Wheels in motion

Entrepreneurs pride themselves on their ability to act fast in order to survive. It’s a trait that Italy’s Marco Tronchetti Provera has demonstrated time and again in his managerial career. “To profit from opportunities you have to be the first mover,” says the ceo of Italian tyre manufacturer Pirelli, which supplies Ferrari and other racing teams on the Formula 1 circuit, as well as premium carmakers worldwide.

Speed in business has long fascinated Tronchetti Provera. In the early 1970s he did a stint in London working for logistics firm p&o and saw firsthand how containerisation was beginning to revolutionise the maritime industry. Upon his return to Italy he set up an inland container terminal that linked with ports to move cargo rapidly from A to B and grew his venture into a thriving operation. “I was attracted to this new global economy, shipping goods to Australia and Africa, and I was fascinated by new technologies.”

A 1978 marriage to the daughter of Leopoldo Pirelli, grandson of the founder of the tyre giant, helped pave the way for an offer eight years later to enter the firm’s managerial ranks. After his father-in-law’s failed bid to acquire German rival Continental left the company mired in debt, Tronchetti Provera stepped in to take over the business, assuming the reins as ceo in 1992.

His tenure hasn’t always been smooth, however; there have been bumps in the road. His arrival at the helm of the storied firm marked a changing of the guard in Italian business circles. He was one of a new wave of managers who pursued a more aggressive, US-style approach to conducting business, one that wasn’t afraid to dismantle underperforming business units and let people go. This cohort represented a sharp departure from Italy’s previous generation of managers – Fiat head Gianni Agnelli was reluctant to cut staff during tough times, for instance, and was much revered by his workforce.

In his first years in charge, Tronchetti Provera steered the group through a reorganisation. He shuttered a number of production facilities and introduced automation, which meant laying off many managers and workers. These moves didn’t make him popular but the approach paid dividends. “You never stop restructuring,” he says. “You keep looking for efficiencies in all areas.”

Of course, the self-styled industrialist has learned the hard way about racing into new ventures. In 2001, he invested the firm’s money into taking over former state monopoly Telecom Italia. He used cash from a 2000 sale of Pirelli’s fibre-optics business but borrowed heavily too. When the telco’s fortunes slumped, he raised cash by spinning off Pirelli’s long-held cable-making division (when Pirelli began in 1872, it focused on rubber-coated telegraph cables before moving into tyres at the turn of the century).

“I don’t have regrets,” says Tronchetti Provera, who exited Telecom in 2007. “You learn from decisions and you move on.” The sale of its cables unit led to the birth of Prysmian Group, now a leader in high-voltage transmission lines and undersea-cable production; its revenue has already eclipsed Pirelli’s. To an outside observer the move looks like a major error but the ceo is keen to explain the rationale. “It’s no longer a world of conglomerates,” he says. “When you have an industrial company like ours, to compete at the highest level, focus is a must.”

Today that focus has shifted to making high-performance tyres for premium and prestige carmakers, such as bmw and Bentley, where margins are higher and where the Italian brand holds an edge – for the past seven years, for instance, it has been the sole supplier of tyres to Formula 1. In recent years the 70-year-old ceo has accelerated efforts to focus on this higher-margin business, which has helped it become more profitable than rivals Michelin and Continental. Meanwhile, its R&D team unveiled the Connesso tyre with sensors embedded in the tread to provide real-time data to drivers to improve safety.

Then, three years ago, ChemChina (a state-owned Chinese enterprise), in partnership with a holding headed by Tronchetti Provera, launched a tender offer for Pirelli. The decision raised fears in Italy of losing a national industrial treasure to foreign owners, as it saw Pirelli delisted from the stock exchange after nearly a century of trading. But Tronchetti Provera argued that the entry of an industrial partner would help protect the brand from becoming a takeover target for its bigger tyre competitors.

The departure from the bourse was to be short lived: in the autumn of 2017 he staged a return with a leaner company, focused solely on consumer tyres, which is now on track to post nearly double-digit growth. Tronchetti Provera negotiated with his Chinese partners, who were convinced of the importance of keeping the brand rooted in Italy, to put in place a set of by-laws that impose strict rules on technology transfers and on moving the company outside the country (a vote of 90 per cent of shareholders is required). Through the ipo, ChemChina also lowered its original stake in the firm from 65 per cent to about 45 per cent.

Once again the shrewd tycoon showed observers that he can manoeuvre the firm onto a profitable path. But, as always, Tronchetti Provera kept one eye on the next turn in the road, ready to seize the next opportunity by being, as he puts it, the “first mover”.