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PAGE 01 TURIN 00242 301147Z
43
ACTION XMB-04
INFO OCT-01 EUR-12 ISO-00 AID-05 IGA-01 EB-07 OPIC-06
COME-00 TRSE-00 RSC-01 /037 W
--------------------- 015153
R 300830Z DEC 74
FM AMCONSUL TURIN
TO SECSTATE WASHDC 0452
INFO AMEMBASSY ROME
UNCLAS TURIN 0242
E.O. 11652: N.A.
TAGS: BPRO, BBSR, IT
SUBJ: FCIA CREDIT INSURANCE REQUEST FOR SALE OF RADIO
AND TV BROADCASTING EQUIPMENT TO INDESIT, S.P.A.
REF STATE 257100 AND ROME 17699
1. AMCONSULATE TURIN PERCEIVES NO REASON WHY EXIMBANK
SHOULD NOT CONSIDER SUBJECT REQUEST.
2. BACKGROUND INFORMATION FOLLOWS:
INDESIT (INDUSTRIA ELETTRODOMESTICI ITALIANA) IS ONE OF
THE LARGEST ITALIAN MANUFACTURERS OF HOUSEHOLD
REFRIGERATORS, WASHING AND DISHWASHING MACHINES,
ELECTRIC STOVES, AND TELEVISION SETS. ESTABLISHED IN
1956, IT PRESENTLY HAS A NOMINAL CAPITALIZATION OF
ABOUT 24 MILLION DOLLARS. IT IS THE ONLY LARGE
ENTERPRISE SPECIALIZING IN THE FIELD OF HOUSEHOLD
ELECTRICAL APPLIANCES IN ITALY WHICH HAS NO FOREIGN
FINANCIAL CONTROLS. INDESIT IS ALSO ONE O F THE FEW
ITALIAN CONCERNS WHICH, IN THE CONTEXT OF THE CURRENT
GENERAL ECONOMIC CRISIS IN THIS COUNTRY, CONTINUES TO
PLAN AND EFFECT AMBITIOUS EXPANSION PROGRAMS. IN ITS
ANNUAL REPORT FOR 1973 THE MANAGEMENT DISCLOSED A
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CONSIDERABLE DECLINE IN PROFITS (FROM ABOUT 725,000
DOLLARS IN THE PREVIOUS YEAR TO 425,000 DOLLARS) BUT, AT
THE SAME TIME, IT REVEALED THAT ABOUT 6 MILLION DOLLARS
WERE ASSIGNED TO ROUTINE AMORTIZATION, ABOUT 9.5 MILLION
DOLLARS TO IMMOBILIZED CAPITAL IN THE BANK, AND THAT
ITS CREDITS IN BANKS HAVE REACHED THE VERY HIGH CEILING
OF ABOUT 80 MILLION DOLLARS.
INDESIT OWNS SEVEN ESTABLISHMENTS (EMPLOYING 6,000
WORKERS ALTOGETHER) AT NONE AND ORBASSANO, ON THE OUTSKIRTS
OF TURIN. EACH ESTABLISHMENT IS STAFFED WITH
APPROXIMATELY 1,500 EMPLOYEES, AND SPECIALIZES IN A SINGLE
PRODUCT. SINCE 1971 THE COMPANY HAS BEEN INVESTING HEAVILY
IN UNDERDEVELOPED SOUTHERN ITALY TO TAKE ADVANTAGE OF
THE VARIOUS ATTRACTIVE INCENTIVES OFFERED BY THE ITALIAN
GOVERNMENT. THREE PLANTS (EMPLOYING 2,000 WORKERS)
HAVE ALREADY BEEN COMPLETED AT AVERSA (CASERTA PROVINCE)
WHILE FIVE OTHER ESTABLISHMENTS, REQUIRING ABOUT 60
MILLION DOLLARS IN CAPITAL OUTLAYS, ARE SCHEDULED TO BE
COMPLETED IN THAT SAME AREA BY THE END OF 1975.
AT PRESENT, ONE OF THE NEW PLANTS IN THE SOUTH CURRENTLY
TURNS OUT 1,700 WASHING MACHINES DAILY, ANOTHER PLANT 1,500
REFRIGERATORS, AND ANOTHER PLANT 1,000 PORTABLE TELEVISION
SETS. THE COMPANY IS PLANNING TO INVEST AN ADDITIONAL
4.5 MILLION DOLLARS IN A NEW ESTABLISHMENT AT NONE (TURIN
PROVINCE) FOR FABRICATION OF COLOR TELEVISION SETS.
INCLUDING THIS NEW PLANT, INDESIT S TOTAL LABOR FORCE WILL
BE APPROXIMATELY 9,000 BY THE END OF 1975.
INDESIT PRODUCTS ARE NOT ONLY SOLD SUCCESSFULLY IN
ITALY BUT ALSO IN 76 FOREIGN COUNTRIES THROUGH AN
EFFICIENT SALES NETWORK. FRANCE, GREAT BRITAIN, AND THE
MIDDLE EAST COUNTRIES ARE ITS PRINCIPAL EXPORT MARKETS
AND, ALONG WITH ITALY, ABSORB TWO HIRDS OF ITS ENTIRE
ANNUAL OUTPUT OF OVER 1.5 MILLION UNITS.
INDESIT HAS RECENTLY UNDERTAKEN A THOROUGH REORGANIZATION
OF ITS PRODUCTIVE FACILITIES WITH A VIEW TO EXPANDING
THOSE SECTORS WITH MORE PROMISING FUTURES AND INVOLVING
HIGH TECHNOLOGICAL INPUTS (COLOR TELEVISION SETS, PICTURE
TUBES, TRANSISTORS, TAPE RECORDERS, TIMERS, THERMOSTATS,
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FREEZERS, ETC.) AND, ON THE OTHER SIDE, TO SLOWING DOWN
FABRICATION OF WASHING MACHINES AND REFRIGERATORS WHICH
REQUIRE LESS SOPHISTICATED TECHNOLOGY TO PRODUCE AND ARE
INDEED BEING PRODUCED BY LESS INDUSTRIALIZED COUNTRIES.
THIS CHANGEOVER BROUGHT ABOUT INEVITABLE REDUCTIONS OF WORK
HOURS AND, CONSEQUANTLY, HARSH REACTIONS BY THE LABOR
UNIONS. THE LATTER CHARGED THE MANAGEMENT WITH RESORTING
TO SHORTER WORKWEEKS NOT SO MUCH BECAUSE OF MARKETING
DIFFICULTIES, BUT ONLY TO EXERT PRESSURE TO OBTAIN AN EARLY
ADVANCE OF THE 60-BILLION-LIRE (90 MILLION DOLLARS) LOAN
AT 4& INTEREST PROMISED BY THE ITALIAN GOVERNMENT.
THIS LOAN IS TO BE GIVEN FOR THE COMPANY S INITIATIVES IN
HELPING TO INDUSTRIALIZE SOUTHERN ITALY AS WELL AS FOR THE
REVAMPING OF ITS MANUFACTURING STRUCTURES. HOWEVER,
LABOR CONDITIONS HAVE RECENTLY RETURNED TO NORMAL.
THE MAIN GOAL OF THE FIRM S PRESENT STRATEGY OF CONCENTRATING
ITS EFFORTS ON COLORED TELEVISION SETS IS TO GAIN A
SUBSTANTIAL SHARE OF THE DOMESTIC MARKET ONCE ITALY
DECIDES ON A NATIONAL COLOR SYSTEM. THIS DECISION SHOULD
COME SHORTLY.
INDESIT IS UNDERSTOOD TO HAVE A SOUND FINANCIAL BASIS
AND TO HAVE ALWAYS MERITED FAVORABLE COMMENTS BY ALL
TRADE SOURCES. IT IS UNIFORMLY REPORTED TO BE DIRECTED
BY HIGHLY-SKILLED AND CONSCIENTIOUS PROFESSIONALS.
CHAIRMAN ADELCHI CANDELLERO (BORN 1894), A GRADUATE
ENGINEER, MAINTAINS CONTROLS IN OTHER LARGE LOCAL
INDUSTRIAL COMPANIES.
WITH ALLOWANCE FOR INDESIT S BASIC REORGANIZATION
WHICH IS UNDERWAY, AND CONSIDERING THE FINANCIAL
IMPLICATION OF THAT REORGANIZATION, THE FIRM S LEADING
POSITION IN ITS LINE IN ITALY AND THE EXCELLENT
REPUTATION OF ITS OWNERS AND MANAGERS VOUCH FOR ITS RELIABILITY
AND SUITABILITY FOR TRANSACTIONS WITH U.S. COMPANIES.
LANIUS
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