ITALIAN DEFENSE INDUSTRIES: STRIVING TO COMPETE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89T00295R000400390004-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 51
• Document Creation Date: December 27, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 4
• Publication Date: November 1, 1986
• Content Type: REPORT

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Directorate of
Intelligence
Striving To Compete
Italian Defense Industries:
EUR 86-10042
November 1986
Copy 3 9 6
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 Directorate of ,Secret
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Italian Defense Industries:
Striving To Compete
This paper was prepared by
Office of European Analysis. Comments and queries
are welcome and may be directed to the Chief,
Security Issues Division
Reverse Blank Secret
EUR 86-10042
November 1986
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Italian Defense Industries:
Striving To Compete
Summary Through the astute use of licensed production and participation in joint
/n/ormation available weapons programs with the United States and a number of West European
as of /June 1986 countries, Italy has become a major manufacturer of military hardware
was used in this report.
and now ranks as the fifth-largest non-Communist supplier in the global
arms market. Participation in codevelopment and coproduction arrange-
ments has given Italian firms access to key advanced technologies without
the high costs associated with independent research and development
(R&D). Moreover, using the experience gained, the Italians have developed
indigenous weapons in most of the defense sectors-chiefly at the lower
end of the technology range. Italy remains dependent on its US and West
European partners in a number of high-technology areas and is likely to re-
main so for the foreseeable future:
? The Italians have gradually developed a substantial aerospace sector,
which ranks second in Western Europe behind France in sales. Agusta is
one of the major world helicopter producers, and Aeritalia is the prime
Italian partner in the Tornado consortium and the Eurofighter projects.
Italian firms have achieved relative independence in airframe design and
avionics, but still rely on US and British engines and foreign suppliers for
aircraft weapon systems. They also lag in advanced missile propulsion
and guidance technology.
? Italian shipyards produce vessels ranging from patrol craft to helicopter
cruisers, and Italian firms have developed a number of highly competitive
naval weapon systems, including an OTO Melara gun system in service
with over 40 navies, the Otomat missile that has been sold to some 15
countries, and a variety of sonars, radars, and electronic warfare systems.
Rome has streamlined its shipbuilding industry to compensate for
flagging worldwide demand, but new construction orders remain low and
most work has been in ship repair.
? With the exception of small arms, the Italian land armaments industry
has been the least successful defense sector in challenging the dominant
positions of the United States, Britain, West Germany, and France. OTO
Melara and Fiat have successfully marketed a variety of armored
personnel carriers, and the artillery industry has sold towed guns
throughout NATO and the Third World. Largely because foreign
systems have better capabilities at competitive prices, however, the
Secret
EUR 86-10042
November /986
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propelled artillery.
Italian Army is equipped with US and West European tanks and
antitank systems, and it is looking to a US system to modernize its self-
country with limited R&D resources.
As it has grown, the Italian defense industrial sector has become an
important economic asset, providing direct employment for up to 100,000
workers. An equal number probably are employed by firms that indirectly
support the defense sector. Annual defense industry sales are estimated at
$3-4 billion, and the industry is a key source of advanced technology for a
tion proposals that, in effect, would place Agusta under Aeritalia.
The Italian Government has played a key role in the development and
structuring of the defense industrial complex, and over 70 percent of
Italian arms manufacturers are government controlled through state-
owned holding companies. This government presence has permitted Rome
to restructure firms and entire sectors in an effort to enhance their
competitiveness in the export market and to rationalize R&D and produc-
tion. Nonetheless, bureaucratic resistance and periodic infighting between
government ministries and state holding companies have limited Rome's
ability to fully eliminate redundancy and develop efficient worksharing
schemes. Domestic politics also have been a stumblingblock, particularly in
the aerospace sector. Aeritalia, controlled by the Christian Democrats, and
Agusta, controlled by the Socialists, are important sources of funding and
patronage for the two parties, and the Socialists have resisted rationaliza-
total exports.
Export sales have become crucial to the health of the Italian defense
industries and dominate the business of some firms. Except for weapons
produced through joint programs and some electronics, Italy has not
cracked the West European market. Recognizing their lower technology
base, and taking advantage of a somewhat lower wage structure, however,
the Italians have been successful in marketing cheaper and less sophisticat-
ed weapons in the Third World. For example, the bulk of Italian export
sales since 1980 have been to Middle Eastern and North African states
(67 percent of total sales). Libya, Iraq, and Somalia have been major armor
customers, and Libya was a major aircraft client. Sales to Sub-Saharan
Africa account for another 13 percent and equal those to Latin America
and Asia. Sales in Western Europe have accounted for only 5.2 percent of
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Although hampered by the lack of a centralized sales organization such as
in France and the United Kingdom, the Italian Government has taken an
active role in arms marketing, occasionally subsidizing export credits.
Government control of the defense industrial sector has enhanced Italy's '
export sales position, in part because Rome can offer its clients complete
packages of military hardware and associated nonmilitary goods and
services provided by firms owned or controlled by the government. Rome
also places substantially fewer restrictions on arms sales than its competi-
tors and has been more willing to transfer technology to its customers.
The future health of the Italian defense industries will depend in large part
on Italy's ability to maintain its position in the export market. Although
they remain relatively well placed to exploit their current status as
important suppliers of cheaper and less sophisticated arms to the Third
World, we believe that overall Italian export sales will decline in the next
10 years:
? A number of Third World clients are now completing modernization
programs and many, particularly those dependent on oil revenues, will
face increasingly tight defense budgets.
? Italy will face increasing competition, not only from established West
European exporters-such as France and the United Kingdom-but also
from other smaller but growing West European defense industrial
suppliers such as Spain, Greece, and Turkey, and from Third World
suppliers such as Brazil and South Korea.
? The next five years may also see a decline in orders from the Italian mili-
tary as it completes much of its current modernization program and faces
increased fiscal austerity.
Italy's drive to increase its arms sales, its quest for greater self-sufficiency
in the advanced technology arena, and its policy of equipping its own forces
with indigenous weapon systems will pose challenges for the United States:
? As it attempts to maintain its position in the Third World arms market,
Italy will face a growing dilemma over its policy regarding sales to the
more radical Middle Eastern states, particularly Libya. On the one hand,
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Italy has been willing to accede to US requests to restrict exports. Rome
recently banned sales to Tripoli, has refused to sign major agreements
with Tehran, and has signed no new agreements with Baghdad. On the
other hand, Rome is increasingly concerned that other countries,
especially France and the United Kingdom, are not restricting sales to
Iran and could have an advantage over Italy should the Iran-Iraq war
end. Rome also may resume sales to Libya if it becomes apparent that
others are not restricting sales or if it detects a noticeable change in
Tripoli or West European attitudes toward Libya.
? Although Rome has actively supported greater West European and
NATO armaments cooperation, there will be increasing pressure-
particularly if the export market shrinks-on the Italian military to
procure indigenously designed weapon systems regardless of their capa-
bility or compatibility with other NATO systems.
? Rome probably will continue to support US policy on COCOM restric-
tions against technology transfer to Communist states. Italy is concerned,
however, over the impact of US export controls on its competitiveness as
an arms supplier-particularly given its dependence on US-designed
advanced technology subsystems-and almost certainly will press for less
rigid restrictions on US technology. Italy also may turn increasingly to its
West European partners as a source of crucial technology and to find a
way around US restrictions.
? The Italians are likely to demand heavier industrial offsets for any US
arms they purchase and insist the United States make substantial
purchases in Italy to help redress the chronic imbalance-about 4 to 1 in
1984, according to Rome-in US-Italian arms trade. Nonetheless, they
will not completely sacrifice cost effectiveness and military capability
simply to maintain their domestic defense industries.
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Codevelopment and Coproduction 2
Independent Development 4
Strengths 9
Domestic Impact of Defense Industrial Growth 12
The Military 12
Outlook 15
B. Major Codevelopment Programs
C. Major Industries
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Italian Defense Industries:
Striving To Compete
The Italians have developed a substantial defense
industrial capability in the last 15 to 20 years and can
now produce a broad range of sophisticated military
equipment. This capability has brought direct benefits
to Italian military forces and reduced somewhat
Italy's dependence on foreign-particularly US-sup-
pliers. Nonetheless, in order to maintain or improve
its position in the world arms market and further
reduce its dependence on US-developed technology,
Italy will have to continue to expand its indigenous
research and development (R&D) base
This research paper focuses on the rise of the Italian
defense industrial base since World War II and
examines the role of the Italian Government in the
defense industries. It assesses the current position of
the industries in the arms market and describes the
current state of the major defense industrial sectors.
Finally, it discusses the impact of the rise of the
defense industrial sectors on the Italian military and
economy and on future US-Italian defense coopera-
tion. Appendix C describes the major Italian defense
Development of the Italian Defense Industrial Base
Following World War II-during which much of
Italy's defense industry was destroyed or disman-
tled-the Italians began to rebuild their defense
industrial base. With the exception of the less-
technology-intensive shipbuilding sector, the gradual
development of a substantial defense industrial capa-
bility has succeeded largely because of the Italians'
astute use in the 1950s and 1960s of licensed produc-
tion and codevelopment to acquire technology and
production know-how from other Western countries-
mainly the United States-with more mature and
technologically advanced programs. The experience
gained from this led directly to independent Italian
designs that, in general, reflect modification and
modernization of the licensed systems (see table 1).
Licensed Production
Licensed production allowed the Italians to adopt
modern systems without the heavy R&D expenditures
that would have been required if they had had to
develop their own systems. Equally, it allowed them to
develop and maintain a cadre of skilled technicians 25X1
and designers that proved essential to their eventual
move into indigenous design (see appendix A).
The United States played a crucial role in the postwar 25X1
development of the Italian defense industries. Almost
all of the systems that were produced under license
during the 1950s and 1960s were US designs. The
United States was also a major customer during this
period, purchasing many of the systems and then
immediately transferring them as military aid to the
Italian armed forces as well as to several other allies,
especially the West Germans:
? Italy's helicopter industry got its postwar start with
licensed production of the Bell H-47 helicopter in
the mid-1950s. The Italian firm Agusta has since
license produced a number of other US helicopters.
With this extensive experience, Agusta has begun to
develop its own helicopters, including the A-109
transport helicopter and the new A-129 attack
helicopter. Italy's jet fighter industry got its start
with licensed production of the US-designed F-86 in
the 1950s and the F-104 in the 1960s.
? Italy's armor industry was reconstituted through
licensed production of US and West German tanks
and US armored personnel carriers (APCs). OTO
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Table 1
Selected Italian Arms Production
G-91 MB-326
SF-260
Helicopters H-47 AB-204
AB-205
Sea Sparrow
Cobra
Mosquito
Sea Killer
Armor M-47 M-60
M-113
Melara has used the M-113 APC as the basis for
development of its VCC-1 APC and its experience
in licensed production of the West German Leopard
I tank to develop its OF-40 tank.
? With its long experience in ship construction, Italy
has maintained a strong indigenous naval shipbuild-
ing capability, according to
However, many subsystems for
nava com atants to the 1950s, particularly sonars
and air defense systems, were license-produced US
systems. Whitehead Motofides license produced the
Mk 46 torpedo and used this experience to develop
the A-244 torpedo for the Italian Navy and other
customers. On the basis of its experience in produc-
ing GE aircraft turbines, Fiat has adapted these
engines for marine use and now supplies them to a
number of Italy's naval customers.
Tornado AMX Eurofighter
MB-339
CH-47
H-300
H-500
A-109
Milan
Otomach
Otomat
Leopard I OF-40 Tricolorie
OTO 6614 VCC-80
OTO 6616
VCC-1
Codevelopment and Coproduction
By the 1970s, as their production capabilities expand-
ed and technology levels matured, the Italians became
increasingly active in codevelopment and coproduc-
tion agreements (see appendix B). Codevelopment has
given Rome access to advanced technologies still in
the design stage and has enabled the Italian defense
industries to keep abreast of major technology devel-
opments without the high costs of independent R&D,
according to US Embassy reporting. Shared develop-
ment programs have provided both outside funding
for the enhancement of indigenous R&D capabilities,
and additional markets for the Italian defense indus-
tries. In turn, Italy has provided R&D funding sup-
port and an assured market to its partners.
Most of Italy's codevelopment projects have been with
the United States, the United Kingdom, and West
Germany, although the Italians have recently signed
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cooperation agreements with several other West
European and Third World countries. Most major co-
development programs have been established through
government-to-government agreements; some firms,
particularly Fiat and OTO Melara, have been active
in developing industry-to-industry programs as well.
The Italians also have actively supported recent at-
tempts to revitalize West European arms cooperation
organizations-particularly the Western European
Union (WEU) and the Independent European Pro-
gram Group (IEPG}--out of a desire, we believe, to
maintain access to European technology and to pre-
serve the competitive position of their indigenous
defense industry.
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Italy's largest and most ambitious codevelopment
program has been the Tornado multirole combat
aircraft, a joint project with the United Kingdom and
West Germany under the Panavia consortium. The
Italians received nearly 15 percent of the workload on
the basis of their share of total Tornado procurement
and costs-100 out of about 830 aircraft. Italian
firms produce the wings for all of the aircraft, and
Aeritalia is responsible for assembly of those
Tornados slated for the Italian Air Force. The same
countries jointly developed the FH-70 towed 155-mm
howitzer that is entering service in all three countries.
United Kingdom, and Spain) of the consortium for the
new European Fighter Aircraft, which is still in an
early design stage. In addition, they are involved in
the NATO frigate replacement program, an attempt
by the Alliance to develop a common frigate for the
1990s, which, according to NATO reporting, is still in
a very early design phase. In general, however, most
Italian naval programs are national projects, in part
because of the need to maintain employment in Italy's
depressed shipbuilding industry and also because of
Italy's tradition of naval construction and its relative-
ly lesser dependence on foreign technology in this
The Italians also have become increasingly active in
arms cooperation with Third World states, chiefly as
a means of securing export markets and foreign funds
for R&D. Rome has used production licensing as a
major inducement to attract Third World customers.
The MB-326 trainer, for example, was license pro-
duced in Brazil, Australia, and South Africa; and
Italy has recently signed a number of general arms
cooperation agreements with Argentina, Chile, China,
and Greece. While specific cooperation programs
have not been outlined, the pacts are designed to
enhance Italy's defense industrial relationship with
these countries. The biggest Third World cooperation
project they have undertaken to date is the joint
development of the AMX fighter aircraft with the
Brazilians (see inset).
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Italy is a member of asix-nation consortium-with
the United States, the United Kingdom, the
Netherlands, France, and West Germany-that is
developing NATO's Multiple Launch Rocket System
(MLRS). The Italians, through Selenia, are also par-
ticipating in a European program to develop a new
short-range, antiradiation missile and are seeking to
coproduce the US-developed Maverick air-to-ground
missile. In the aerospace field, the Italians have
signed agreements with Westland of the United
Kingdom to develop the EH-101 helicopter and the
A-129 attack helicopter and are moving into the
commercial aircraft field, cooperating with the
French and the United States on several projects. The
Italians are also members (with West Germany, the
Independent Development
Using the experience gained in licensed production
and codevelopment, the Italians have been able to
develop indigenous weapons in most major areas. In
general, however, these systems tend to be less sophis-
ticated than those produced by other West European
countries or the United States.
Aircrgi't. In the 1950s, the key area of independent
development was in trainer aircraft. Italian trainers
were highly successful competitors for export sales
throughout the 1950s and 1960s, although increased
competition-particularly from France, the United
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Kingdom, Switzerland, and Brazil-has severely cut
The AMX light fighter aircraftt is a joint development
project of Aeritalia and Aermacchi of Italy and
Embraer of Brazil. The plane is being developed in
response to an Italian Air Force requirement to
replace its aging inventory oJ'G-91 and F-104 ground
attack aircrgJ'i in the late 1980s. Current plans call
for a total production run of nearly 270 aircrq~'t-79
for Brazil and 187 for Italy.
The Italians originally approached the Swedes in the
late 1970s to codevelop a new fighter aircrq/'t. When
this project collapsed because of cortRicting require-
ments, Italy turned to Brazil, which had license
produced the MB-326 trainer, and, in early 1980,
Brazil and Italy signed a memorandum of under-
standingfor the codevelopment of the AMX. This
government-to-government agreement waslollowed in
July 1980 by an industrial cooperation agreement
between Aeritalia, Aermacchi, and Embraer. Under
the current agreement, production work will be divid-
ed, with 70 percent going to Italy and 30 percent to
Brazil. Aeritalia will be the project leader and will
produce 46 percent of the aircrctf't including the center
fuselage, nose radome, fin and rudder, elevators,
flaps, ailerons, and spoilers. Aermacchi will build 24
percent including theforwardluselage, canopy, and
tail section. Embraer will provide 30 percent of the
AMX including the air intakes, wings, wing leading
edge slats, tailplane, wing pylons, and fuel tanks (see
figure 3J. There will be two final assembly lines, one
in Italy and one in Brazil, with each country provid-
ing components to the other. The plane will be
powered by aBritish-designed Spey 807 turbofan
engine. Each country will install its own avionics and
weapons delivery systems. So far, six prototypes have
been constructed, the first of which crashed. Series
production is slated to begin later this year.
into their market,
Italy's most successful early design was t e - 1
ground attack/trainer aircraft begun in the late
1950s. Fiat developed the aircraft using a US engine,
and the G-91 was selected as a standard NATO
aircraft. Some 630 were built from the late 1950s to
the early 1970s, including about 300 built by West
Germany under license. Successful trainers have also
been extensively exported by Aermacchi and Siai-
Marchetti:
? Aermacchi began development of the MB-326 jet
trainer/ground attack aircraft in the mid-1950s,
and more than 800 have been built and sold to over
15 countries since production began in 1961. Aer-
macchi also began development of the MB-339
trainer/ground attack aircraft in the mid-1970s
and, since production began in 1976, has built
almost 200 for five countries.
? Siai-Marchetti began production of the SF-260 prop
trainer/utility/strike aircraft-developed by Italy's
Aviamilano-in 1967 and produced some 1,400 of
these aircraft for over 10 countries.
Another major independent program has been the 25X1
G-222 transport aircraft, developed by Fiat's aircraft
division (now part of Aeritalia) and in production since
1975. Nearly 100 have been built. Most G-222s have
gone to the Italian Air Force, but some have been
shipped to countries such as Dubayy, Argentina,
Venezuela, Nigeria, and Libya. As with most major
Italian military aircraft programs, nearly all of Italy's
aircraft firms produce significant parts of the aircraft: 25X1
Aermacchi produces the outer wing; Piaggio, the wing
center section; and Siai-Marchetti, the tail unit.
Agusta made several attempts to develop helicopters
in the 1950s, but none were a commercial success. In
1971, it began development of the A-109 utility
helicopter, with production beginning in 1975. To
date, over 500 have been built, mostly for the Italian
Government. Agusta also has developed the A-129
attack helicopter, and full production is expected to
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The Government and the Defense Industries
The Italian Government's role in the Italian defense
industries is pervasive and complex. In the 1950s, the
government's chief goal, with prodding and assistance
from the United States, was the reconstruction of its
defense industries. Its ultimate goal now,
s to make Italy self-su cien m a
mayor areas o weapons development. In the late
1960s and early 1970s, through the acquisition of
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begin in late 1986 or 1987. Since the A-129 is the
only non-US attack helicopter likely to enter produc-
tion in this decade-the Franco-German PAH-2 is
still under development-it could be a strong contend-
er on the export market, both in Europe and the
Middle East.
Missiles. Italy's first major missile program was a
joint effort by the Italian firms Contraves Italiana
and SISTEL to develop the Sea Killer antiship cruise
missile in the late 1960s. More than 500 were pro-
duced, with the bulk delivered to the Italian Navv:
exports went only to Iran
Current programs include two antitank
systems scheduled to enter series production by the
end of the decade-the Folgore rocket by Breda
Meccanica and the MAF (Missile Anticarro per
Fanteria) antitank guided missile (ATGM) by OTO
Mehra-and the Spada mobile air defense system
(under development by Selenia for the Italian Minis-
try of Defense), which uses the Aspide missile and
Selenia radars.
Some of Italy's attempts at indigenous design have
not been successful, although the failures represent
only a relatively small portion of all programs under-
taken. In the 1970s, after several years of develop-
ment, Breda Meccanica abandoned its Sparviero
ATGM program when the Italian Army elected to
purchase the Franco-German Milan system because
of its proven capabilities and known price,
In 1981, OfIicine Galileo and
SISTEL abandoned development of the Indigo-MEI
air defense system following several years of develop-
ment because of a lack of demand resulting from the
substantial number of systems already available.
stock by the Ministry of State Participation, the
government began to acquire control of a substantial
portion of Italy's defense industries. The government
was able to provide needed investment funds for the
modernization of the industry, as well as a guaranteed
market through defense procurement. By the late
1970s, the government had also become increasingly
active in the marketing of Italian arms throughout the
world. The government continues to play an active
role, signing numerous government-to-government
cooperation agreements and mandating industrial off-
sets for its foreign purchases of military equipment.
The Role of the Government
Today some 70 percent of Italian arms manufacturers
are government controlled, largely through Rome's
prime holding companies: the State Holding and
Finance Company for the Manufacturing Industry
(Ente di Partecipazione a Finanziamento Industria
Manufacturiera-EFIM) and the Institute for Indus-
trial Reconstruction (Istituto per la Ricostruzione
Industriale-IRI) under the Ministry of State Partici-
pation (see figure 5).
The government-m ustry re ationship is complicated
by the fact that a substantial share of the stocks of
many defense firms is also in the hands of private
investors, according to US Embassy reporting. As a
result, the true relationship between the government
and these firms is often nebulous because, even when
the government has majority control of the firm, the
wishes of private investors can often play a substantial
role in company decisions.
Another complicating factor is that the two holding
companies are, in effect, independent entities often in
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Figure 5
Ownership of Selected Italian Arms Industries
Indicates either total or partial ownership
^ Holding companies
Subsidiary holding companies
Manufacturers
A =Aircraft
E =Electronics
G =Ground forces vehicles
I =Infantry equipment
M = Missiles
Ministry for State
Participation
Breda Ferroviaria, SpA
Construzioni Aeronautiche G.
Agusta (A)
~~ Elicotteri Meridionali (A)
Fonderie a Officine
Meccaniche di Bevento (A)
Industri Aeronautica
i Meridionale (A, M)
Siai Marchetti (A)
Appliczioni Industriali Fiat
I OM (G)
Elettronica per I'Automazione,
Soc. di, SpA (N)
Fiat Veicoli Industriali,
SpA (G)
Generale Missilistica
i Haliana (M)
Gilardini, SpA (E, O, 1)
Grandi Motori Trieste,
i SpA (N)
Sistemi Elettronica,SliA (M)
~ Turbo Union, LTD (A)
SNIA BPD
N =Naval equipment
O =Ordnance
Finanziaria E. Breda, SpA
Fincantieri (N)
Breda Fucine (G)
Cantieri Navali Breda (N)
Aeritalia (A)
Breda Meccanica
Cantieri Navali
Aermacchi (A)
Bresicana (O, N)
Muggiano (N)
Alfa Romeo, SpA (A)
Oto Melara (N, M, G)
Cantieri Navali Riuniti (N)
Ansaldo Soc. Generale
Simmel (O)
Grandi Motori Trieste (N)
Elettromeccanica (N)
Stabilimenti Meccanici,
SpA (G)
Termomeccanica Italiana,
SpA (N)
31050311-86 ~~~/~
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competition with each other, which has led to frequent
squabbling and some industrial redundancy.~~
t e imstry o tate Participation attempted to end
years of bitter bureaucratic infighting between EFIM
and IRI over control of the aerospace industry. Each
was attempting to gain a greater market share for its
subsidiaries; IRI's Aeritalia and EFIM's Agusta. In
the end, Aeritalia was given control over most of the
industry, particularly heavy aircraft; Agusta was to
take control of helicopter and light aircraft produc-
The 1982 agreement went only part way in rationaliz-
ing the aerospace industry, chiefly because of domes-
tic politics. Recent proposals to place the entire
aerospace sector under a single holding company-
IRI-have been hampered by the fact that Aeritalia
and its holding companies are traditionally controlled
by the Christian Democrats; Agusta is controlled by
the Socialists, and Agusta's holding company, EFIM,
is controlled by the Social Democrats. These firms
have become important sources of funding and pa-
tronage for the individual parties, and the Socialists
have protested any move that would effectively place
Agusta under Aeritalia.
The pervasive role of the government-particularly
the state holding companies-nevertheless gives
Rome the opportunity to restructure firms to enhance
Italian competitiveness in the world market and
rationalize R&D and production efforts. Attempts at
government intervention by the Ministries of State
Participation and Defense, however, have frequently
run up against bureaucratic obstacles, as government-
owned firms have resisted having their production
lines declared redundant, according to US Embassy
reporting. This resistance has forced the Ministry of
Defense and the individual state holding companies to
design complex worksharing formulas on major arms
programs to ensure that all the government-owned
.firms receive some benefit. While this maintains
employment for the firms involved, it tends to be more
inefficient than if production were undertaken by a
single company. In the Tornado program, for exam-
ple, Aeritalia is responsible for overall aircraft assem-
bly, but firms such as Bredanardi, Siai-Marchetti,
and Aermacchi are responsible for the production of a
number of subassemblies.
On the positive side, government control has enhanced
Italy's export sales position, particularly in naval
systems, because Rome can offer clients complete
packages including not only ships produced by
government-owned shipyards but also subsystems
such as missiles, radars, and guns produced by
government-owned firms. Equally, a client can be
offered a package of military hardware and associated
nonmilitary goods and services produced by
government-owned firms. The government has also
used its control of the defense industries to implement
domestic economic programs such as attempts to
relieve unemployment in depressed areas. In the
1970s, for example, it announced a policy of moving
industries to the poor, southern regions of Italy, and
the firm Elicotteri Meridionali was formed by Agusta
to manufacture helicopters at a new plant built in the
south. In general, however, such programs have
proved to be only marginally successful.
Rome has also taken an increasingly active role in
arms marketing .The
Ministry of State Participation has begun to negotiate
arms contracts directly, the Minister of Defense has
signed a number of general arms cooperation agree-
ments in an attempt to promote sales, and the Minis-
try of Foreign Affairs has set up a coordinating
service in an attempt to prevent Italian firms from
competing with each other for the same contract.
Government-owned banks also have occasionally of-
fered export credits at subsidized rates to Italian arms
customers. Despite all this activity, Italian military
exports are still hampered by the lack of a centralized
government arms sales organization, such as at the
Ministry of Defense level in the United Kingdom and
Consortiums and Consolidation
One of the major stimulants in the growth of Italy's
defense industry has been the formation-frequently
under government leadership~f a variety of consor-
tiums to produce weapon systems. The government
has also mandated the consolidation of a number of
firms under more broadly based holding firms in
order to rationalize management in some defense
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sectors. Such arrangements have attempted to encour-
age specialization among individual firms and reduce
costly duplication and competition, particularly in
R&D. These teaming arrangements, although certain-
ly not unique to Italy, try to make better use of
limited R&D resources, support employment in key
firms, and improve specialization. As a result, in most
major weapon system development programs, three or
four Italian firms are responsible for different por-
tions of the project:
? Most of the major defense industrial groups, such as
Aeritalia and Agusta, have been formed out of a
number of smaller firms. SISTEL, one of Italy's two
missile manufacturers, resulted from combining the
efforts of Montedison, Fiat, Contraves Italiana, and
SNIA-Viscosa. OTO Melara and Fiat, and now
Lancia, have joined to produce most of Italy's
armored vehicles in the last 15 years. Selenia and
ELSAG were recently joined to strengthen their
capabilities in electronics. A group of Italian aero-
space equipment manufacturers have formed a con-
sortium-Italian Group of Aerospace Equipment
Companies (CIRSEA)---to move toward greater col-
laboration between equipment firms and aircraft
manufacturers. Three consortiums have been
formed recently in response to the call for West
European participation in the Strategic Defense
Initiative.
? An example of the establishment of a consortium to
develop a specific system is the Albatros naval SAM
system. The overall system was designed by Selenia,
originally based on the US Sea Sparrow missile, and
now on the Italian Aspide missile. The Aspide, in
turn, is a joint product of Selenia, SNIA BPD, and
Microtecnica. The fire-control system was devel-
oped by ELSAG, and the missile mount is produced
by OTO Melara. The system has been sold to over
15 countries and is being license produced in Japan.
Italy's Position in the Defense Market
Italy is one of Western Europe's leading arms produc-
ers (see figure 6~. Although Italy has yet to develop a
competitive position in the high-technology sector, it
has established itself as a producer of more basic
weapon systems-such as infantry weapons, artillery,
armored vehicles, and trainer aircraft-at lower costs
than those available from most other West European
suppliers. Most of Italy's success on the world arms
market has come in sales of less expensive systems,
often to countries unwilling or unable to purchase
weapons from the major arms suppliers. This position,
however, is coming under increasing pressure as other
countries, such as Brazil and Spain, are moving into
the world arms market offering weapons comparable
in price and technology to those produced by the
Italians. Despite their success, the Italians still are
seldom serious competitors with the United States in
the world's arms market. Italy's current share of
world arms sales is still only one-fifteenth of the
United States' share, and Italy cannot offer the
technology or the financing currently available from
Washington.
Strengths
The major advantage of Italian industry in the global
market is its ability to produce a wide variety of
weapon systems and subsystems at lower prices than
most other producers. In the 1970s, recognizing the
need to expand their arms sales, both to support a
growing defense industry and to reduce the indige-
nous cost of weapon systems, the Italians began
producing low-technology systems. In effect, accept-
ing that they would have difficulty competing with
the United States and the major West European
manufacturers, the Italian firms made a virtue of
their limited high-technology base by moving into the
world arms market with less sophisticated and less
expensive weapon systems that were more attractive
to Third World customers. In addition, wages in Italy
tend to be somewhat lower than in most other West
European countries, making it easier for the Italians
to produce these systems at a lower cost than their
competitors. The Italians also place substantially few-
er restrictions and controls on exported weapons than,
for example, the West Germans, and they have tended
to offer competitive and attractive coproduction and
licensing arrangements, according to US Embassy
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Figure 6
Arms Production by Major West European Countries
Armored Vehicles Production
Hundred
Secret 10
United Kingdom
Italy
Tank Production
Hundred
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Table 2
R&D Expenditures
Million /985 US $
(except where noted)
2.01 2.11 2.16 2.19
2.49 2.58 2.56 2.58
2.46
Weaknesses
Italy's key weakness is its technological base. Italian
weapons generally are not at the leading edge of
technology, in part because of Italy's relatively weak-
er position in advanced technology R&D,
general, the Italians do not enjoy a significant techno-
logical lead in any of the major defense industrial.
sectors. According to a number of contractor studies,
they are at least competitive with other firms in
Western Europe and the United States in a few areas,
particularly in composites (the combination of two or
more distinct materials bonded together, such as new
glass-reinforced plastic) and manufacturing processes
(the assembly of weapon systems).
Italy spends substantially less than the other major
West European countries-as a percentage of GDP
and in absolute terms~n R&D, and R&D funded by
the Ministry of Defense is only a fraction of that in
the other major West European countries (see
table 2). Moreover, Italian military R&D is hampered
by a lack of central direction: each service is responsi-
ble for its own development programs, and there is no
overall ministerial-level agency to coordinate the pro-
grams. Data on funding by individual firms are
generally unavailable, but, overall, privately funded
R&D appears to lag that in other countries
The Italians have a substantial R&D infrastructure-
the Ministry of Defense, for example, has over 20
research and experimental institutes,
but the work remains fragmented.
The Italians, like most West Europeans, also suffer
from a continuous outflow of scientists and research-
ers to the United States. The Italians have been
attempting to redress this problem, and defense-
funded R&D has grown from some $30 million in
1975 to nearly $175 million today. Nonetheless, gov-
ernment spending is still so limited that Italy probably
will remain dependent on licensed production and
joint ventures to stay abreast of state-of-the-art tech-
nologies.
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Domestic Impact of Defense Industrial Growth
The advent of a substantial domestic defense industry
has aided the military in its quest for modern arms,
but has weakened its standardization with the rest of
NATO. The growth of domestic arms firms has also
provided substantial employment throughout Italy,
particularly in high-technology fields, and the defense
sector has become an important exporter.
The Military
Italy's armed forces have been able to take some
advantage of the growth in the Italian defense indus-
trial base. The military modernization program begun
in the mid-1970s placed strong emphasis on the
domestic manufacture (largely successful) and design
(still largely unsuccessful) of weapon systems,
Because of this priority on
m igenous systems, we elieve military procurement
requests have been more favorably considered by the
government than they would have been if Italy were
more heavily dependent on foreign suppliers.
Italy has gone a long way toward meeting its domestic
manufacturing goals, but the lion's share of Italian
Army and Air Force military hardware is still foreign
designed. This situation should change fairly signifi-
cantly over the next several years. The modernization
effort is far from completed, and a substantial share
of the current inventory was procured in the late
1960s and the 1970s-before Italian firms began to
build up their domestic design capabilities. Because
Rome is almost certain to maintain its emphasis on
domestic production and design, the share of indige-
nous Italian tanks, APCs, missiles, and aircraft in
Italy's military inventory will increase.
Development of an indigenous defense industry, how-
ever, has not been without its cost to the Italian
military. By opting for domestically developed weap-
ons, the Italians, in effect, have paid a surcharge
reflecting the lost economies of scale they would have
received had they purchased standard NATO sys-
tems. Moreover, different Italian military require-
ments and standards have led to the development of
systems that require their own logistic infrastructure 25X1
and a unique supply of spare parts whose cost has
increased substantially as weapon systems have grown
increasingly sophisticated. Equally, average unit costs
increase sharply for most major weapon systems
because Italy cannot amortize the large startup and
R&D costs required to manufacture modern arma-
ments with its short production lines. Codevelopment
and coproduction arrangements eliminate some of the 25X1
additional costs, but the prices of weapons procured
through such programs can be as much as 20 percent
higher than they would be if the partners were to buy
from a single source, according to a number of private
surveys. These increased costs place an additional
strain on the defense budget and restrict the military's
ability to modernize as quickly or as much as it feels it
needs to maintain its capbilities. For NATO, Italy's
independent efforts-and those of most other West
European countries-have been detrimental to Alli-
ance attempts to increase weapons standardization
and interoperability.
The Economy
As the defense industries have grown, they also have
become an important economic asset. They provide
direct employment for some 80,000 to 100,000
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Figure 9
Italy in the World Arms Market
France
~ West Germany
~ United Kingdom
~ Italy
Arms Sales Agreements, 1980-85
Current billion US $
Share of World Arms Sales Agreements, 1980-85
Percent
Italy 2.8
United
Kingdom 3.2
West
Germany 4.0
France 10.3
Middle East
D Africa South of the Sahara
Europe
defense industries in the other major West European Exports have become crucial to the health of the
countries-France, the United Kingdom, and West Italian defense industries and dominate the business
Germany. These jobs have taken on added importance of some defense firms-for example, 80 percent of
as Italy faces continued high unemployment in most
other sectors of the economy. According to US Em-
bassy) sources, annual defense industry
sector. This is roughly one-third to one-fourth of the country with small R&D resources.
number and percentage of those directly employed by
persons-about 2 percent of all manufacturing em- sales are estimated at some $3-4 billion, an estimated
ployees-and a similar number are probably em- 60 percent of which is exported. The defense indus-
ployed in firms that indirectly support the defense tries also provide a key source of high technology for a
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OTO Melara's 1984 sales. From 1980 to 1984, annual
Italian military export agreements averaged $1.3
billion, fifth among Western exporters (see figure 9).
Except for weapons developed through joint programs
and some electronics, however, Italy has been unsuc-
cessful in cracking the West European market, and
the bulk of Italian arms sales in recent years have
been to the Third World. Such sales are likely to
decline in the next 10 years, as most countries com-
plete their modernization programs or suffer from
tight defense budgets.
This dependence on arms exports affects Italy's rela-
tions with the United States in a number of different
areas. With the Third World market becoming ques-
tionable and because of Italy's difficulties in cracking
the West European market, Rome is looking to US
purchases of Italian weapons as important to sustain
its domestic defense industry. It also wants Washing-
ton to balance Italy's heavy procurement from the
United States, the so-called two-way street. In 1984,
the balance in arms trade was about 4 to 1 in the
United States' favor, according to Italian figures,
although the US Government places it at about 1.5
to 1. The discrepancy is chiefly a function of the
Italians looking only at sales of complete weapon
systems, whereas the US figure includes substantial
purchases of subsystems. The Italians, and most West
Europeans, argue that the United States must in-
crease its purchases in order for the West Europeans
to maintain a viable defense industrial base, according
to press reports, US Embassy reporting, and com-
ments made at NATO forums. The demands for US
procurement of Italian military goods are likely to
continue in the foreseeable future.
We believe the willingness and ability of Italy to
control arms sales to radical Third World states will
come under increasing pressure in the next five to 10
years and lead to some conflicts with the United
States as the global arms market continues to con-
tract. With increasing competition from other states,
such as Spain and Brazil, Italy may feel forced to
offer increasingly sophisticated weapons to its estab-
lished customers, such as Libya and Iraq, and may be
less supportive of Western embargoes on sales to other
states, such as Iran. Equally, Italian willingness to
engage in coproduction with Third World countries
will diminish the effectiveness of other nonmilitary
measures, such as cutting off the flow of spare parts to
limit the warfighting capabilities of belligerents.
The Italians face a considerable dilemma in their
quest for Third World markets. On the one hand, the
need to maintain and expand their sales has increased
Italy's requirement to sell modern arms to radical
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Middle Eastern states, particularly Libya. Despite an
official embargo, Italian firms continue to offer weap-
on systems to Iran, and some shipments have probably
slipped through the Italian bureaucracy. Equally,
Italy has insisted on being able to deliver weapons to
Iraq under existing contracts. The Italians have ex-
pressed increased concern that other countries, espe-
cially France and the United Kingdom, are not
restricting their sales to Iran and that these other
states would be in a more favorable position in these
markets should the Iran-Iraq war end.
Nonetheless, Rome proved willing to accede to US
requests to restrict arms sales to radical states. The
Italian Government recently banned sales to Tripoli.
Despite intense pressure from Tehran and Baghdad,
the Italians have refused to sign any major arms
agreements with the Iranians and have signed no new
agreements with Iraq. We believe the Italians will
continue to restrict sales to Iran and Iraq, but also will
allow firms to continue sales visits in order to main-
tain their access. Equally, they may resume sales to
Libya if it becomes apparent that others are not
restricting their sales, or if they feel that there has
been a noticeable change in Tripoli or in West
European attitudes toward Tripoli.
to achieve leadership in any major field.
The production capacity and level of technology in the
Italian defense industries are likely to expand and
improve over the next five to 10 years. But we believe
it is improbable that they ever will achieve complete
self-sufficiency, particularly in high-technology sys-
tems such as aircraft engines, airborne radars, mili-
tary application of computer technology, and state-of-
the-art armor technology-areas in which France,
West Germany, the United States, and the United
Kingdom have a substantial lead. Italian R&D re- 25X1
mains fragmented, and funding is inadequate for Italy
Over the near term, Italy should be able to exploit its
position as an important supplier of cheaper and less
sophisticated systems to the Third World. It also will
continue to play an important role as a supplier to
those states that are unable or unwilling to purchase
weapon systems from the other major suppliers or as a
second source of weapons to countries attempting to
ensure against being cut off from supplies from a
single source. Italy will face increasing competition,
however, in a declining arms market over the longer
term. The rise of other industries in Western Europe
(particularly in Spain, Greece, and Turkey) as well as
Third World suppliers (such as Brazil and South
Korea) will undercut the Italian position as a supplier
of simpler and less costly weapon systems. The next
five years also may see a decline in orders from the
Italian military as it completes much of its current
modernization program.
Attempts to rationalize the Italian defense industries,
particularly the aerospace sector, will continue as the
government attempts to bolster Italy's competitive-
ness. However, domestic political considerations will
continue to encourage individual parties to fight to
preserve their control over defense firms. This resis-
tance will be overcome in some cases, but sweeping
changes in the armaments industries are extremely
unlikely.
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Long-term growth in Italian defense industrial capa-
bility will be heavily dependent on the success of
several arms cooperation projects currently under
development, particularly the Eurofighter, AMX air-
craft, and EH-101 helicopter programs. These pro-
grams, in which Italy currently plays a substantial
development and design role, also provide access to
key technologies and manufacturing processes devel-
oped by the other partners. If these programs survive
with a significant Italian role, Italy should be able to
maintain a measure of independence in high-technol-
ogy R&D. The capability to develop and produce
high-technology weapons will become increasingly
critical as competition for sales in the Third World
market heats up, and particularly if the demand for
more sophisticated weapons from Middle Eastern
countries-still the largest arms purchasers-grows.
We believe the US role in Italian defense industrial
programs is likely to decline over the next decade. The
Italians have expressed increasing dissatisfaction with
tight US export controls that have prevented comple-
tion of a number of arms sales. Although the Italians
will continue to participate in US-NATO coproduc-
tion agreements, we believe they will attempt to
design indigenous systems that minimize their depen-
dence on US subsystems or allow for the ready
substitution of other countries' subsystems. The
G-222 transport aircraft, for example, can use either a
US engine or one designed in the United Kingdom.
The Italians will also increasingly turn to West
European partners as a source of crucial technology
and for cooperative programs, according to US
Embassy reporting.
At the same time, the Italians are attempting to hedge
their bets by participating in the US Strategic
Defense Initiative and have recently signed a
government-to-government Memorandum of Under-
standing on SDI.' The Italians are eager to gain
access to US technology and to use US funds for
domestic R&D, although several independent contrac-
tor studies have indicated that Italy is not competitive
in most areas of SDI technology. SDI funds may give
a small boost to Italian technology, but we doubt that
Italy's participation will alter substantially its lagging
technological position.
On those occasions when Rome does decide to buy US
arms, it will demand increasing industrial offsets from
the United States to support the Italian defense
industries. Italian officials will also become even more
insistent that the United States make substantial
purchases in Italy to redress the chronic imbalance in
US-Italian arms trade. Nevertheless, the Italians will
not completely sacrifice cost effectiveness and mili-
tary capability for the sake of maintaining their
domestic defense industries.
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Appendix A
Licensed Production
Aerospace
The Italians produced under license British Vampire
and Venom jet fighters in the early 1950s, but the key
boost to the rebirth of Italian aerospace firms came in
1953 when the Italian Government signed an agree-
ment to license produce the US F-86 jet fighter under
the US Military Assistance Program. Fiat Aviation
(later combined with two other aviation firms to form
Aeritalia) was the chief Italian manufacturer. Eventu-
ally, over 230 of the aircraft were built in Italy-the
first 50 from parts supplied by the US manufactur-
er-for the Italian, French, West German, Norwe-
gian, and Dutch Air Forces. This program was fol-
lowed by a license to produce F-104s. Again Fiat was
the major Italian manufacturer, and eventually some
200 were built (primarily for the Italian Air Force),
although some were supplied to Turkey as well.
Agusta's entry into helicopter manufacture was accel-
erated by an agreement with Bell to license produce
the H-47 light helicopter in 1952. The agreement
gave the Italians exclusive marketing rights in West-
ern Europe and the Middle East, greatly aiding
Agusta's competitiveness in the export market. Even-
tually, over 1,000 were produced and supplied to
countries throughout Western Europe and the Middle
East. Agusta has also license produced over 1,000
AB-206 helicopters, as well as over 650 AB-205s, over
300 AB-212s, and several hundred AB-204s. It now is
manufacturing the AB-412 in both civil and military
configurations. In 1967, Agusta also began licensed
construction of the Sikorsky S-61 (civil) and SH-3D-
to date, close to 200 have been built in Italy-and
Agusta assisted in forming Elicotteri Meridionali
(EM), which in 1968 acquired the rights to license
produce the Boeing Vertol CH-47. Thus far, EM has
produced more than 160 for a number of customers
including the Italian military services, Egypt, and
Libya. EM has since been taken over by the Agusta
Group, and CH-47 airframes are now produced by
another Agusta subsidiary, Siai-Marchetti.
The manufacture of aircraft engines remains a key
area of licensed production. Fiat began production of
the British de Havilland Ghost engine shortly after
World War II, and in 1953 it began building the
Allison J35 turbojet. In the 1960s, it built the British
Orpheus 803 and was part of a European consortium,
which included Alfa-Romeo, for the construction of
GE J79 engines for the F-104. Alfa-Romeo produced
the J85-GE-13A engine for the Italian G91 jet fight-
er. Piaggio produced the Rolls-Royce Bristol Viper 11
turbojets for the MB 326 jet trainer. Piaggio also
license produced a number of Avco Lycoming engines
for Agusta's helicopters. Today, licensed production
still makes up the lion's share of Italy's aircraft engine
industry, with Fiat and the Rolls-Royce Viper 600.
Piaggio continues to produce Avco Lycoming engines
as well as the Rolls-Royce Gem 2 for the A-129
attack helicopter. Alfa-Romeo works with Fiat in the
licensed production of a number of GE engines as well
as work on the Rolls-Royce Spey 807 for the AMX
aircraft.
Armor
Italy's armor industry was given an initial boost by
licensed production of the US M-47 tank in the late
1950s by OTO Melara. Eventually, over 500 were
built. In 1965, OTO Melara and Fiat signed an
agreement for licensed production of 200 US M-60
tanks, with Fiat responsible for the chassis and OTO
Melara building the turret. In 1974, these two firms
were joined by Lancia in a program to license produce
over 700 West German Leopard I's. All of these tanks
were produced for the Italian armed forces, although
some M-47 models have since been transferred to
Somalia. OTO Melara also signed an agreement in
1963 for licensed production of the US M 113 ar-
mored personnel carrier, eventually manufacturing
over 4,500 (chiefly for the Italian Army), although
some have been supplied to Greece and Turkey. OTO
Melara also has recently signed an agreement to
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produce the Franco-German Milan antitank guided
missile (ATGM) system and eventually will manufac-
ture over 1,500 launchers and 35,000 missiles. The
firm also has license produced over 250 US M-109
155-mm self-propelled howitzers since 1970.
Naval Systems
In general, naval systems, both ships and most major
subsystems, have been of domestic design or directly
purchased; however, most of the radars and sonars on
Italian ships manufactured in the 1950s were license
produced by Selenia from US designs. Whitehead
Motofides has license produced the Mk-46 torpedo for
the Italian Navy and other customers since the 1960s.
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Appendix B
Major Codevelopment Programs
Italy made its first major moves into Codevelopment
in the late 1960s when it joined with Britain and West
Germany to develop the FH-70 155-mm howitzer and
the Tornado aircraft and with France to develop the
Otomat antiship missile. The Italians have also partic-
ipated in a number of programs sponsored by NATO
and the IEPG, including production of the Sea Spar-
row SAM and Sidewinder AAM and development of
NATO's third-generation antitank guided missile.
partners.
FH-70
The FH-70 was originally to be developed jointly by
the United States, the United Kingdom, and West
Germany, but Italy joined the consortium in 1970
after the United States withdrew. More than 450
howitzers were eventually produced. OTO Melara is
responsible for final assembly for Italy, but compo-
nent production has been divided among the three
several years.
Otomat
The Otomat missile program began as a private
venture between OTO Melara and Engins Matra of
France to develop an antiship cruise missile. Develop-
ment began in 1969, and production in 1975. Engins
Matra directed design and production as well as final
assembly. In 1982, final production was transferred to
OTO Melara following the French Navy's decision to
purchase the Exocet missile system rather than Oto-
mat. Italy has produced over 300 of the missiles for a
number of customers, and production will continue for
Tornado
The Tornado aircraft project, at a total cost of some
$20 billion, is the largest Codevelopment program in
recent West European experience. Aeritalia, British
Aerospace, and Messerschmitt-Boelkow-Blohm
formed Panavia Aircraft in 1969 to develop Tornado
as an outgrowth of a 1958 NATO study calling for a
new fighter aircraft and following the failure of the
French and British to agree on a common aircraft.
Reverse Blank
The engine was developed by a consortium of Fiat,
Motoren Turbo Union, and Rolls-Royce. Production
workshares were based on the number of aircraft each
country was planning to purchase, with the Italians
receiving 15 percent.
The manufacture of Tornado components is divided
among the three participants, and each assembles its
own aircraft. West Germany produces the fuselage
center section, the Italians produce the wing sections,
and the British produce the rest of the fuselage and
tail sections. Overall, some 500 firms employing over
70,000 workers are involved in the program. In Italy,
Aeritalia is responsible for the overall assembly of the
Tornado; Aermacchi, Nardi, Piaggio, and Siai-
Marchetti are involved in the manufacture of
subsystems.
EH-101
In 1980, Italy's Agusta and Britain's Westland
formed a joint venture-EH Industries, with each
partner holding 50-percent ownership-to develop a
helicopter designed primarily as an antisubmarine
warfare platform but also available in several civil
versions. Westland is to take design leadership for a
commercial version and Agusta for arear-loading
general utility version. Each company will develop a
naval version to meet its own Navy's specifications.
Series production is not expected to begin until the
end of the decade.
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Appendix C
Major Industries
The Italians have developed a broad defense industrial base, but weapons
manufacturing is generally dominated by 15 firms, and some sectors are signifi-
cantly more developed than others. The aerospace sector, for example, is the
second largest in Western Europe on the basis of sales, trailing only the French.
Other sectors, such as armor and missiles, are still heavily dependent on outside
design capabilities and represent a smaller portion of the world market.
This appendix describes the major defense sectors and provides descriptions of the
major firms. Many firms are involved in several different aspects of arms
manufacture; they are described primarily in the sector in which they are most
heavily involved.
Land Armaments Italy's armor industry has grown substantially and produces about 250 tanks and
armored personnel carriers (APCs) annually (see table C-1). It is dominated by
OTO Melara and Fiat, with OTO Melara generally responsible for armaments
and Fiat for hulls and engines. On the basis of their experience in license
producing foreign-designed tanks, particularly the Leopard I, OTO Melara and
Fiat have developed the OF-40 tank to compete on the export market. Sales,
however, have been disappointing-only 36 were sold to the United Arab
Emirates-chiefly because of the dominant position in the armor field of the
United Kingdom, West Germany, and France. The Italian Government has
expressed interest in a new tank, the Tricolorie, based on the OF-40, and the
Italian Army is likely to order an "all-Italian" tank in the 1990s, 25X1
. Much of the design, however, will almost certain y e erive 25X1
rom license-produced systems and will be dependent on imported technology,
particularly engine technology, modern armor, and fire-control systems. OTO
Melara and Fiat also have produced a number of APCs, which have been more
successful on the export market, and the Italian Army is likely to buy the new
VCC 80 from a consortium of OTO Melara, Lancia, and Fiat. 25X1
The artillery industry is well established, and the Italians have been successful in
marketing towed weapons, particularly the 1950s-vintage M-56 105-mm mountain
howitzer, which appears in the inventory of many of the NATO Allies and is still
sold throughout the world. The FH-70 towed 155-mm howitzer-codeveloped with
the British and the West Germans-also has been sold to Saudi Arabia and is be-
ing produced under license in Japan.
Attempts to develop self-propelled howitzers have been less successful. The
Palmaria-a self-propelled 155-mm howitzer developed by OTO Melara-has
only been purchased by the Libyans and the Nigerians. OTO Melara also is
working with its West German and British partners to develop and market aself-
propelled version of the FH-70 howitzer, but it is increasingly likely that the effort
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will be abandoned hecauce of ecealatinn rnctc and tPChnlcal dlfficultles.
25X1
~
is, in fact, looking tot e US- 1X1
designed M-109A2 to modernize its self-propelled artillery. 25X1
Beretta is an acknowledged world leader in small arms. Its submachineguns and
pistols are in service throughout the world, and it recently won the competition for
the new US Army sidearm. Small arms, however, make up only a small portion of
overall Italian arms production and sales, and, in general, involve fairly simple
technology.
Armored personnel carriers (APCs):
OTO 6614, OTO 6616, VCC-1;
Tanks: M-47, M-60, Leopard I, OF-40,
Tricolorie
Fiat Veicoli Industriali APCs: OTO 6614, OTO 6616
Tanks: Leopard I, OF-40, Tricolorie
Lancia Tanks: OF-40, Tricolorie
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Table C-1
Armor Industry Production and Sales,a 1980-84
OTO 6614
114
150
150
] 0
OTO 6616
67
25
100
VCC-1
80
109
70
10
]0
Sales
a Production and sales may not equal because some vehicles are
produced for future sales. Some vehicles delivered may come from
production from previous years. There is a lag between production
and delivery as customers receive training on new systems. Produc-
tion includes development of prototypes that will not enter service.
Data on arms sales are frequently incomplete, and not all sales may
be captured in these data.
b Includes systems procured by paramilitary forces.
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OTO Melara OTO Melara was originally formed in 1905 as Vickers Terni to produce weapon
systems for the Italian armed forces and adopted its present name in 1951. The
company is now part of the state-owned EFIM group. Activities are centered
around the development and manufacture of gun and missile systems, fire-control
systems, and armored vehicles. The company holds shares in a number of other de-
fense firms including the electronics firm Officine Galileo and the missile
manufacturer SISTEL. OTO Melara works closely with Fiat in the development
of armored vehicles and with Breda Meccanica in weapons development.
Company Data
Sales (million US $)
9 percent
Location: La Spezia
Products: Armored vehicles, artillery, missile systems, naval guns
Work force: 2,500
Activity breakdown: Army systems, 50 percent; Navy systems, 41 percent; R&D,
a Exports accounted for about 80 percent of total sales.
the Libyan Government.
Fiat is Italy's largest private employer and controls over 120 different firms.
Founded in 1899, it is an international holding company headquartered in Turin.
Its total work force is over 350,000. Two of its subsidiaries are major defense
industrial firms. Fiat Aviazione, formed in 1976 when Fiat sold its airframe
manufacturing firm to the Italian Government, specializes in aircraft engines and
produces a number of jet engines under license. Fiat IVECO manufactures a wide
variety of civil vehicles, heavy-lift military trucks, and armored vehicles. Fiat has
announced that it will purchase back the 15 percent of its shares previously held by
Fiat Aviazione: Company Data
Sales (million US $) 171.6 182.0 221.6 224.5 205.4
Work force: 3,500
Location: Turin
Products: Aircraft and marine engines
e Exports accounted for 70 percent of sales.
25X1
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Sales (million US $)
Location: Turin
Products: Trucks and armored vehicles
Breda Meccanica Breda Meccanica was founded in 1925 and by the early 1940s had become a major
arms manufacturer responsible for the production of automatic weapons of various
calibers for the Italian Army and Navy. The company is now part of the state-
owned EFIM holding group. The firm has a longstanding licensing agreement with
Bofors of Sweden and produces a range of systems based on that firm's L70 40-
mm cannon. Breda Meccanica specializes in the development and manufacture of
antiaircraft (AA) cannons, antitank rockets, mortars, and naval rocket launchers.
Sales (million US $)
Work force: 850
Location: Brescia
Product: AA cannons, rockets, mortars, rocket launchers
a Exports accounted for 50 percent of sales.
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Pietro Beretta Pietro Beretta was officially founded in 1680, but traces its origins back to the
15th century. It is Italy's largest small arms manufacturer and produces a wide va-
riety of sporting rifles, shotguns, pistols, and submachineguns.
Sales (million US $)
Work force: 1,200
Location: Brescia
Products: Small arms
a Defense accounted for about 15 percent of total sales.
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engines
The Italian aerospace sector, currently struggling through a worldwide slump, is
dominated by Agusta and Aeritalia (see tables C-2 and C-3). Both firms have a de-
gree of independence in fuselage design and avionics, but still require outside
assistance for engine technology; most Italian-built aircraft use US or British
US systems or is dependent on US subsystems.
After significant growth in the late 1970s, the Italian aerospace sector has been
depressed over the last several years because of the worldwide decline in demand,
according to open source reporting. Funds for aerospace R&D have fallen by
nearly 30 percent from their 1981 peak .The Italians
also have been less successful in developing indigenous weapon systems for their
aircraft, and the only current Italian system in production is the Aspide air-to-air
missile. The Italians were responsible for the design of the wings on the Tornado
aircraft and have a substantial avionics industry, but much of this work is based on
capability.
The long-term health of the Italian aerospace industry will depend heavily on the
success of the new Eurofighter aircraft. Italian participation in Eurofighter is
critical because it will afford Italian firms continued access to high technology. If
the Eurofighter partners can develop and produce a competitive aircraft, Italy
should be able to maintain a substantial role in the worldwide aerospace market.
The Italians also will be dependent on Eurofighter to keep their production lines
open and indigenous design teams working. Although projects such as the AMX
help the Italian aerospace sector in terms of employment and profits, the multi-
European projects are key to Italy's ability to maintain astate-of-the-art
Major Aircraft Firms
Aeritalia Fighters: F-86,a F-104,a AMX Tornado
Transport: G-222
Aermacchi Fighters: AMX
Trainers: MB-326, MB-329
Piaggio Transport: P-166-DL3, aircraft engines
Siai-Marchetti Trainers: 5-211, SF-260
Alfa-Romeo Avio Aircraft engines
Fiat Aviazione Aircraft engines
a The F-86 and F-104 were produced by a component of Fiat that was later sold to
the government and became part of Aeritalia.
Major Helicopter Firms
Agusta B-47, AB-204, AB-205, AB-206, AB-212, S-61/SH-
3D, A-109, EH-101, A-109, A-129
Bredanardi NH-300, NH-500
Elicotteri Meridionali CH-47
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Table C-2
Aircraft Industry Production and Sales,a 1980-84
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Table C-2 (continued)
a Production and sales may not equal because some aircraft are
produced for future sales or inventory. Some aircraft delivered may
come from production from previous years. There are lags between
production and delivery as customers receive training on new
aircraft. Production includes development of prototypes that will
not enter service. Data on arms sales are frequently incomplete, and
not all sales may be captured in these data.
b Includes aircraft procured by government agencies other than the
Ministry of Defense.
Assembled in Brazil.
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Table C-3
Military Helicopter Industry
Production and Sales,a 1980-84
A-109
30
30
20
21
16
AB-205
21
29
20
20
12
AB-206
20
30
35
39
30
AB-212 ~
25
45
40
25
]0
AS-61/SH-3D
20
15
25
30
30
CH-47
15
10
12
15
15
H-500
15
15
15
7
5
AB-412
1
10
10
Sales
Italy b
A-109
30
30
20
21
16
AB-205
]0
15
20
20
10
AB-206
20
30
30
26
15
AB-212
6
14
26
23
10
AS-61/SH-3D
18
12
25
30
15
CH-47
7
1
15
8
H-500
15
15
15
7
5
AB-412
1
2
Bahrain
Secret 30
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Table C-3 (continued)
AS-61 /SH-30 4
e Production and sales may not equal because some helicopters are
produced for future sales or inventory. Some helicopters delivered
may come from production from previous years. There is a lag
between production and delivery as customers receive training on
new helicopters. Production includes development of prototypes
that will not enter service. Data on arms sales are frequently
incomplete, and not all sales may be captured in these data.
n Includes procurement by government agencies other than the
Ministry of Defense.
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Aeritalia is Italy's principal aerospace company engaged in the development and
manufacture of aircraft, avionics, remotely piloted vehicles (RPVs), missiles, and
space systems. It was formed in 1969 from a merger of Fiat's aviation division
Aerfer and Salmoiraghi, with the objective of coordinating their aerospace
activities. Stock was initially held equally by Fiat and the state holding company
IRI-Finmeccanica, but in 1976 IRI bought out Fiat. Aeritalia began to expand its
operations after the government assumed full ownership. In 1981, it purchased
Partenavia, the light aircraft firm; 50 percent of Meteor, Italy's only RPV
manufacturer; and Finmeccanica's 25-percent share of Selenia. Aeritalia is
divided into seven main operating groups: combat aircraft, transport aircraft,
general aviation, avionic systems and equipment, RPVs and missiles, space and
Company Data
1980
1981 1982 1983
Sales a (million US $)
350.0
464.5 599.6 570.8
Work force: 12,300
Main Plants
Location
Products
Combat Aircraft
Group
Turin
Combat aircraft
Transport Aircraft
Group
Pomigliano D'Arco
Naples
.Foggia
Civil and military
transport aircraft
Same as above
Same as above
General Aviation
Group (Partenavia)
Casoria
Light aircraft
Avionics Systems and
Equipment Group
Turin
Milan
Avionics
Avionics
RPVs and Missiles
Naples
RPVs "
Group
Monfalcone
Same as above
alternative energies, and overhaul modification and maintenance.
a Exports account for about 60 percent of sales.
The Agusta Group was formed in the late 1960s by combining three major firms-
Construzioni Aeronautiche Giovanni Agusta, Elicotteri Meridionali, and Siai-
Marchetti. In 1973, the state holding firm EFIM acquired a substantial share of
the Agusta Group as part of a government plan to develop the aerospace industry.
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The Agusta Group acquired two major firms-Fonderie ed Officine Meccaniche
di Benevento (FOMB) (specializing in avionics) and Industria Aeronautica Meri-
dionale (IAM) (an aircraft manufacturer~in the late 1970s. In 1981, it acquired
another avionics firm, Ottico Meccanica Italiana (OMI), and in 1983 the aircraft
manufacturer Caproni Vizzola. In 1980 Agusta and Westland formed EH
Industries (EHI) to undertake joint development of the EH-101 helicopter.
Several of the firms in the Agusta Group date from the early 1900s. Agusta was
founded in 1907 and produced aircraft before and during World War II. Siai-
Marchetti-originally known as Savoia-Marchetti-was established in 1915 and
has produced a variety of military and civil aircraft as well as flying boats. Caproni
Vizzola was founded in 1910.
Currently, the Agusta Group is divided into three main divisions:
? Helicopters: Agusta, Elicotteri Meridionali, EHI
? Aircraft: Siai-Marchetti, IAM, Caproni Vizzola
? Systems: Agusta Sistemi, OMI, FOMB, Meccanica Verghera
Sales (million US $) 524.3 614.0 493.2 569.5 512.2
Work force: 6,500
Activity breakdown (percent o,J' 1984 sales): Helicopters, 65; aircraft, 25;
systems, 10
Main Plants
Location
Products
Agusta Helos
Samarte
A-109, 5-61,
AB-412, A-129
Elicotteri
Meridionali
Frosinone
AB-206, components
for CH-47, AB-205,
AB-212, SH-3, A-109
Siai-Marchetti
Sesto Calende
SF-260, 5-211, SF-600,
components for G-222,
CH-47
IAM
Brindisi
Avionics
Caproni Vizzola
Milan
Vizzola Ticino
Light aircraft
C-22J trainer
Agusta Sistemi
Milan
Avionics
a Exports accounted for 68 percent of total sales.
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Aermacchi Aermacchi was formed in 1913 as SA Nieuport-Macchi to produce Nieuport
aircraft under license. It changed its name to Aeronautica Macchi in 1923
following the establishment of the Italian Air Force. In 1981, Aeronautica Macchi
took control of a group of enterprises including two aerospace firms, Officine
Meccaniche Gerenzano (OMG) and Societe Italiana Construzioni Aeronautiche
Martin Baker (SICAMB), and became a holding company. As part of this move, a
wholly owned subsidiary, Aermacchi, was set up to undertake all airframe
manufacture for the group. Aermacchi is privately owned, but in 1982 state-owned
Aeritalia acquired a 10-percent share in the company.
Company Data
1981
1982
1983a 1984
Sales (million US $)
107.8
135.5
142.5 125.9
Work force: 2,500
Main Plants
Location
Products
Aermacchi
Varese
Venegono
Headquarters and material
preparation
Aircraft assembly
OMG
Gerenzano
Aircraft parts
SICAMB
Latina Scalo
Airframe components and
ejector seats
a Exports accounted for 65 percent of sales.
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and development (see table C-4).
Using the experience they have gained from licensed production of other missile
systems, Italy's major missile firms, Selenia and OTO Melara, have been able to
achieve a degree of design independence although they continue to lag in state-of-
the-art technologies such as propulsion and seekers-the subsystems that search
out targets .Only one indigenously designed system
is currently in production, but five other missile systems, including a new antiship
cruise missile and a new antitank guided missile, are in various stages of research
OTO Melara Milan, Otomat, MAF
Selenia Aspide, Sea Sparrow, Maverick
SISTEL Sea Killer, Marte
Table C-4
Missile Industry Production
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Sistemi Elettronica SISTEL was established in 1967 as a result of joint financial, technical, and
(SISTEL) technological collaboration between Montedison, Fiat, Contraves Italiana, and
SNIA-Viscosa for the design, development, and manufacture of missile systems.
The company is now part of the EFIM holding group. Its principal shareholders
are Selenia (40 percent), OTO Melara (27 percent), Contraves Italiana (18
percent), and Breda Meccanica (15 percent). Its chief products are the Sea Killer
and Marte antiship missiles, and it is currently collaborating with Selenia in the
development of other antiship missiles.
Company Data
Sales (million US $)
Work force: 230
Location: Rome
Products: Design, development, and manufacture of missile systems
SNIA BPD BPD, founded in 1912 for the manufacture of munitions, was taken over in 1968
by SNIA-Viscosa, a major Italian chemical firm. Renamed BPD Difesa-Spazio,
the firm acquired interest in a number of other firms active in munitions, including
Simmel (ammunition) and SIPE-Nobel (explosives and pyrotechnics), and expand-
ed its line to include solid rocket motors. In 1983, SNIA-Viscosa underwent a
major reorganization that included the transfer of shares to Fiat, which recently
increased its holdings to over 30 percent, and a merger with BPD Difesa-Spazio to
form a new holding company, SNIA BPD. Major defense activities of this new
firm include rockets/propellants, unguided weapon systems, and ammunition.
Defense activities now account for about 40 percent of total group sales.
Company Data
Sales (million US $) 140.9 135.2 194.5 248.7 a
Work force: 2,500 (not all of whom are engaged in defense activities)
Main Plants
Location
Products
BPD
Rome
Rocket motors, propellants,
unguided weapon systems,
ammunition
Simmel
Castelfranco Veneto
Ammunition
SIPE-Nobel
Gallicano
Orbetello
Powder and propellants
Same as above
Spilamberto
Same as above ~
a Total group sales after reorganization. Exports accounted for 75 percent of sales.
25X1
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without technological inputs from other West European or US firms.
Italian industry is involved in the development of a wide range of defense
electronics systems (see table C-5), and studies by US defense contractors have
assessed them generally as at least competitive-although not leading-in most
areas. Elettronica has been highly successful in electronic warfare (EW) systems
and is one of the largest manufacturers of EW equipment in Western Europe.
Selenia has sold air traffic control radars to over 10 countries-including
Denmark, Austria, and Sweden-in the last five years and developed the
Goldhaube air defense radar network for Austria. Given Italy's limited R&D
funds, however, these firms could have difficulty in expanding their markets
Table C-5
Selected Electronics Firms
Compagnia Generale Di Elettricita Fire-control systems, radars, sonars, laser rangefinders
Contraves Italiana Super Fledermaus fire-control system, Skyguard fire-
control system, LPD/20 search radar
Naval radars, fire-control systems, sonars, air traffic
control radars, surveillance radars, torpedo guidance
FIAR Avionics, radar and optical fire-control systems, radars,
sonars, electro-optics, laser rangefinders
Microtecnica Data acquisition and processing equipment, optics and
electro-optics
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information processing sectors.
Selenia has been active in the electronics field since its formation in 1960 and is
part of the state-owned IRI-STET group of companies with stock held by STET
(71.7 percent), Aeritalia (25.75 percent), and IRI (2.55 percent). As part of a major
reorganization of the Italian aerospace industry, it was announced in September
1982 that Selenia and ELSAG (see separate entry) were to group their operations
in order to coordinate activities. This new consortium is led by Selenia, which
acquired 51 percent of ELSAG from STET. A new company, Selenia Spazio, has
been formed by combining the space divisions of Selenia and Italtel and merging
them with Compagnia Nazionale Satelliti to control the group's space activities.
Selenia's main activities are development and production of missiles, radars,
electronic warfare equipment, air traffic control systems, and space and naval
systems. The company also works in the commercial telecommunications and
systems.
Selenia's military activities are divided into two divisions. The defense systems
division is primarily concerned with the manufacture of air defense equipment,
including the Aspide missile and the Albatros and Spada air defense systems, and
also is involved in the manufacture of ground radar, command and control
equipment, electronic warfare systems, and avionics. The naval systems division
produces naval radars, shipborne missile systems, and naval command and control
Company Data
Sales (million US $) 195.0 267.4 289.0 315.0 339.8
equipment
Main Plant Location Products
Selenia Rome R&D
Guigliano Command and control
equipment
Fusaro Air traffic control systems,
missile systems
Pomezia (Rome) Avionics, electronic warfare
a Exports accounted for over 60 percent of total turnover.
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Elettronica San Giorgio ELSAG was formed in 1969 as the electronics and systems division of Nuova San
(ELSAG) Giorgio. Its parent firm has been active in the development and production of fire-
control systems since 1928. ELSAG specializes in the development of naval fire-
control systems, sonars, minehunting equipment, torpedo launchers, and torpedo
guidance systems. In 1983, it signed a consortium agreement with Selenia
(Raggruppamento Selenia-ELSAG) for joint development and production of naval
systems. ELSAG is part of the state IRI-STET holding company with shares held
by Selenia (51 percent) and Ansaldo (49 percent).
Sales (million US $)
Main Plant Location Products
ELSAG Genova Naval fire-control systems, naval
radars
Naples Sonars, torpedo launch and guid-
ance systems, mine countermea-
sures equipment
a Exports accounted for 30 percent of sales.
Fabbrica Italiana FIAR was formed in 1941 to manufacture radio equipment for both civil and
Apparaccbiature military markets and subsequently merged with the Compagnia Generale di
Radioelettriche (FIAR) Elettricita (CGE~-a subsidiary of the US firm GE-to become the latter's
electronics division. In 1979, this division became a separate company but remains
a wholly owned subsidiary of CGE. FIAR manufactures a wide range of military
electronics equipment including ground and airborne radars, avionics, electro-
optics, sonar, communications, and training equipment. It is also active in the civil
sector in space systems and data processing. It has three main divisions: defense,
space and automation, and logistic support.
Sales (million US $) 25.9 30.5 47.7 48.1 45.5
Work force: 1,000, of whom 570 work in the defense sector
Activity breakdown: Defense, 78.2 percent; space and automation, 16.2 percent;
support, 5.6 percent
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Defense Division Milan Radars, sonars, air defense,
communications
Space and Automation Milan
Logistics Support Milan
Sistemi (EIS), an engineering and software firm.
Elettronica was founded in 1951 primarily to provide electronic warfare equipment
to the Italian armed forces. In the early 1970s, it began an expansion program
aimed primarily at the export market. It is one of the few firms in Western Europe
that specializes almost exclusively in electronic warfare equipment. In 1984, the
British electronics firm Plessey acquired some 35 percent of Elettronica. Elettron-
ica has an extensive product line that includes airborne and naval electronic
countermeasures, passive search, and electronic counter-countermeasures equip-
ment. It has a subsidiary in West Germany that provides support to a number of
systems sold to the West German military. It also owns Meccanica Per 1'Elettron-
ica (MPE), which specializes in electrical assembly, and Elettronica Ingegneria
Sales (million US $)
Rome EW equipment
Bonn Support
MPE Rome Engineering and electronic
assembly
a Defense accounted for over 80 percent of sales.
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Naval Industries The Italian naval industries, like most of Western Europe's naval shipbuilding
industry, remain depressed. Nevertheless, Italy has been comparatively successful
in securing some Third World sales, helped in large part by a $1.9 billion sale of
four frigates, six corvettes, and an oiler to Iraq 2 (see table C-6). The Italians also
have sold minehunters to Malaysia and Nigeria, and an Italian-designed mine-
hunter is currently under consideration by the US Navy. Italian shipyards can
produce a variety of naval vessels from patrol craft to helicopter cruisers. Although
Italian ships are generally of high quality, a number of countries, particularly
Malaysia and Ecuador, have suffered long delays in deliveries and some quality
control problems with the ships they purchased,
In 1983, the shipbuilding industry underwent a major reorganization in an attempt
to compensate for the worldwide decline in demand for both commercial and naval
shipping. Under the new structure
~ Italian shipyards are organized into our ivtstons-merc ant construc-
tion, military construction, ship repair, and mechanical-compared with the
previous pattern of independent yards manufacturing all systems. One shipyard
has been closed, and several thousand workers have been laid off. The government
hoped that the reorganization would improve Italy's competitiveness in the world
shipping market by controlling costs and reducing redundant production capacity.
With worldwide demand for new construction depressed, however, most work has
been in ship repair. The workload at the Palermo shipyard, for example, currently
is only at about 25 percent of its peak capacity,
Italian firms produce a number of highly competitive naval weapon systems. The
OTO Melara 76/62 naval gun has become virtually the standard weapon system
throughout NATO and is in service with more than 40 navies, including the US
Navy. The Otomat missile also has been sold to 15 countries. The Italians also pro-
duce anumber of naval subsystems including radars and sonars. Elettronica has
marketed a variety of electronic warfare systems in a number of countries
including West Germany. Fiat has successfully marketed its LM 2500 engine,
derived from a GE aircraft turbine, and is currently developing a larger model.
' Although several of these ships have been built, none have been delivered due to the Gulf war.
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Table C-6
Naval Production
Numb
er of units
1980
1981
1982
1983
1984
Production
Submarines (Sauro class)
1
1
1
Frigates
Lupo class
1
3
2
Maestrale class
2
2
Patrol combatants
1
4
5
6
3
Minehunters (Lerici class)
3
1
Sales
Italy
Submarines (Sauro class)
1
1
1
Frigates (Maestrale class)
2
2
Patrol combatants (Sparviero class)
2
3
1
1
Minehunters (Lerici class)
1
1
Libya
Patrol combatants (NR 550)
1
2
Ecuador
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Fincantieri-Cantieri The Fincantieri-Cantieri Navali Italiani Group was formed in late 1983 to further
Navali Italiani rationalize the Italian naval shipbuilding industry. It controls nearly 80 percent of
Italian shipbuilding. Its three main subsidiaries are Cantiere Navali Breda,
Cantieri Navali Riuniti, and Italcantieri. Cantiere Navali Breda was founded in
1923 in Venice and joined the Fincantieri government holding group in 1979. Its
primary products are small/medium vessels such as patrol craft for the Thai Navy
and corvettes for the Iraqi Navy. Cantieri Navali Riuniti dates back to 1889 and
currently has six shipyards. It was acquired by the Italian Government in 1970. It
specializes in larger naval ships including frigates and coastal submarines.
Italcantieri is the largest Italian shipbuilding company. In the past, it has largely
produced commercial vessels, but it is currently responsible for building the Sauro-
class submarines, and it built Italy's new helicopter carrier-the Giuseppe
Garibaldi.
Company Data
Sales (million US $)
Defense sector
716.6
260.7
Work force: 26,000
Main Shipyards
Location
Products
Cantiere Navali Breda
Venice
Patrol craft, corvettes
Cantieri Navali Riuniti
Genoa
Leghorn
Riva Trigoso
Ancona
Muggiano
Palermo
Ship refitting
Ship refitting
Frigates, corvettes
Frigates
Patrol craft
Ship refitting
Italcantieri
Monfalcone
Submarines, helicopter
carriers ~~
Intermarine Intermarine was established in 1970 and is Italy's largest privately owned
shipyard. It produces a variety of small patrol craft and glass reinforced plastic
(GRP) minehunters
Sales (million US $)
Work force: 500
Location: La Spezia
Products: Minehunters, small patrol craft
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Secret
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