Cycle News - Archive Issues - 2000's

FEDERICO .,NOL, DueatiNOW andinthe Q F Would it be fair to call you a company doctor? Yes, at a certain point in the early 'SOs, I started not liking being an outside consultant very much but preferred to get inside a company, find out what was wrong with it, then stay behind to fix it. That gives much more satisfaction. Plus, turning around a company can also be rather profitable, because if you're any good, you can make a lot of money out of identifying the problems and working to fix them. My batting average is two successes, two even and one failure - and Ducati is definitely one of the successes! A By ALAN CATHCART PHOTOS BY KYOICHI NAKAMURA And one you seem to have become attached to! Are you hooked on Ducati? (Laughing ) Yes, even if it's not very economically attractive for me - I could make much more money finding another sick child to help cure! When I moved my family from Boston to Italy in 1996 to take over running Ducati, my wife, who is American, signed up for two years living here while we turned it around - but here I am more than six years later, still in Bologna! I can only say that when I came back here full time in March this year after being only president of the company for a couple of years, she agreed to sign up for another four years - so now you've got me here in the Ducati hot seat for at least that long! Q ..,.".-ore than any other man, 53-year-old ..L'Y company doctor Federico Minoli has been responsible for the miraculous turnaround that Ducati has achieved since it was acquired in a parlous state from Cagiva by American venture capitalists Texas Pacific GrolJP/TPG in 1996. Parachuted into Ducati to orchestrate what turned out to be a dramatically successful turnaround operation, Minoli stepped up to president of the company two years ago, handing the baton of CEO to the firm's chief financial officer, Carlo Di Biagio. But in the wake of biking beancounter Di Biagio's shock resignation in March, Minoli - also an active motorcyclist and a two-year veteran of the Motogiro classic, which he was responsible for reviving under Ducati's aegis - has returned to head up day-to-day operations of the Italian manufacturer. This comes at a crucial time for Ducati, not only because of the company's impressive return to Grand Prix racing for the first time in 30 years while still maintaining its overwhelming supremacy in World Superbike, but also because of the difficult current trading conditions in a sliding market. This comes at a time when Ducati has overhauled its entire product range in a single year, with new engines for the Monster and 55 models, the launch of the Multistrada, and the replacement of the iconic 10-year-old 916 family of bikes with the new 999 and its 749 kid sister. With Ducati's turnover and gross profit flat-lining and profits down in 2002 compared to 2001, it was a difficult time to take up the reins of the company again - but it's perhaps an indicator of the affection this high-flying figure in the world of business feels for Ducati, that he should accept the challenge of doing so. Visiting him in his office at the Bologna factory just a few weeks after his appointment revealed a fascinating insight into his plans for Ducati's future. A And once more combining the roles of CEO and president once again, as you did in the turnaround period. However, isn't it true to say this has come about because Ducati has clearly had some recent problems with its senior management? Earlier this year the company lost three key executives in sudden circumstances, all in the space of a couple of months - its previous CEO, Carlo di Biagio, as well as its director of sales and marketing, and the president of Ducati USA. What were the reasons for their departure, and have you taken steps to resolve those issues? well, Carlo says he resigned because he needed to be back in Rome with his family - but frankly I think there were certain circumstances that made Ducati still the most successful Italian motorcycle company but not as successful as it was, for example, two years ago. The reason for this is that we hit a slump in the market just at the exact moment we were making the maximum effort to invest in new products, and of course we strained our resources doing that. We recognized that we needed to overhaul our entire range, and that's what we did - but at some cost. If the company had grown another 20 percent more than it did, we'd feel much better, because of course it's expensive to renew your entire line and also introduce a totally new model like the Multistrada all in one year. But after a decade of continuous growth the market turned, and together with other companies Ducati has suffered the consequences. However, luckily enough we had paid down our debts, and therefore we're in a very strong financial position. So while we're here lamenting less profit than we would have liked, we still remain very buoyant, and there's absolutely no issue of Ducati being in a financial crisis, as I have read in some sections of the press. Q A Federico, though you're often portrayed in the press as an American, I understand you were in fact born in Italy? Yes, that's right - in Gallarate, as a matter of fact, which was originally the home of MV Agusta. My mother actually came from Verghera, which was where Count Agusta was based - MV stands for Moto Verghera. So because of that, I grew up very much aware of motorcycles, until I went to work for Proctor & Gamble in Rome in 1973, just as MV's racing career was reaching its zenith. After that I moved from industry to consulting, Italy to the USA. I was at McKinsey and then Bain and have been involved in several different industries as a result - among others Playtex, CIGA Hotels, Bally shoes and of course here at Ducati. Q A 22 JULY 16, 2003' cue I e n e vv Q s What was your total production in 2002 compared to the previous year? We recorded 39,600 motorcycles in the last calendar year, which was two percent ahead of the year before, 2001 - so it was essentially a flat year, because previously we'd been growing annually at around 20 percent in revenues and 17 percent in registrations. When I came here in 1996, we were making 11,000 bikes a year, so that gives you some idea of how the company's grown since then. In fact, back then production was down to 10 bikes a day - and today we're doing 220 daily. That's with a total workforce now of about 1100 people, compared to around 400 in those days, of which 9S0 or so are working here at the factory in Bologna, the rest scattered around the world at our various wholly owned subsidiaries. And that's in addition to the 5000 people we have indirectly working for us through our network of suppliers - of the total value of each motorcycle we manufacture, just seven percent is added internally, while 93 percent comes from outside, almost exclusively from suppliers in Italy and Japan. A Q What's Ducati's target production for this year? That's a big question, because we really don't know what the market's going to do, and our sales and therefore our production are driven by registrations. We're not going to simply build more bikes and increase dealer stocks, which right now are at the right level, but registrations were down 24 percent worldwide for the market as a whole in the first two months of the year, and if this is going to last, it'll be a disaster - for everyone, not just Ducati. However, our prediction is that it will taper out, and by the end of the year we could see a total fall-off of under 10 percent compared to 2002. If that happens, I think Ducati will be stable in terms of growth - you might see us produce 41,000 bikes or so, and that'll be partly b'ecause we have freshened up our range so much and partly because of our promotional success in racing. But we plan pro- duction six months in advance, so once the season has taken off in May, we'll evaluate the situation and see what to do. A But against this rosy overall picture since TPG's takeover at the end of 1996, the Ducati share price has bounced up and down like a yo-yo. It's recently shot up on the back of rumors about TPG seIling off its stake in the company. Can you explain this? Our public offering was issued at Euro 2.9 ($3.35), and now the stock is at 1.5 ($1.73) against a high of 3.2 ($3.70) and a low of 1.1 ($1.27). Unfortunately, however, I have discovered that there is no relationship between the behavior of the company and the behavior of the stock, the reason being that it's so thinly traded - if somebody buys or sells a few hundred thousand shares, then the stock shoots up or down significantly. The last plunge was because a Chicago investor sold about 2.5 percent of the company, so the stock plummeted - but then it moved up based on rumors about Harley-Davidson having an interest in acquiring us, which we've denied because it's simply not true. Then once again it took off because of the Colannino affair with Piaggio (an Italian investor reported Q A

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