Discovery of Russia ‘Italian pipes - for Soviet coal’
The Soviet Union emerged from World War II victorious. This brought it from relative isolation to the level of a world superpower. In the first years after the end of military actions, the USSR established its dominance over the countries of Eastern Europe. For this purpose, it created a number of satellite people’s republics.
Audio version of the history of the company "Koeklerici"
Hello world!
A giant territory fell under the control of the USSR. The control was carried out by Communist parties, theoretically each belonging to their own state, but practically subordinated to the Communist Party of the USSR. Joseph Stalin, an undisputable ruler, reigned at the top of this. The state, politics, ideology, army, police, and any other means of exercising power were concentrated on him.
However, these territories were ruined by the war. And although there was a lot of minerals in the subsoil, these lands, having previously been industrially backward, now had to get out of the boundless devastation. Huge areas of the most fertile soils remained uncultivated. The war took twenty million lives.
However, these territories were ruined by the war. And although there was a lot of minerals in the subsoil, these lands, having previously been industrially backward, now had to get out of the boundless devastation. Huge areas of the most fertile soils remained uncultivated. The war took twenty million lives.
In those years, in the eyes of any European entrepreneur, the very idea of working in the USSR symbolized the possibility of a huge, unlimited market. However, for some reason, no one dared to proceed, to enter the territory of the dangerous "Soviet bear”.
Given this general situation, one can imagine the extent of the responsibility and possible complications after what happened at "Henry Coe & Clerici" in the very late 50's.
Enrico Mattei, a giant of state entrepreneurship, and his brainchild, ENI (Ente Nazionale Idrocarburi — National Hydrocarbons Company), were at the origin of this story. The company was founded in 1953 on the basis of AGIP; its foundation was an important international event. An advanced vision of energy was put at the forefront Of course, Enrico Mattei immediately identified a rich source of oil and gas supply for Italy in the subsoil of the USSR. But for this prospect to become a reality, it was necessary to provide the Soviet partners with everything needed for pumping, and first and foremost with high-quality pipes produced with state-of-the-art technology. Soviet steel mills at that time were not able to produce such pipes and at the same time it was impossible to exist without them. How to create oil and gas pipelines, powerful, reliable, capable of crossing all of Europe from east to west?
Enrico Mattei was not afraid of this aspect. On the contrary, he expanded his plan and overcame all the obstacles, including the insidious obstacles that his fellow Italian politicians had placed in his way. ENI negotiated a large-scale contract with the USSR government. The production of pipes was to be entrusted to the best steelworks of the IRI family, namely IIva, Finsider, located in Cornigliano. At first, everything was going well. So much so, that soon after the installation began, the Soviets offered to greatly increase the volume of deliveries. For Italy, the deal looked highly promising. There were no operational production problems either, couldn’t have been. But there was a bottleneck of a financial nature. Moscow did not have enough currency, that is, dollars for such volumes. A proposal appeared to settle the case through barter. "Italian pipes — for Soviet coal."
This was the first search for an approach that, twenty years later, would become a comprehensive practice of East-West deal-making known as counter trading.
Enrico Mattei, a giant of state entrepreneurship, and his brainchild, ENI (Ente Nazionale Idrocarburi — National Hydrocarbons Company), were at the origin of this story. The company was founded in 1953 on the basis of AGIP; its foundation was an important international event. An advanced vision of energy was put at the forefront Of course, Enrico Mattei immediately identified a rich source of oil and gas supply for Italy in the subsoil of the USSR. But for this prospect to become a reality, it was necessary to provide the Soviet partners with everything needed for pumping, and first and foremost with high-quality pipes produced with state-of-the-art technology. Soviet steel mills at that time were not able to produce such pipes and at the same time it was impossible to exist without them. How to create oil and gas pipelines, powerful, reliable, capable of crossing all of Europe from east to west?
Enrico Mattei was not afraid of this aspect. On the contrary, he expanded his plan and overcame all the obstacles, including the insidious obstacles that his fellow Italian politicians had placed in his way. ENI negotiated a large-scale contract with the USSR government. The production of pipes was to be entrusted to the best steelworks of the IRI family, namely IIva, Finsider, located in Cornigliano. At first, everything was going well. So much so, that soon after the installation began, the Soviets offered to greatly increase the volume of deliveries. For Italy, the deal looked highly promising. There were no operational production problems either, couldn’t have been. But there was a bottleneck of a financial nature. Moscow did not have enough currency, that is, dollars for such volumes. A proposal appeared to settle the case through barter. "Italian pipes — for Soviet coal."
This was the first search for an approach that, twenty years later, would become a comprehensive practice of East-West deal-making known as counter trading.
At that time, it was really about the first search, about the answer to an immediate inquiry, about a good idea that was to be tested.
The president of Ilva (Italcider) approached the largest Italian coal importers, presenting them with the innovative concept and its possibilities. However, he was not encouraged by their responses. In the end, no one showed genuine interest, no one showed the courage to take on the new challenge. No one but Jack Clerici.
Jack reacted to the project with the enthusiasm of a true novelty lover: a really big game! And big bets worked on Jack like the sirens' chant on Ulysses. He immediately boarded the plane and flew to the Russian capital.
The "triangular" deal was in principle intended to be uncomplicated. "Henry Coe & Clerici" would buy the coal, paying for it with currency, and the dollars would be used to pay for the pipes. But first it was necessary to defeat the Soviet bureaucratic apparatus practicing long, hooked and repeated discussions: they had to be carried out in stages at each level from bottom to top, each time providing insane amount of papers. Each document had to be checked up and down by officials, brought back with corrections to be added, checked again… In addition, these officials checked each other’s work.
But this time the Soviets showed a fantastic intention to achieve the result. Bureaucratic red tape was kept to a minimum. The Russians have explicitly shown that for them the task is strategic and must be resolved as a matter of urgency, regardless of cost.
If it seemed to Moscow officials that the most important was to quickly find a reliable and non-random buyer for the coal, capable of making a large-scale commitment for a long term and meeting all the arrangements of the special deal, Jack Clerici looked at things more globally. He considered the current moment from the perspective of future company. He tried to look into the future.
That’s why he decided to go against his own immediate interest this time.
After a surprisingly hasty negotiation phase and drafting of an operational plan, it came down to a paper contract. And suddenly it turned out that the Kremlin negotiators had indicated an extremely low sales price ($ 4.50 per ton) of the main subject of the contract, coal, which was clearly below the normal market price for coal of that grade. The price was absurd, even if you take into account all the costs of setting up logistics and transportation (the mines were located in hard-to-reach places). Without a doubt, everything was done in a hurry. The Russians were in a hurry. They were only interested in closing the deal as quickly as possible. Immediately.
The "triangular" deal was in principle intended to be uncomplicated. "Henry Coe & Clerici" would buy the coal, paying for it with currency, and the dollars would be used to pay for the pipes. But first it was necessary to defeat the Soviet bureaucratic apparatus practicing long, hooked and repeated discussions: they had to be carried out in stages at each level from bottom to top, each time providing insane amount of papers. Each document had to be checked up and down by officials, brought back with corrections to be added, checked again… In addition, these officials checked each other’s work.
But this time the Soviets showed a fantastic intention to achieve the result. Bureaucratic red tape was kept to a minimum. The Russians have explicitly shown that for them the task is strategic and must be resolved as a matter of urgency, regardless of cost.
If it seemed to Moscow officials that the most important was to quickly find a reliable and non-random buyer for the coal, capable of making a large-scale commitment for a long term and meeting all the arrangements of the special deal, Jack Clerici looked at things more globally. He considered the current moment from the perspective of future company. He tried to look into the future.
That’s why he decided to go against his own immediate interest this time.
After a surprisingly hasty negotiation phase and drafting of an operational plan, it came down to a paper contract. And suddenly it turned out that the Kremlin negotiators had indicated an extremely low sales price ($ 4.50 per ton) of the main subject of the contract, coal, which was clearly below the normal market price for coal of that grade. The price was absurd, even if you take into account all the costs of setting up logistics and transportation (the mines were located in hard-to-reach places). Without a doubt, everything was done in a hurry. The Russians were in a hurry. They were only interested in closing the deal as quickly as possible. Immediately.
"The profitability was so unbelievable. Who wouldn’t sign a contract? But it was more important for our company to get this major supplier for many years, to secure it for the future. I suggested adjusting the duration of the contract to such a long period of time, which is simply never provided in the contracts of this type. And at the same time offered to put in a higher price. Even higher than the market price. They stared at me with surprise, smiled, extended their hands to shake, and we signed for $ 6 a ton."
With his step, Jack achieved an extraordinary advantage in terms of trust and goodwill of those who were given the opportunity to establish themselves in front of their superiors. This brought Jack an unpaid advantage and great future prospects that Jack could not even have guessed at the time. This favorable treatment continues to this day.
It was all about transportation. To understand the logistics at that time and in that environment, the contract included two types of coal supplied by the Soviet side: steam coal from the Far North of Russia, from the Pechora River basin, and high-quality coking coal mined in Eastern Ukraine, near Donbass (that's where the city of Anthracite is located).
Pechora coal was first carried many thousands of kilometers by rail. The Ukrainian coal was transported at a shorter distance. Both types eventually reached the Black Sea port of Illichevsk, about thirty kilometers south of Odessa. From there, the coal was transported by sea through the Dardanelles to Italy. The charcoal carriers entered each harbor in turn and unloaded the goods in portions as close to customers as possible, that is, some in Naples, some in Palermo, in La Spezia, in Ancona, in Venice. Part (much less often) in Genoa.
While organizing a new complicated project, Jack Clerici negotiated cargo ships with various freighters, the first of which was his Neapolitan friend Giovanni Bottiglieri, who provided him with the ship Orsolina (a restored version of Liberty), which delivered the very first cargo from the USSR. That was in 1961. The work began.
For several years, shipments followed this pattern. But when the cycles, rhythms and deliveries were well-organized, it became clear that the high cost of freight was cutting already thin margins of the business. Another solution had to be found. Given the importance and long-term nature of the agreements, the solution was not to be temporary or whatever. Jack locked himself in the office with the most faithful "experts in numbers". They were Gaetano Baelli, the man in charge of administration, and Pierluigi Gatti, Milan’s accountant, chairman of the auditing committee, but mainly a trusted advisor to both Jack and the whole family for forty years.
"The magnificent trio," like three conspirators, shut themselves up in the office and started drawing up many schedules and charts, calculating in every possible combination transportation time, freight cost, carrying capacity of available vessels, all the alternative hypotheses and making an estimate for each. After counting everything in the world, Jack decided to try an unconventional solution: to have his own vessels. Thus, the company was returning to its primary operations. In was in 1912 that his father Alfonso purchased a freight carrier and used it along with the others — chartered — until World War I made his work impossible by cutting off all routes by sea.
Many thought that Jack had no reason to go to such expense, the risk was too great. But opposing opinions could never stop any of Jack’s plans, and the company purchased its first 10,000-cargo-ton ship in 1965 from the Pittaluga Waporie Freight Company. It was also a modification of the Liberty, built in Baltimore in 1943. The ship’s name was Urbania; the Clerici renamed it Cockler, from the abbreviated name of Henry Coe & Clerici. It was immediately used on the line, added to the two similar vessels chartered by Bottiglieri Navigazione, that is, the Orsolina and the Maria Bottiglieri.
A year later they were joined by a second purchased vessel, the Falcone, a former 20,000-ton tanker converted for the occasion into a dry cargo ship. It was purchased jointly with Pittaluga Vapori. This was a beginning of a promising endeavor — share freight. The system worked subsequently for two decades. The management of this undertaking was formalized as a joint venture, the Capo Falcone Joint Stock Company, headquartered in Cagliari, Sardinia. In 1972, the company "retired" the fundamentally obsolete dry cargo vessel and purchased a new Falcone for 50 thousand tons. It was followed by the Poyana, also 50 thousand tons, and then by two bulk carriers (for bulk cargoes) Milvus and Plotus, with carrying capacity 60 thousand tons each.
It was all about transportation. To understand the logistics at that time and in that environment, the contract included two types of coal supplied by the Soviet side: steam coal from the Far North of Russia, from the Pechora River basin, and high-quality coking coal mined in Eastern Ukraine, near Donbass (that's where the city of Anthracite is located).
Pechora coal was first carried many thousands of kilometers by rail. The Ukrainian coal was transported at a shorter distance. Both types eventually reached the Black Sea port of Illichevsk, about thirty kilometers south of Odessa. From there, the coal was transported by sea through the Dardanelles to Italy. The charcoal carriers entered each harbor in turn and unloaded the goods in portions as close to customers as possible, that is, some in Naples, some in Palermo, in La Spezia, in Ancona, in Venice. Part (much less often) in Genoa.
While organizing a new complicated project, Jack Clerici negotiated cargo ships with various freighters, the first of which was his Neapolitan friend Giovanni Bottiglieri, who provided him with the ship Orsolina (a restored version of Liberty), which delivered the very first cargo from the USSR. That was in 1961. The work began.
For several years, shipments followed this pattern. But when the cycles, rhythms and deliveries were well-organized, it became clear that the high cost of freight was cutting already thin margins of the business. Another solution had to be found. Given the importance and long-term nature of the agreements, the solution was not to be temporary or whatever. Jack locked himself in the office with the most faithful "experts in numbers". They were Gaetano Baelli, the man in charge of administration, and Pierluigi Gatti, Milan’s accountant, chairman of the auditing committee, but mainly a trusted advisor to both Jack and the whole family for forty years.
"The magnificent trio," like three conspirators, shut themselves up in the office and started drawing up many schedules and charts, calculating in every possible combination transportation time, freight cost, carrying capacity of available vessels, all the alternative hypotheses and making an estimate for each. After counting everything in the world, Jack decided to try an unconventional solution: to have his own vessels. Thus, the company was returning to its primary operations. In was in 1912 that his father Alfonso purchased a freight carrier and used it along with the others — chartered — until World War I made his work impossible by cutting off all routes by sea.
Many thought that Jack had no reason to go to such expense, the risk was too great. But opposing opinions could never stop any of Jack’s plans, and the company purchased its first 10,000-cargo-ton ship in 1965 from the Pittaluga Waporie Freight Company. It was also a modification of the Liberty, built in Baltimore in 1943. The ship’s name was Urbania; the Clerici renamed it Cockler, from the abbreviated name of Henry Coe & Clerici. It was immediately used on the line, added to the two similar vessels chartered by Bottiglieri Navigazione, that is, the Orsolina and the Maria Bottiglieri.
A year later they were joined by a second purchased vessel, the Falcone, a former 20,000-ton tanker converted for the occasion into a dry cargo ship. It was purchased jointly with Pittaluga Vapori. This was a beginning of a promising endeavor — share freight. The system worked subsequently for two decades. The management of this undertaking was formalized as a joint venture, the Capo Falcone Joint Stock Company, headquartered in Cagliari, Sardinia. In 1972, the company "retired" the fundamentally obsolete dry cargo vessel and purchased a new Falcone for 50 thousand tons. It was followed by the Poyana, also 50 thousand tons, and then by two bulk carriers (for bulk cargoes) Milvus and Plotus, with carrying capacity 60 thousand tons each.
Capo Falcone Society operated until 1987. It was then taken over by SO.MO.CAR, discussed below, in which, in any case, Pittaluga Vapori participated at the technical management level.
Let’s return to the first working days. To Liberty, which had seen a lot, to the amended estimates. Looking at the documents, we can see: each trip from Illichevsk to Italy, as well as the trip from Italy to Illichevsk, taking into account unloading and loading, took an average of 14 days. Each of the three vessels could thus make 25 trips to the USSR per year. It resulted in a very substantial amount of 750 thousand tons of coal imported from the Soviet Union within twelve months. Thus, exactly one dollar was saved on each ton, and these dollars were added to the profit column.
In addition, as soon as the whole system took shape, the Clerici executives, in accordance with their eternal desire to "outrun themselves," began to improve it again. First, we are talking about purchased vessels. Considering how much the overall budget was affected by the cost of each such purchase, a special department was organized to recruit ship crews (and 75 professional sailors were hired). After the largest expenditures were established, the obsolete vessels were replaced (the last Liberty-class vessels rolled off the shipyards in 1944) with more up-to-date vessels. Hundreds and hundreds of tons of good-quality Soviet coal awaited loading on Henry Coe & Clerici's ships.
During Khrushchev's time, Soviet policy toward Western countries was uneven, but there were also periods of "thawing”. The Vienna meeting with the newly elected U.S. President John F. Kennedy in 1961 should be considered such a moment.
Of course, there were also "muscle games," in particular the construction of the Berlin Wall in the same year. Especially frightening was the 1962 attempt to install nuclear missiles in Cuba.
This meant that those who had a support in Moscow (mostly exporters of raw materials from the USSR, and they were also holders of the increasingly valuable Western currency) were in a privileged position to expand their export range. "Henry Coe & Clerici” certainly didn't miss the chance.
In addition to coal exported exclusively to Italy, the company was allowed to work with scrap metal, oil products and other valuable raw materials for which there was a demand among Italian customers of Clerici.
In 1964, the Italian-Soviet Chamber of Commerce opened in Milan, which was for several years supported by Jack Clerici as an advisor and active promoter.
In addition, as soon as the whole system took shape, the Clerici executives, in accordance with their eternal desire to "outrun themselves," began to improve it again. First, we are talking about purchased vessels. Considering how much the overall budget was affected by the cost of each such purchase, a special department was organized to recruit ship crews (and 75 professional sailors were hired). After the largest expenditures were established, the obsolete vessels were replaced (the last Liberty-class vessels rolled off the shipyards in 1944) with more up-to-date vessels. Hundreds and hundreds of tons of good-quality Soviet coal awaited loading on Henry Coe & Clerici's ships.
During Khrushchev's time, Soviet policy toward Western countries was uneven, but there were also periods of "thawing”. The Vienna meeting with the newly elected U.S. President John F. Kennedy in 1961 should be considered such a moment.
Of course, there were also "muscle games," in particular the construction of the Berlin Wall in the same year. Especially frightening was the 1962 attempt to install nuclear missiles in Cuba.
This meant that those who had a support in Moscow (mostly exporters of raw materials from the USSR, and they were also holders of the increasingly valuable Western currency) were in a privileged position to expand their export range. "Henry Coe & Clerici” certainly didn't miss the chance.
In addition to coal exported exclusively to Italy, the company was allowed to work with scrap metal, oil products and other valuable raw materials for which there was a demand among Italian customers of Clerici.
In 1964, the Italian-Soviet Chamber of Commerce opened in Milan, which was for several years supported by Jack Clerici as an advisor and active promoter.