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Once busy Italian land mine company totters on bankruptcy

December 1, 1997

CASTENEDOLO, Italy (AP) _ Drive down a heavily potholed road through the mists of the northern Italian flatlands, pass a dog training center and you arrive at a place that once produced millions of land mines a year.

Now, computer screens sit dark in empty offices. Cobwebs and plastic sheeting cover assembly line machines. A few workers toss threaded plastic rings, fuse holders and orange tabs into boxes for eventual hand-over to the government required under a recent ban on mines passed by Parliament.

Despite several efforts to convert the assembly lines of Valsella Meccanotecnica SpA for civilian products, the company is in bankruptcy proceedings, in large part due to a 1994 Italian moratorium on the production of anti-personnel mines.

The company’s 52 remaining workers haven’t been paid since July and a court-appointed administrator is handling its affairs. But they have one more chance.

A small Italian engineering venture, Electric Motive Power Group, is considering acquiring Valsella’s plant to make electric buses. Local officials and Valsella’s owners are waiting for an offer.

If it doesn’t come, administrator Ferruccio Barbi said he will pull the plug.

The anti-mine campaign had placed great hopes that Valsella could successfully convert to civilian production in this prosperous town of 8,600 people on the edge of Brescia, in Italy’s industrial heartland 60 miles east of Milan.

Now the workers wait to hear from EMP. One of the firm’s partners, Paolo Fusari, said the chances are 50-50 the project will go forward.

Santina Bianchini, Castenedolo’s deputy mayor and an anti-mine activist, is not confident. With Valsella’s $8.5 million debt, and no sign of subsidies from the government, she says the plan doesn’t look feasible.

``We need jobs immediately,″ said Franca Faita, a shop steward who has been leading efforts to convert the factory. ``We punch our cards in the morning ... and do nothing. I don’t have the courage any more to see people in the morning.″

The only executive present is Giovanni Borletti, whose family owned half the company with Fiat _ although Fiat says it sold off its share. Borletti declined to speak for the record.

The arms industry made the fortunes of Castenedolo and its surroundings. Mine production boomed in the 1980s, with millions of the weapons making their way to Iran and Iraq in their 1980-88 war and to other countries.

Valsella’s revenues shot up tenfold to around $60 million a year. It gave work to about 200 people, including many in small businesses supplying parts and services.

Valsella and other mine-makers turned Italy into one of the world’s leading mine producers.

That attracted the attention of human rights groups, which criticized Italy for lax enforcement of export laws. The government cracked down, limiting exports.

Management says that in the late 1980s, it converted some of its machinery to stamp out plastic dashboards instead of mine parts. But the venture never made money.

When Italy declared a moratorium on the production of anti-personnel mines in 1994, sales plummeted and debts mounted.

Valsella says it readied itself to produce small explosive devices used to jerk back seatbelts during car crashes, but no orders have come in. It says it couldn’t really do the job because the government never came through with a promised conversion subsidy.

Bianchini argues the company never made a real effort for a full conversion. ``They didn’t push,″ she said.

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