Last Man Standing: The Zagato Story, Part I

Note: Around a year ago, I was approached by my editor at Magneto to do an article on the highs and lows of Zagato’s first 100 years. I replied what could be more interesting and meaty was to examine how Zagato survived when so many larger, better-capitalized coachbuilders did not. Since that issue is quite hard to find, running it here seemed a great way to close out Zagato’s Centennial, and celebrate its resurgence. I hope you enjoy, and a big thanks to Andrea Zagato for some wonderful and insightful conversation!

The demise of Italy’s coachbuilding industry unobtrusively began in 1950 just as Carrozzeria Zagato was on the threshold of having its greatest run ever. As Zagato and the other carrozzerias flourished, company founder Ugo Zagato handed the running of the firm to his eldest son Elio. That control eventually passed to Elio’s younger brother Gianni, and thanks to disruptive industry changes, erroneous management decisions, and business deals gone bad, by the time Elio’s son Andrea inherited the helm in the early 1990s, Zagato was a shell of its former self.

In the mid-1990s, Elio Zagato stands outside the Zagato works on the outskirts of Milan, Italy. The eldest son of company founder Ugo Zagato, Elio’s weathered look reflects the ups and downs that confronted Zagato throughout the decades.

That’s when I first visited the works on the outskirts of Milan. There was Andrea, in his young 30s, passionately describing how Zagato’s dilapidated grounds were going to be refreshed, new modern buildings would be constructed, and a devoted staff of designers and engineers would create cars with the latest CAD, CAM, VR, and other cutting-edge technologies. According to Andrea, all this and more would have Zagato in the design and engineering limelight in the not-too-distant future.

The office was bleak and devoid of human energy as he spelled out his vision, and I couldn’t help but wonder if this enthusiastic but seemingly misguided third-generation coachbuilder had been smoking something not too long before my arrival. Pininfarina, Bertone and Ital Design were all going great guns over in Turin, yet here was this fabled, sometimes quirky outlier some 100 miles away from the bustling epicenter of design and coachbuilding, with no new major contracts in hand, quietly suffering a slow death.

Elio Zagato owned this particular Fiat 8V, and he raced it with great success in the mid-1950s. That “Win on Sunday, Sell on Monday” mindset permeated throughout Zagato in the 1950s.

Nearly three decades later, it’s clear which one of us was shortsighted, and smoking something. Today Bertone is completely gone, the victim of unwieldy corporate overhead, and family infighting. Ital Design is part of the Volkswagen Group, and with the founding Giugiaros and Montovanis out of the picture, realistically exists in name only. And Pininfarina, for decades the automotive world’s paragon of elegance and design excellence, continues due to India’s Mahindra Group buyout.

Meanwhile, Carrozzeria Zagato enters its 100th year thriving, with business better than ever. So what were the forces that brought all the much better-capitalized design legends to their knees, and how did Andrea and his firm become Italy’s last great independent coachbuilding name?

Our journey begins a century ago in the industrial city of Milan, where Ugo Zagato had returned after World War I. Then 29 years old, Ugo first worked in a German foundry, and then at Carrozzeria Varesina as a factory worker, and shop foreman. For most of the war he assisted in the design and construction of airplanes, and wanted to apply those techniques to automobiles in a company of his own.

Zagato’s coachbuilding history stretches back to pre-World War II, and includes cars such as this one-off Alfa 8C2300.

As he once noted, “It is better to be a small owner than an important employee,” and he founded Carrozzeria Ugo Zagato in 1919. A decade later he and his craftsmen were at the forefront of Italian design and performance, thanks in great part to his firm’s association with Alfa Romeo. Describing how Zagato-bodied cars were different from other Alfas, legendary test driver Giovanbattista Guidotti summed up his experiences in a Zagato 6C 1500 this way: “Driving it gave me a new feel, that of total security. To look at her was like looking at art.”

That relationship’s strength prompted Zagato to relocate next to Alfa, and in 1930 Zagato-bodied Alfas took the first four places in the Mille Miglia, and overall victory at Le Mans the following year. It wasn’t completely smooth sailing at the new location though, for Zagato ran into financial trouble, and would eventually go into receivership. Ugo learned from his lessons, and started up again. Clients at his new company included Alfa, Fiat, Lancia and Isotta Fraschini. Racing cars with sleek lightweight bodies, and subsequent class and overall victories, followed suit.

Zagato built five Ferrari 250 models in the 1950s. Seen here is the third in the series, 250 TdF chassis 0665 GT that was made in 1957. It’s an ideal example of such cars being custom tailored suits to meet the demands the commissioning client, all while expressing a specific type of design ethos.

During World War II Zagato’s factory was razed, so once hostilities ceased a new facility was constructed on the outskirts of Milan. Prototype Isotta Fraschinis, racecars and the avant-garde Panoramica series were built, but perhaps the company’s greatest development during this period was the coming of age of Ugo’s eldest son.

Elio was born in 1921 and originally had aspirations of being a doctor, but at age 16 he started working in various departments at Zagato. Following the war Ugo pushed his heir apparent to complete college, and with good reason—Elio was passionate about driving, and very good at it. “This started me thinking about racing,” Elio told me, “but my father said, ‘If you want to race, you have to finish your studies at the university.”

He did in 1947, and was soon working alongside Ugo and engineer Fabio Luigi Rapi on the radical Isotta Fraschini 8C Monterosa, the Panoramicas, and intriguing barchettas. He also competed in Zagato-bodied machinery, and his successes led to a good number of sales, proving “Win on Sunday, Sell on Monday” has credence.

As Elio racked up victories in the early 1950s, on the other side of the globe an unassuming man named W. Edwards Deming was unknowingly sowing the first seeds of the coachbuilders’ eventual demise. Deming had created a statistically driven quality control system that could guide most any firm to make better goods, and with America in the midst of an economic boom where insatiable homegrown demand and arrogance masked product shortcomings, no one paid attention.

Perhaps Zagato’s most famous car is the Aston Martin DB4 GTZ, of which 19 were built from 1960-1963. Today they are highly prized by collectors, and have values in excess of $10 million.

Deming found willing disciples in Japan. Immediately after the war Japanese goods were shoddy at best, and even they knew it. As David Halberstam points out in the tome “The Reckoning,” “If it rained in Tokyo, ten thousand phones might be out of order.”

That began to change in 1950 when Deming gave a speech on quality control to some of Japan’s top executives. As Halberstam notes, a few months later numerous companies reported 30% increases in productivity. The guru’s teachings soon spread like wildfire, and his annual lectures quickly became one of the country’s hottest tickets.

Over in Italy, the hottest ticket on the racetrack was a Zagato-bodied car. Yes, a nicely finished product was important, but not nearly as critical as taking the checkered flag. Throughout the 1950s Zagato’s hand-built winners included Maserati’s A6G2000, Ferrari’s 250 GTZ, Fiat’s 8V and Alfa’s 1900 SSZ.

In the 1960s the Japanese automotive juggernaut started gaining serious momentum, all while Italy’s coachbuilding industry underwent its own revolution. Monocoque construction became more prevalent in the 1950s and ‘60s so “the existence of the coachbuilders became tied to coupe and spider models,” Andrea Zagato told me. “These special models were named ‘fouriserie’ and their assembly was provided by the OEMs, where the existing coachbuilders had to replicate their assembly lines inside their premises. They also had to duplicate the quality of their OEM clients while having lower investments.”

Zagato rode this trend, even though it took away the long-standing relationship they (and other coachbuilders) had with the final clients. But with Italy and Europe’s postwar economic miracle in full swing, nobody seemed to mind. Demand for sports and GT cars was booming, and to meet it Zagato built a new facility in the Milan suburb of Terrazzano di Rho, the same building where I met Andrea three decades later. There, production runs were no longer in single and double digits, as in the 1950s and early ‘60s, for models such as Lancia’s Fulvia and Flavia Sport were built in the hundreds and even thousands.

Another famed marque Zagato worked with was Lamborghini when it made two 3500 GTZs in 1965. Not too long after this public tastes and perceptions began to go against such sports and GT cars.

The Sixties would be Zagato’s economic high water mark. Over the next two decades Japan’s relentless pursuit of perfection and other factors punished the Italian automakers and coachbuilders. Some of the industry’s maladies were home grown, one being the unions’ ever-increasing power. “When the unions started coming into the workplace,” Ferrari coachbuilder Sergio Scaglietti told me, “they decided workers shouldn’t do extra hours. Everything went from heaven to hell quite quickly.”

Indeed, the unions’ reach became so pervasive that strikes were quite frequent, and all the more effective after Italy’s Parliament passed what became known as the “Workers’ Statute.” That made it difficult to fire anyone for things such as laziness or absenteeism. Combined with constantly increasing wages, the cost-effectiveness that made so many manufacturers flock to Italy for its “fouriserie” capabilities just 10 years earlier, all but vanished.

Public tastes were also changing. A socialist mentality swept across Europe, and once-revered sports and GT cars were scorned, the viewpoint becoming so prevalent that banks were reluctant to lend money for new models. America’s Department of Transportation instigated its safety requirements, which put additional financial burden on companies, and started handcuffing Italy’s renowned creativity. Then the first oil shock hit, making a chaotic environment that much worse.

Zagato was severely crippled but survived the storm. Alfa’s Junior Z, Lancia’s Fulvia Sport and Beta Spider II sold in limited numbers, the diminutive Zele electric car was produced, and Bristol’s 412 convertible and a number of one-offs were throwbacks to the hand-built days. Plus constructing armored cars helped make ends meet.

It’s easy to see where much of the design inspiration for the Lamborghini 3500 GTZ came from—the Alfa TZ2 that Zagato created in 1964.

In October 1980 the increasing union power was thwarted when Turin’s impromptu “March of 40,000” saw thousands of auto industry employees gather in the center of the city to declare “That’s enough!” Oil prices were in decline, technology finally caught up with emissions and crash standards, and performance and style once again became en vogue.

Zagato’s troubles seemed to be a thing of the past as the ‘80s progressed, with perhaps the biggest headline being the rekindling of its relationship with Aston Martin. The British firm bought 50% of Zagato not long after Maserati had the coachbuilder supplement its new Biturbo 2+2 with an open Spyder, and later, the hardtop Karif.

Intriguingly, one who wasn’t convinced by this turn of events was Andrea Zagato. Then in his mid-20s, Elio’s son originally had no plans to follow in his father’s footsteps. Sure, there were days when he would be at the factory, cruising the company grounds in a forklift or Zele electric car, but he wanted to be a veterinarian and “open the perfect farm in Canada.”

Such dreams changed after Andrea graduated from Milan’s Bocconi University with a degree in Economics and Commerce, and he helped man Zagato’s stand at the Turin and Geneva Auto Shows. He possessed a keen mind for the business, and industry as a whole: “While getting my degree in Design in Automotive Marketing and Production, I became aware of the impact Japan’s lean production techniques could have on the coachbuilding industry.

When Zagato and Aston teamed up in the mid-1980s, the result was the 186-mph V8 Vantage Zagato. Not too many years after this, Zagato teetered on the edge of bankruptcy, and that’s when Elio’s son Andrea took over the company.

“This was after my father had his first heart attack, and my uncle was running the company. I told him we should look for a solution, that the assembly lines would vanish. But it was not easy to convince somebody who was responsible for production—especially because my uncle was in his sixties, and the future was not easy to predict.”

Indeed it was not. Unexpected twists and turns awaited Andrea when he took over the company—including the coachbuilding industry going into a tailspin. And that’s where we will pick up the story next week. 


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