This Feature

WESTBUSINESS
June 2015
RISING MARKET
THE WA PRODUCERS SELLING WINE TO JAPAN
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There is more to the
economy than rocks
Rod Jones, Navitas chief executive
and former EY Entrepreneur of
Australia winner (2008)
E
Silks Weekend
Yum Cha
$48 Set Lunch
Saturday & Sunday
arlier this month I spent a week
with business leaders from
some of the most successful
companies in the world — all
without one single conversation
about iron ore.
I was a panellist at the EY World
Entrepreneur of the Year Awards in
Monaco, recognising winners from
53 countries and selecting the World
Entrepreneur of the Year.
The event was attended by the
likes of Bill Ford from the Ford
Motoring Company, Howard Schultz
from Starbucks and one of the
Rockefellers. Julia Birkenstock of
the shoe company, Biz Stone,
co-founder of Twitter and Muhtar
Kent, the head of Coca Cola were
also there.
During the many presentations,
panel discussions and social events I
attended with these brilliant minds,
commodities didn’t crack a mention.
It was unusual for a West
Australian businessperson because
in this State resources are pretty
much all we talk about. There is a
general feeling the sky will fall in if
commodity prices drop, but my
Commodity prices
didn’t crack a mention
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Red carpet: Rod Jones
and wife Carol at EY
event in Monaco
experience in Monaco has reminded
me it does not have to be that way.
Firstly, commodities are cyclical.
We can feel fairly confident that
prices will come back, even if they
do not return to boom-time levels,
and then they will drop again and
rise again and so forth.
But the more important lesson
from my trip is that as a State, we
can cushion ourselves from the cycle
by diversifying away from just
digging things up. One of the ways
we can do this is by maximising
investment in new technologies.
It was evident during my trip that
many of the world’s great companies
and entrepreneurs are focused on
creating or finding new technologies
to expand their business
opportunities and reach.
Australia has a great capacity to
build new markets for its top-level
services, like health and education,
through new technologies.
On a personal level, I will be using
this advice in my own education
service business, Navitas. We are
already using online platforms to
support the delivery of education,
and I’m now determined to expand
this focus and continue to grow the
international education sector in
Australia,worth $17 billion a year.
I am involved in a number of
different tech opportunities,
including the digital currency
bitcoin. The real gem in bitcoin is
the block chain technology that
supports it. The company I’m
involved with is now seeking ways to
utilise block chains in new
endeavours, like the creation of
international money transfer
systems that avoid exorbitant fees
from banks and credit unions.
What started out as an investment
in one project has unlocked the keys
to an entirely new and potentially
lucrative market.
The potential is unlimited because
technology is always changing. Even
desktop computers are old hat these
days because no-one wants to be
desk-bound. People have developed
the same relationship with the
smart-phones and tablets they had
with computers a decade ago.
It was clear at the event that
Australians get along with everyone
and they are great entrepreneurs.
While commodities will always be
part of the future of Australia, we
need to look beyond resources and
continue to grow our services
industries and the technologies that
support them.
As told to Kim Macdonald
WESTBUSINESS
WELCOME
From the editor
Australia’s relationship with Japan would
appear to have taken a backseat over
the past decade, hidden in the shadow
of our growing ties to China.
But this year’s free trade agreement
with Japan will help revitalise our
relationship with Tokyo. And WA
winemakers are set to benefit.
In this edition, WestBusiness Insider
reports on how local winemakers can
build on Japan’s fledgling love affair with
WA wines when tariffs are completely
abolished under the new free trade
agreement.
Insider also travels to America to
report on Austal’s shipyards in Mobile,
Alabama. We look at how a clever
business strategy helped the game of
cricket to win new fans and
sponsors, and we consider the
future of digital currency bitcoin.
Spud king Tony Galati opens
up over lunch about his
burgeoning business
empire and why he
sometimes sings the
1970s folk rock song
The Cat’s in the
Cradle.
Kanpai, mate!
Japan-based Beatrice Thomas discovers WA wines are the
toast of Tokyo, and there will be more to celebrate under the
new free trade agreement P8-10
The Alabama Gamble
Peter Williams travels to America to report on how WA
shipbuilder Austal beat multibillion dollar companies to major
contracts with the US Navy. P12-17
It’s just not cricket
There is more to cricket than a bat and ball. Kim Macdonald
reports on the business strategy to helped kill the “male, pale
and stale” image and boost the game’s following. P18-20
P12-17
The future of bitcoin
Will bitcoin hit the mainstream or is it destined to be a bit
player in the world of commerce? Kate Emery talks to
Perth’s bitcoin experts. P22-24
PLUS
Motoring: Minister for Small Business and Corrective Services,
Joe Francis, test drives a luxury ute. P27
Fashion: Why you really need to dress up when you dress
down for casual events. P29
Lunch: Retailer Tony Galati talks about his business, ethics,
family and spuds. P30
P18-20
Kim
Macdonald
P22-24
EDITORIAL Kim Macdonald Editor, WESTBUSINESS INSIDER magazine. 08 9482 3104 kim.macdonald@wanews.com.au
ADVERTISING Regi Philip 08 9482 3497 regi.philip@wanews.com.au. DESIGN John Henderson john.henderson@wanews.com.au
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THE ART OF
INTRODUCTIONS
MY OFFICE
LINDA WAYMAN
Does chivalry or corporate status
determine the order of introductions?
Linda Wayman, general
manager Southern Cross
Austereo, on Gen Y
T
he correct order for introductions is different in
business settings to social ones. Chivalry governs
social settings, so women should be introduced
first, followed by older people and then men.
But age can outrank gender if the older person is very
old and the female is relatively young.
In business, the client should always be introduced
first, because there is no business without clients.
The business person holding the highest rank is
introduced next, followed in order of one’s status on the
corporate ladder.
So that means the chief executive is mentioned before
the account manager, who is mentioned before the
administration assistant, and so on.
Contemporary business manners allow for first names
to be used in Australia, but always refer to someone by
their surname until you are invited to use the first name.
And never abbreviate names unless that nickname is the
one provided at the introduction or it appears on the
person’s business card.
And Ms — not Mrs — is the title used for all females in
business.
If you get confused, just do you best to make everyone
feel welcome. Good manners are all about inclusion.
Natalia Josephs, managing director at Image Power
Australia
In business, the junior person is always introduced to
the senior business person, which means you mention
the senior person’s names first. For example, you would
say, “Mr CEO, let me introduce Mr Account Manager.”
Status also governs the business handshake. This
means it is the senior person’s prerogative to instigate
the handshake by extending his or her hand to the
less-senior person.
However, the host of an event is entitled to take the
lead on handshakes, regardless of their rank. So if you
invite the premier to your business function, you are
allowed to extend your hand first.
No-one in Australia gets too hung up on this
international standard for handshakes. We can be
relatively casual in terms of business etiquette, even
allowing for the use of first names in business circles.
In France, it is common to use Monsieur and Madame
with a colleague, even if you have been doing business
with them for 30 years.
In Asia, the family name always comes before the first
name, whereas Anglo Saxon names are in the opposite
order. That’s why I am often referred to as Ms Louise,
rather than Ms Percy, in Asia.
Louise Percy, managing director at the Percy
Institute of International Protocol
I
designed my office without a
door, and with a glass partition
instead of a solid wall, so that staff
can see me and know that I am
accessible.
With such a large contingent of
Gen Y workers at Austereo’s two
radio stations, hit 92.9 and Mix 94.5,
accessibility is very important.
If you have an open mind and an
open environment, staff will know
they can always come to you with
their ideas.
Gen Y staff need to be nurtured in
terms of their talent. They need to
feel confident that they can be
themselves and come up with their
own ideas without getting shot down
or stomped on.
But they also need to be aware that
they are working for a publicly listed
corporation and as part of a team.
Often the best way to teach them is to
lead by example.
It can be easy to get rattled in this
business, particularly if you are
inexperienced. I’m pretty calm and
very resilient so it’s good for my staff
to see that. It helps keep everyone’s
confidence levels up.
Creative types can be very
passionate too, which means they
can get extremely disappointed or
disheartened if they don’t get the
ratings or results they want or
expect.
I try to show, by example, that life
goes on and they need to keep things
in perspective when it doesn’t go to
plan.
It’s not a matter of life and death,
it’s just radio ratings.
But that’s not to say we don’t have
high standards.
In my office I have a big silver
trophy that staff presented me in late
2010 when Mix 94.5 broke the
Australian ratings record with 87
consecutive survey periods at No.1,
snatching the crown from Brisbane’s
B105.
We had one of our famous roof top
parties to celebrate and invited
B105’s general manager Richard
Barker to the party, just to rub salt in
the wound. He took it in good
humour. He is a great guy.
Mix 94.5 went on to get 100
consecutive surveys at No.1.
I also have some awards on the
walls, including two for winning the
Media Organisation of the Year from
Campaign Brief and the WA’s Telstra
Businesswoman of the Year (2003).
I always have newspapers on my
desk, and I also keep up with trade
and business journals, like the
Harvard Business Review.
I started out as a print journalist
in the late 70s, and still have a great
passion for the printed word.
You may notice three pictures of
Bob Dylan on my wall. The photos
are original publicity shots taken by
Sony in the 1980s. They were found
in an old filing cabinet in New York,
and given to me 18 months ago by
Dennis Handlin, Sony’s chief in
Australasia.
Yes, I am a Dylan tragic.
3
2
1
4
7
5
Picture: Bill Hatto
6
JUNE 2015
6
1. Original Bob
Dylan publicity
shots.
2. Media awards.
3. Telstra
Businesswoman
of the Year WA
Award, from
2003.
4. Flamingo
— from a
rebranding
campaign for
hit29.9.
5. A trophy staff
presented
when Mix 94.5
broke Australian
ratings record.
6. Newspaper - I'm
passionate
about the
printed word.
7. Digital radio
— to listen
to Austereo
stations.
337 Harborne Street, Osborne Park | Tel. 9231 5888 | audicentreperth.com.au
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V
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WHEN EAST
DRINKS WEST
Could WA wine become the toast of Tokyo
under the new free trade agreement with
Japan? Beatrice Thomas reports
I
t’s Friday night in central Tokyo and the city’s
popular Roppongi district is heaving with the
after-work set.
At Roti, a wine bar and brasserie tucked away
behind the bright lights of the main drag, software
engineer Emi Kasahara and project manager
Hiromi Kosaka are settling in at an alfresco table
over a glass of sauvignon blanc.
Both knowledgeable wine drinkers, they favour the
city’s wine bars and restaurants over more traditional
haunts such as izakaya taverns for the cosmopolitan
atmosphere, food and, of course, the wine list.
“In Tokyo we have millions of kinds of restaurants of
different cultures, quality and price,” Kosaka says. “But
chilling out at a terrace sofa with friends with nice wine
is cool.”
Far from alone, they are part of the new wave of
drinker leading what is being described as a quiet revival
in Asia’s most sophisticated wine market.
And Japan’s fledgling love affair with WA wines is
likely to grow with local winemakers poised to win a
bigger slice of Japan’s $1.75 billion annual wine import
market when the free trade agreement takes full effect.
The trade deal, which came into effect in January, will
eliminate the 15 per cent tariff on bottled wine over seven
years, and has already granted an immediate abolition
on all tariffs on bulk wine.
Bottled wine sales from Australia jumped 11 per cent
in the first three months of the new deal, according to the
Australian Grape and Wine Authority, taking total
year-long exports to the Land of the Rising Sun to a
record 11 million litres.
But it is the massive 414 per cent jump in the volume of
bulk wine to Japan in the same period — following the
complete abolition of tariffs — that signals the
longer-term potential for the bottled variety.
Rabobank’s quarterly wine report says it is an
opportune time for Australian wine-makers to build on
recent success, which it claims has seen premium
sparkling wines replace sake in some traditional
celebrations.
The question being asked now is how the WA industry
should weave this new narrative into a sector where first
impressions last and reputations are everything.
The answer could lie in the Australian wine industry’s
very own coming of age as it seeks to find its new place in
a fastidious Japanese market.
After peaking 16 years ago on the back of the
extravagant bubble economy years, Japan’s wine market
somewhat slid into the background for a decade until
8
JUNE 2015
about 2008 when consumption begun to increase.
Globally, the wine world was spinning as Chinese wine
drinkers arrived on the scene. Business strategies were
rewritten to accommodate the 128 per cent jump in
Chinese wine imports between 2008 and 2013, according
to Rabobank’s World Wine Map 2014.
But in Japan a new free trade agreement with Chile in
2007 also shook things up by throwing a new low-end
offering into the mix, giving consumers a cheaper option
at a time of low wages growth and less discretionary
spending.
The discerning Japanese wine drinker, who made
Beaujolais Nouveau part of the vernacular, began to look
beyond Old World offerings from France and Italy to
increasingly explore new types of wines.
Meanwhile, the emergence of the supermarket
off-trade channel saw home consumption soar, while
major events such as the March 2011 earthquake and
tsunami also influenced spending and social norms.
“Wine has become less of a novelty and is steadily
edging into the mainstream food and wine culture of
Japanese society,” Rabobank notes in its second-quarter
wine report.
For Chile, shoring up the bottom end of the market has
more than tripled its market share from 7.5 per cent eight
years ago to more than 25 per cent in late 2014, Rabobank
data shows. It is now the country’s second-biggest
supplier of wine after France.
“Their price competitiveness, it has not been ideal for
us, because we were not playing on a level field,” Wine
Australia regional manager Asia Hiro Tejima says over
coffee in inner-city Yurakucho during a whirlwind trip to
Tokyo in late April, his third for the year.
“But now we are.”
Adelaide-based Tejima says though the Chilean
strategy has been successful and Australia’s early
success has been bulk wine, “Australia is still positioned
to provide the world with value for money wine at a
higher price point”. Notably, more than half of all exports
to Asia are above $7.50 a litre.
But he says the challenge is doing that in a country
where wine remains “a borrowed culture” and where
people are used to paying low prices but expecting
Wine has become less
of a novelty and is
steadily edging into the
mainstream culture of
Japanese society.
Cheers: Kozue Shibata and Satoru Mori at
Conrad Tokyo with 2003 Leeuwin Estate
Art Series Chardonnay Pic:ture Yuriko Nakao
quality. Nevertheless, Wine Intelligence figures show per
capita wine consumption was just over three litres in
2013, up 11 per cent on 2012 and more than double that of
China, Australian wine’s biggest Asian market. Japan is
the tenth biggest market.
Carl Robinson, a 20-year Japan wine industry veteran
who heads Jeroboam and Wine Diamonds, two of four
prominent Japan-based importers of Australian wine,
says Australian wine has plenty of potential but cautions
against pursuing a price point-based strategy.
“Japanese consumers are not saying, ‘I want to drink
Chilean wine’, they don’t care,” he says from across the
boardroom table at his seventh-floor office in Tokyo’s
upmarket Aoyama district.
lab
pic
oth
be
sh
els
ap
ro
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of
s
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“It’s just they’re there and the wines are rightly
labelled and cheap and easy to understand, and they have
picked a market that is new to Japan.”
Robinson, who imports WA label Vasse Felix among
others, believes the Australian free trade agreement will
benefit “the big-box guys”, referring to bulk wine
shipping, which is wine shipped for repackaging
elsewhere, often in large containers of up to 24,000 litres.
He predicts a big trend will be in organic wines, which
appeal to a growing demand for healthy lifestyles.
“It’s hipster juice, and that is growing like an absolute
rocket,” he muses.
At Tokyo specialty wine shop, Wine Market Party,
the task of boosting Australia’s market share
reveals itself in the 2500 bottles neatly on
display — of which only 100 are Australian labels.
General manager Hideyuki Numata says customers
will ask for iconic Australian labels Penfolds and
Henschke, but beyond that they seek his advice.
He says while it is a store for “wine lovers who are
prepared to pay for quality”, 70 per cent of his Japanese
customers prefer wine under ¥1000 ($10.44).
At ¥2000 to ¥3000, Australian wine is more expensive
than average, he says.
Ken Kendrick, the Perth-based manager of another
Japan wine importer, Farmstone, sent his first shipment
— a pallet of Plantagenet Pinot Noir — 25 years ago. He
now represents some 20 Australian wineries, including
WA’s Cullen, Sandalford, Woodlands, Plantagenet and
Devil’s Lair, and ships about 100,000 cases to Japan
annually.
Kendrick believes the Japan-Australia Economic
Partnership Agreement will help Australian wines in the
longer term.
Likewise, Woodlands Winery production manager
Andrew Watson, who is based in Margaret River, also
expects the tariff reduction to bring long-term success.
But he says that success depends partly on changing
the image of Australian wines.
CONTINUES PAGE 10
JUNE 2015
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FROM PAGE 9
“I worry for the reputation that Australian wines are
‘cheap and cheerful’. The landscape will not move unless
we move it.”
Watson says Woodlands exports about 20 per cent of its
wine to eight countries, with Japan one of its oldest and
most important markets.
The advantage for WA wines, he believes, is they tend
to be more consistent from year to year than many other
countries, which helps give consumers confidence when
buying them.
“Also, Australian wines have a fantastic clean climate
to grow grapes and a very driven entrepreneurial spirit
in our winemaking,” he says.
Sydney-based Ned Goodwin, one of five Masters of
Wine in Asia and a former 13-year resident of Japan,
predicts it will be a tough task as wine itself is still a
“niche” drink in Japan compared to beer, sake and
shochu.
He doesn’t believe consumers would currently justify
paying for premium Australian wine, after previously
selling itself as a low-cost supplier.
“After telling the world that ‘Australia makes good wine
for $5, sunshine in a bottle, it’s what’s in the glass that
matters’, suddenly we’re having to tell the world that
Australia does make good $100 wine,” he says.
“It’s a hard story to suddenly jerk from one to the other
and it’s going to take a lot more work to make sure that it
resonates with fastidious consumers like the Japanese.”
Goodwin says it is important to tell a story of
provenance, as seen in the French wine narrative, which
Australia has failed to do.
During his April visit Tejima says 300 students
attended specialist Australian wine courses at the
prestigious Academie du Vin in Tokyo last year.
Aki Shidaka, one of four A+ Australian wine specialist
educators, says the change in the drinking culture has
been very much female-driven, with women more eager
to learn about wine.
However, she notes that it is also prestige-driven, with
many of her students comprising doctors and lawyers
“who enjoy wine, often in their business meetings”.
Tejima says campaigns such as Restaurant
Australiaare also doing more to link food and wine
tourism with the Australian brand.
Robinson, who hosts ‘Australia Uncorked’ wine parties,
as well as lunches through Jeroboam’s fine wine club,
says: “There is so much good wine in the world, that
you’re not just selling the wine, you’re selling the story
behind the wine.”
Kosaka agrees, saying she now appreciates the journey
that comes with drinking a particular wine after living
in Provence for two years.
For sale: Wine Market Party general
manager Hideyuki Numata takes
out a bottle of 2014 Si Vintners
Sophie Rose at his store in Tokyo
Picture: Yuriko Nakao
It’s hipster juice, and it’s
growing like an
absolute rocket.
CARL ROBINSON
I
t’s a Monday morning and the buzz of lunch
service at Two Rooms in trendy Omotesando has
already begun.
Matthew Crabbe, chef and co-owner of three
Tokyo hotspots, is musing on the future of
Australian winemakers in Japan.
“I would like Australia to concentrate more on
the top shelf wines rather than the cheap, crappy wines,
because it gives a really bad name to the industry,”
he says.
Dominating one end of the fifth-floor eatery’s main bar
is a floor-to-ceiling glass wine room filled with some 1800
bottles, including WA wines from Frankland Estate,
Leeuwin Estate, Moss Wood, Devil’s Lair and Howard
Park.
In the next room one of the actual paintings from
Leeuwin’s Art Series hangs on a wall in a nod to the
relationship with the winery’s founder, Denis Horgan.
“It’s the same with anything — if you enter the market
and the view of your customers is cheap stuff, like
entry-level stuff, then it’s very hard to get up to the top,”
Crabbe adds.
Originally from Sydney, Crabbe first landed in Japan
in 2001 to work at the Park Hyatt Tokyo’s famed New
York Grill. Back then wine wasn’t so popular, he
recalls, but it was still consumed by nearly all of the
Japanese customers he served.
Rabobank senior wine analyst Marc Soccio says
while it’s hard to say what the agreement is
potentially worth to the Australian industry, it’s an
opportunity to “excite the trade and tap into this
growing awareness of wine”.
A toast: Hiromi Kosaka (right) and Emi Kasahara
drink a Sauvignon Blanc. Picture: Yuriko Nakao
“Potentially, a country like Australia, which does have
a bit of a stronger premium wine reputation than Chile,
for example, has that opportunity to fill that . . . middle
part of the market,” he says.
But he warns that some of the benefit of Australia’s
tariff concessions may be short-lived if the 12-country
Trans-Pacific Partnership, which includes the US,
provides similar tax breaks to other New World wine
players.
WA Trade Commissioner to Japan Craig Peacock says
for now the advantage is there, with wine one of the
winners in an agribusiness sector that has done well
overall in the deal.
“We’ve done a lot to improve the image of wine coming
from our State over the years and also to get area
recognition for places like Margaret River, Pemberton,
Geographe,” he says.
“Margaret River, of course, was the first to get
recognition and now that’s pretty well known. What
we’re working on now is the other regions.”
Wines of WA chief executive Larry Jorgensen believes
producers are proactive when it comes to exporting to
non-English speaking countries, but they “must find
ways of encouraging wine consumption as a part of daily
life in each of the cultures they engage with”.
Conrad Hotel Tokyo multi-award-winning head
sommelier Satoru Mori is one such industry figure who
has taken notice. Having trained and worked in
Australia, the US and France, he says Australian wine
has matured but is still evolving.
“Nowadays, Australian wine, and especially Western
Australian wine, is more sophisticated, elegant and it’s
more light,” he says before dinner service at the hotel’s
28th-floor flagship Japanese restaurant Kazahana, where
a bottle of 2003 Leeuwin Estate Art Series Chardonnay
will set diners back a cool ¥30,000 ($312).
“It used to be that Australian wine had too much
alcohol and a lot of sugars. But now . . . there’s been a big
difference.”
Tejima says the outlook is positive but it requires
patience.
“Japan for wine is a long-term proposition. There are
ways to capture the opportunities and it just doesn’t
happen overnight.”
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N
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Big guns of Alabama
G
Ho
bea
ma
Wi
Mo
’day y’all!”
Austal executive Terry O’Brien’s hearty
greeting to guests at the christening of a
US Navy warship this month in Alabama
neatly sums up a cross-cultural industrial
experiment that has been playing out in
America’s Deep South for the past decade
and a half.
The WA company’s shipbuilding facilities in the Gulf
of Mexico port city of Mobile dominate the landscape.
Navy vessels still under construction float prominently
at the dock, or poke their scaffolding-clad bows out of
giant sheds.
Craig Perciavalle doesn’t like us to call them that.
“They’re assembly bays,” the Austal USA president
protests.
Perciavalle may be an ebullient, outdoors American
who likes to fish and hunt, but he clearly needs more
cultural awareness training on the pride an Aussie male
takes in the size of his shed.
But technically he’s right. The precisely organised
modular construction process inside these vast spaces
more closely resembles an aerospace manufacturing
facility than a shipyard, let alone a shed.
The key ingredient is aluminium, or aluminum as the
Americans call it. And lots of it. The material has been
synonymous with Austal since it began commercial boat
building, but is a revolutionary concept for defence
ships.
Austal this month gave unprecedented access to a
group of Australian journalists to its militarily sensitive
US operations, even allowing us on board littoral combat
ships and joint high speed vessels in the final stages of
completion.
Cameras were banned, of course. We were monitored
intently on the escorted tour by Austal security
personnel.
Such measures don’t just apply to nosy reporters. Even
Austal’s WA-based chief executive Andrew Bellamy and
chairman John Rothwell face restrictions when visiting
the site.
“I can’t personally wander around the yard at will,”
says Bellamy, a genial English northerner who joined
Austal after sailing his yacht to Australia. “We get a fair
amount of supervision.”
To conform to US regulations which prevent foreign
companies from building its warships, there are Chinese
walls set up between parent and subsidiary. Instructions
to management are supposed to be channelled through
Austal USA’s board, and emails monitored by a
sub-committee made up of retired naval officers.
“Frankly, it doesn’t matter a damn,” Rothwell says.
“We’re not interested in knowing about stuff that we
don’t really care about. We’re just interested in the
business.
“All we really want to ensure is the commercial
decisions that are being made are being made for the
right reasons.”
Perciavalle concurs. “There’s no surprises, no issues.
Everybody’s got the same common objective which is to
be a successful company and build a great ship.”
Australian Ambassador to the United States Kim
Beazley has known the Austal story since his days as a
Federal politician. Its Henderson shipyard lies in his old
electorate of Brand. “I was impressed with their capacity
to succeed in a business where you’re only as good as
Grand lady: Austal’s latest warship, USS Jackson, docked
in Mobile, Alabama. Picture: Greg Biondo
your last boat and your last boat can break you,” Beazley
says.
Last year the former defence minister and Federal
Labor leader watched an Austal-built warship take part
in Pacific maritime exercises. He says there was
serendipity in Austal tapping the defence market. “It
seems that the class of vessel that they have made their
speciality and their living from has now got
unanticipated military uses,” Beazley says.
The US operations were born out of the brazen idea
that a relatively small company from WA could compete
with multibillion dollar corporations to make warships
for the world’s biggest navy.
Rothwell, a boat builder with a big hands and a
baritone voice is unafraid to think big.
The Henderson-based outfit he co-founded in the late
1980s had expanded from commercial boat building to
defence, making patrol boats for Australian Customs and
th
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th
ma
us
cr
th
Am
wo
ev
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ey
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e
s
nd
How did a relatively small WA shipbuilder
beat the world’s biggest military giants to
major contracts with the US Navy? Peter
Williams goes to Austal’s shipyards in
Mobile, Alabama, to find out.
Heartfelt: Austal’s Australian boss Andrew Bellamy at the christening of the US warship Picture: Greg Biondo
You’re only as good as
your last boat, and your
last boat can break you
KIM BEAZLEY
then the Royal Australian Navy. Mr Rothwell believed the
company could export the technology. He says the 2000
terrorist bombing of the destroyer USS Cole in Yemen led
to an opportunity for Austal.
“The US military started to rethink their warships for
coastal operations,” Rothwell says. “They started to get
their head around that it needed to be very fast and very
manoeuvrable to avoid situations like that.”
Austal saw an opening for an innovative shipbuilder
using aluminium to create faster, lightweight ships. And,
critically, affordable.
But if the company wanted to seize that opportunity,
the vessels would have to be built in the United States.
“We’d never do it from Australia,” Rothwell says. “The
American shipbuilding lobby’s quite strong. It just
wouldn’t work from a security perspective.”
So he went on the hunt for a location and a US partner,
eventually settling on a small commercial shipyard on
the Mobile River, home to a long tradition of
shipbuilding.
“We built a big shed without a contract. It’s fairly brave
stuff in those early days.”
Rothwell and his team wore out some shoe leather
wooing the US Navy’s top brass. “There was plenty of
walking around the Pentagon, there was plenty of
visiting Naval admirals and so forth. “There’s a lot of
work to make yourself look credible with the US Defence
people during this whole process.”
The Navy was encouraged by trials it conducted with
an Austal ferry which had been sailing the Canary
Islands off northern Africa.
To get the Mobile facility up to speed and gather the
necessary workforce, Austal took another risk. It
committed to building two ferries for a Hawaiian
commercial operator before a contract was finalised.
The gamble paid off. The vessels were sold and
delivered to the customer.
But how does an outfit from the other side of the world
with no track record in the US even have a chance of
edging bigger, established competitors?
“What they were asking for was a ship that hadn’t been
built by any of those shipyards before,” Rothwell
explains. “The American defence are very good at
exploiting developments that are done overseas.
“They bring them home to them one way or another.
They pay for the development of that product.”
Perciavalle adds: “They wanted to have something with
less overhead structure, and a more commercial
approach to provide a more cost-effective solution.”
Without the necessary security clearances, Austal
couldn’t do it alone. So it teamed up with weapons
systems maker General Dynamics to develop an LCS
which can conduct coastal missions that include finding
and destroying mines, hunting submarines and fighting
small boats.
The Austal-General Dynamics consortium and US
security and aerospace company Lockheed Martin were
both contracted to design and build their own prototypes.
CONTINUES PAGE 14
Pomp: Navy officers line up Picture: Greg Biondo
Watched: Andrew Bellamy (left) flanked by security
Navy pride: Terry O’Brien at parade Picture: Greg Biondo
N
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FROM PAGE 12
One would be made from aluminium, the other steel.
Austal designed its LCS – now known as the
Independence class - back in Henderson, with the help of
the Australian Government’s Defence Science and
Technology Organisation and the Australian Maritime
College.
The vessel was then built in Mobile and delivered to
the Navy as USS Independence at the end of 2009.
After another LCS was contracted, the Navy ordered
another 10 - with Austal as the sole contractor - a backlog
worth $US3.5 billion. This year it took an option for an
11th ship.
Austal and Lockheed Martin are both building the
frigate-like vessels in equal numbers. But the two
variants are significantly different to one another.
While Lockheed Martin’s Freedom class is a
traditional mono-hull warship, the Independence class is
a multi-hull trimaran like Austal developed for
commercial ferries.
Despite the enthusiasm of the Navy brass for the LCS
vessels, the program has been marked by controversy.
A Navy-commissioned internal report in 2012 claiming
vulnerability in war zones gave succour to powerful
critics like former Republican presidential candidate
Senator John McCain, who chairs the Senate Committee
on Armed Services.
As recently as April, McCain blasted the program in a
Senate address, deploying barbs like “wasteful”,
“dangerous” and “shameful”.
According to McCain, the Navy had produced a
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Safe travels: The Second Lady, Jill Biden, christens the USS Gabrielle Giffords. Picture: Greg Biondo
“supposed” warship which apparently couldn’t survive a
hostile combat environment, saw its cost doubled since
inception and had a “revolutionary” design inferior to
what came before.
US Defence Secretary Chuck Hagel capped the
program at 32 ships instead of 52. He has since accepted a
Navy recommendation to order 20 frigates similar to the
LCS with greater firepower and survivability. The
decision left Austal and Lockheed Martin in the box seat
for more contracts.
“We are a big dog in the hunt,” Perciavalle says,
employing a favourite expression. “If the Navy wants to
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get to (a fleet of) 306 ships and they want to do it cost
efficiently, we’re in a pretty good darned competitive
position.”
That could see Austal USA building warships into the
late 2020s, a remarkable period of earnings visibility for
a shipbuilder.
Navy leaders attending the USS Gabrielle Giffords’
christening this month one after another reiterated their
commitment to Austal’s LCS variant.
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Big guns
FROM PAGE 14
“The partnership between the United States Navy and
Austal is strong,” Assistant Navy Secretary Dennis
McGinn said. “We work very hard to squeeze as much
value out of every ship and every investment.”
Mr McGinn said taking the program to 52 ships would
depend on a “war fighting business case”.
“We need these. They have so many benefits. They can
do so many different missions. They are a very efficient
use of American taxpayer dollars.”
Away from the public chumminess, the Navy by all
accounts is a demanding client. “When you’re supplying
a warship to the American Navy, you better be on the
page because they take that very seriously,” Bellamy
says.
Through the JHSV, Austal even more directly
translated the high speed commercial ferries that were
once its bread and butter to military use. It has a 10-ship
$1.6 billion contract for 10 of those catamarans, with an
option for one more.
The Spearhead class JHSVs are designed to transport
troops and provide humanitarian assistance by ferrying
people from disaster-affected regions.
The JHSV hasn’t attracted the controversies of the
LCS. But difficulties in construction of the first-in-class
ship led to a crisis at Austal that threatened the company.
Since setting up in Mobile, Austal has invested $US380
Howdy: Craig Perciavalle,
president of Austal USA
Picture: Greg Biondo
million building facilities to meet the Navy contracts. To
finance that it took on substantial debt.
Losses from the JHSV 1 project ran into the tens of
million of dollars.
At the same time, the Henderson business was
suffering from a lack of work. By November 2012 the
board decided to act.
“Whilst we didn’t have a gun to our heads from the
bank, we would have if we hadn’t done something about
it,” Rothwell says.
To avoid going broke, Austal embarked on a troubled
capital raising which saw its share price cut in half. In
the end, $78 million was raised, and subsequent asset
sales steadied the ship.
“I never feared that we would lose the business,”
Rothwell says.
We are a big dog in the
hunt … in a pretty good
darned position
CRAIG PERCIAVALLE
While he and other co-founders saw their stakes halved
in the process, Austal’s stock has tripled in value since
those dark days.
“It’s been a bumpy ride. We have turned around a
difficult situation,” Bellamy says.
“Now we’ve got ships popping out of assembly bays all
over the place and the money’s starting to roll in.”
On top of the revaluation which saw Austal this month
admitted to the ASX-200, the company has also resumed
paying dividends.
The Mobile community has also been a major
beneficiary of Austal’s presence. The number of workers
at the facility has swelled from 800 five years ago to more
than 4000.
Mobile Area Chamber of Commerce president Bill
Sisson says the higher paying manufacturing jobs have
bolstered the local economy and reinvigorated the city’s
shipbuilding industry.
Federal, State and local governments have contributed
about $70 million in grants to Austal USA, and funded a
training facility which feeds workers to the plant.
“It’s money well spent,” Sisson said. “Compared to the
sort of impact that those salaries have on this area it’s
seen as a very good investment.”
He said Mobile ranked among 12 manufacturing cities
in the United States. “We have Austal to thank for that.”
During his visits Mr Bellamy enjoys some up close and
personal feedback from Mobilians, who like many
Americans take national defence to heart.
“People genuinely stop you in the street and say ‘we’re
so happy that you’re here. We’re so proud of what’s
happening, thank you for what you’ve done’.
(Australians) don’t do that.”
The writer travelled to Mobile courtesy of Austal
C
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The Australian cricket team is heading into
the Ashes series next month with many
new supporters. Kim Macdonald
considers the business strategy that helped
cricket win over fans and sponsors
C
ricket has undergone its biggest
renaissance since businessman Kerry
Packer introduced World Series Cricket in
the 1970s.
The basic elements of bat and ball have
not changed since the Saxon days, but a
shift in the business model underpinning
the game has helped to renew cricket’s fortunes across
the country.
A shorter game format in the form of the Big Bash
League, as well as a marketing overhaul, new broadcast
and sponsorship deals and a slick social media campaign
have helped to widen cricket’s appeal, turning the
gentleman’s game into a sport for gentlewomen and
children too.
Cricket Australia chief executive James Sutherland
stirred the pot recently when he boldly declared that
cricket was Australia’s national game, citing record
crowds, TV viewers and participation rates.
Not everyone would agree with Sutherland, but there is
little doubt it has enjoyed a sharp growth in popularity of
late.
TV viewership for BBL is up nearly 400 per cent across
Australia over the past two years, WACA Ground
attendance is up 25 per cent over five years and
sponsorship for the Perth Scorchers is up 200 per cent
this year alone.
Suddenly, everyone wants a piece of the action.
It is a surprising turnaround for a game that only five
years ago was in such dire straits that one prominent
businessman labelled his sponsorship “a philanthropic
gesture.”
Even WA coach Justin Langer concedes his priority
over the last few years was to breathe life back into WA
cricket and to bring the sport’s “dysfunctional family
back together”.
WA Cricket Association boss Christina Matthews
credits the revival — increasingly apparent in the
lead-up to next month’s Ashes series — to a deliberate
business strategy.
From her office at the WACA, she says cricket had two
major problems.
“One, it was too old and traditional and had a single
focus audience — male, pale and stale,” she says.
“We have made it our mission and our brand to get out
and engage with people . . . so people don’t see the WACA
as an ivory tower.
Cricket was too old —
male, pale and stale.
CHRISTINA MATTHEWS
“Secondly, we were too dependent on other countries
for our revenue, so we needed to get something that was
more home-grown and able to appeal to a broader range
of people.”
The 2011 rollout of Big Bash League formed a big part
of the solution.
“The introduction of BBL, alongside the Kerry Packer
revolution, are the most significant things to happen to
cricket in recent times,” she says.
Matthews says the creation of BBL’s city-based teams,
as distinct from State cricket teams, provided the
opportunity to build a new sense of tribalism and
excitement. In other words, it gave fans some fanfare.
The traditional State-colours were replaced with bright
orange outfits. Fireworks, flame-throwers, music,
dancers, pyrotechnics and even a mascot called Blaze
were introduced to the matches.
The WACA was nicknamed The Furnace during BBL
games and the venue quickly established itself as the
CONTINUES PAGE 20
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C
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FROM PAGE 18
biggest BBL merchandise merchant in Australia. (“Of
course, winning helps” concedes Matthews about the
Scorchers’ impressive run.)
Appeal is set to broaden further still in the upcoming
season with female teams to join the BBL revolution.
“Some intrinsic things in cricket never change; there
is bowling and there is fielding,” Matthews says.
“But then there is the excitement that you put around
that.
“Where Big Bash is concerned it’s been about really
strong event presentation, with fireworks, music and
entertainment.
“It’s like what America has done with baseball — we’ve
been slow to pick up on that (entertainment) aspect.”
American baseball may well have been the inspiration
for Cricket Australia’s deal with Apple TV, another
crucial part of their business strategy.
The sporting body followed in the footsteps of Major
League Baseball to sign with the technology giant to
become the first Australian sport to create its own
channel. It streams the channel — content is created
with Channel 9 — via the internet to televisions that
have an Apple TV device.
Going live in January, it includes highlights, news
packages, player interviews and historic matches.
CA and Channel 9 generate revenue by advertising on
the channel and while it is free for viewers at the
moment, they have not ruled out paid subscriptions at a
later date, creating an innovative revenue stream within
its existing $550 million broadcast strategy.
The strategy includes Channel 9’s international cricket
game broadcasts and Network Ten’s BBL broadcasts.
The free-to-air station helped boost BBL viewership to
968,000 in the 2014-15 season, up 253,000 on when it aired
on Foxtel two years ago.
“It reached a wider audience and that had an
automatic impact for us in that it changed the
demographics,” Matthews says.
“As soon as it appeared on free-to-air, it attracted more
families, more females and more kids to the game and it
created a real family atmosphere.”
Matthews believes BBL may also prove a saviour for
the Test series too, with BBL newcomers able to develop
an appreciation for the sport that she hopes will mature
to Test level.
But getting a fan to move from a three-hour match to a
five-day Test is not an easy proposition, particularly in a
country where football tends to dominate in the winter.
Cricket Australia’s Finn Bradshaw is the head of
digital and of a 12-person team tasked with keeping
cricket on everyone’s mind. The team live tweets
every five minutes during a match, posts updates on
Facebook and provides a constant flow of copy for the
website.
Their efforts have paid off nicely, with Nielson ranking
it the No.1 sports website in Australia last December.
Traffic has grown further since, with a 40 per cent
jump in the past year. Its Facebook reach hit 10 million at
around the same time.
In Bradshaw’s view, the social media and digital
strategy has played catch-up in recent years, finally
offering fans a quality service, and in the process,
winning over some new ones.
And the strategy is affecting the bottom line.
The 2013-14 revenue was $29 million, up from $26
million a year previously when it operated under a
different funding model. In those days, WACA got much
of its funding from Cricket Australia, which gave every
State an equal share of the pie.
Matthews said the old model made it hard to plan and
strategise, because there was never certainty about how
much WA would get from year to year.
Winners are grinners: Perth Scorchers’ Justin Langer wth the T20 Big Bash League Trophy. Picture: Ben Crabtree
We had to
bring cricket’s
dysfunctional
family back
together.
JUSTIN LANGER
Family circle: Justin Langer has
worked hard to bring the WACA
family back together.
Picture: Steve Ferrier
About three years ago, it was agreed that States would
hand over many commercial activities, such as ticketing,
to Cricket Australia, which would in turn provide each
State with a minimum funding guarantee.
“It means our business is de-risked,” Matthews says.
“We get guaranteed funding from Cricket Australia
that is not dependent on attendances at international
matches, and Cricket Australia carries all that risk, and
with it, the upside.
“It means that at the coal face, we know what we can
deliver and we can be strategic in our approach.”
And this, says Matthews, has been crucial to allowing
WACA to focus on its efforts to broaden cricket’s appeal
and tighten its connection with the community.
Matthews credits coach Justin Langer for helping
deliver the cricket’s family brand, which appeals to fans
and sponsors alike.
Langer, who regularly stays an hour after matches to
sign autographs, said the players were not only expected
to be good cricketers, but to be good people too.
The players were told in no uncertain terms that
cricket was cleaning up the age-old image of partying
players and that they were expected to act like role
models in the community. The makeover was in part
made in respect of their fans and sponsors.
“When I took on the role here I wanted to breathe life
back into West Australian cricket as one of my
objectives,” Langer said.
“It’s almost like bringing a dysfunctional family back
together.
“And what I mean by that is that everyone seemed to
hate the WACA and the WACA seemed to have issues
with everyone else, whether it was the media or Cricket
Australia.
“It was really hard to bring everyone back into the
family of West Australian cricket.”
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BITCOIN
Is it worth the
paper it isn’t
printed on?
Is bitcoin a viable asset class or just a
volatile bit player in the world of
commerce? Kate Emery reports on the
world’s most popular digital currency, its
take-up in Perth, and the local players
determined to take it to the next level
W
hen Perth’s Bitcoin Embassy
opened its doors on Aberdeen
Street Northbridge last year Leo
Treasure made a speech.
The bitcoin enthusiast spoke on
the future of the cryptocurrency
and practical matters, including a
recent ruling that bitcoin transactions in Australia
would attract GST.
Within weeks Treasure’s computer would be hacked
and about $300,000 of bitcoin stolen.
Eight months on the 29-year-old is no closer to getting
his money back and the story of the theft still does the
rounds of Perth’s fledgling bitcoin community.
There are plenty of stories told and retold about bitcoin
and only some are apocryphal. There’s the one about the
guy who made a fortune, there’s the one about the guy
who lost a fortune. Sometimes they are the same guy.
The world’s most popular digital currency comes with
a side of mystique thanks in part to the mystery
surrounding the identity of its supposed creator Satoshi
Nakamoto and conspiracy theories around the collapse
of the world’s biggest bitcoin exchange, Mt Gox, last year.
Closer to home that mystique is aided by Zhenya
Tsvetnenko: the Russian-born Perth millionaire who
arrives for an interview with WestBusiness Insider in a
22
JUNE 2015
head-turning black Ferrari. More on Tsvetnenko later.
At its simplest bitcoin is a digital currency that can be
used to buy goods and services from anyone willing to
accept them.
Sometimes called a cryptocurrency because it uses
encryption techniques, bitcoin is anonymous and does
not require a credit card or bank.
As a result it has been associated with dodgy dealings
and the notorious Silk Road website.
The anonymity and a lack of regulation also makes it
tough to seek recompense when something goes wrong.
Treasure is realistic about his “very slim” chances of
recovering the money. But he is adamant the hacking
was no fault of bitcoin’s security.
“Bitcoin is the most secure computer system ever
known to man,” he tells Insider from Taiwan, where is
working on an electronic card to safely store bitcoin
called a “cool wallet.” He is also helping
businesses make their websites
bitcoin-friendly.
“What happened in my case is I
suddenly found myself with a lot of
money, I got overwhelmed with all the
different methods to securely store my
fortune, was worried about password
management and placed too much trust
in my Apple computer’s operating
system security model.
“I now have a deeper appreciation
and understanding for best practices
when it comes to computer security.”
What started as a hobby — “I first heard about it from
my good friend who phoned me in a state of excitement”
— is now more like a business for Treasure.
He sees its future as a hedge against global markets
and an alternative to traditional asset classes like shares,
bonds and real estate.
I think it absolutely will become
mainstream in one shape or form …
I personally still hold bitcoin
because I still like to have a punt.
BITCOIN INVESTOR ZHENYA TSVETNENKO
Bitcoin royalty: Russian-born
Perth millionaire Zhenya
Tsvetnenko made a lot of money
very quickly from bitcoin. Despite
believing it will go mainstream,
he does not advise investing in it
now.
“The price is volatile, it’s risky and largely it’s
unregulated by the government,” he says.
“Nothing is without risk though and those people that
take sensible risks reap rewards.”
If you want to get your hands on bitcoin you can either
trade with someone else or “mine” for them using
powerful computers to verify bitcoin transactions by
solving complex mathematical equations. Bitcoin is the
“reward” for verifying the transactions.
Talk to someone who got rich through bitcoin and it is
odds-on they were a miner.
Supply is capped at 21 million and all bitcoin
transactions are stored on a public ledger known as a
block chain.
Getting bitcoins is one thing. Figuring out what
to do with them is another.
Much of bitcoin’s volatility — since 2009 a
single bitcoin’s worth has fluctuated from a
few dollars to more than $US1200 — is down to
the fact it is an immature market. In Perth
that means there are only so many places to
spend it.
Cannington Bowling Club is one of a
handful of bricks-and-mortar venues in
Perth that accept bitcoin. Others include
Storm Computers, Fremantle’s Treasury
Gallery.
Some like Frisk Bar in Northbridge and
the Perth Champagne Club once did but no
longer do, the latter citing processing costs,
volatility and lack of interest.
“We realise we’re not the kind of venue
you’d expect to accept bitcoin but then we’re
not your average bowling club,” Cannington
Bowling manager Scott-Leonard Landers says.
“We’ve been ahead of most clubs in WA as far
as technology goes for a while — we haven’t even
offered a paper membership application form at all
for three years now.
“So it seemed a natural progression for us to stay a
little ahead on the digital currency front as well.”
Take-up has been “a little slower than initially
anticipated”.
Daniel Taylor, who took an interest in bitcoin when it
was worth about $10 and now works with companies on
applications of the currency, said Perth’s bitcoin
community was “quite small but it does exist”.
“It’s a shame because bitcoin is a community project,”
he says over a coffee bought with coins of the non-digital
variety.
“In Melbourne and Sydney it’s very different and so
many shops accept bitcoin. It’s an all or nothing game,
it’s either going to work and be worth lots or it’s not.”
C
hris Lees is one of the community’s more
active members and part of a local meet-up
group.
With 123 members it is small compared
to comparable groups in Brisbane (267),
Sydney (498) and Melbourne (866).
If Treasure and Tsvetnenko have made
bitcoin their business, for Lees it is as much “a source of
fascination” as anything else.
He runs advocacy organisation BitAware Australia,
which aims to educate people on how a currency they
cannot see or touch works.
“We like to challenge people’s perceptions about
bitcoin,” Lee says.
“Some people have a perception that it’s rich people
who are speculating on the price, people who think it’s
some kind of scam or that it’s just people who want to
buy drugs or illegal things on the internet.”
Lees bought in when bitcoin was around the $1000
mark. It is now closer to $300. He did not make money but
caught the bug.
“I sought out some local businesses that accept bitcoin:
I bought some coffee with bitcoin, I bought a few things
online with bitcoin and got interested in it from there,”
he says.
“I attended a bitcoin meet-up — that would have been
January 2014 — and from there I enjoyed being part of
that little community.
“For a lot of people bitcoin is a tool and it’s not a source
of fascination for them.
“For me my bigger interest is in helping people to just
use it in their everyday life and get the maximum benefit
from it.
“I compare bitcoin to email or the internet.
“Basically with bitcoin you can move money between
countries as quickly and easily as you can send email.
“You would have to be quite short-sighted to think that
it won’t change the world.
“If you talked to people back in 1998 about how they
think the internet will impact on their lives they’d
probably say it’ll make it easier to communicate… and
you think about what you can do with the internet
today.”
“I think it will become the case that you can do an
amazing amount with bitcoin and it will start to creep
into people’s lives and sometimes they might not even
realise what’s happening is bitcoin.”
For many, security is the big issue standing in the way
of bitcoin going mainstream.
Nobody likes paying bank transaction fees but when
banks are involved at least there is a chance of
recompense if things go wrong.
PJ Radcliffe, a senior lecturer at RMIT University in
Melbourne, argues bitcoin and other digital currencies
are in the “Wild West” stage.
They might become a useful part of the economy but
they are not there yet.
“The Wild West had very little law and order, people
took justice into their own hands and usually
communities came together to apply a collective justice.
“The digital currency scene is a little like that,” is how
he explains his analogy.
CONTINUES PAGE 24
JUNE 2015
23
Premium
economics
Singapore Airlines has joined the growing
list of airlines to introduce premium
economy to their offerings.Airline
boardrooms have put off introducing
premium economy for years, fearing that
business passengers would move back to
save money.
Instead, they have consistently found
economy passengers spend more to
move up.
Almost without exception airlines have
had to add more seats to premium
economy to meet demand.
Premium economy is a sweet spot for
passengers because it has ample leg and
shoulder room, business class meals and
wines and a dedicated cabin, but it only
costs about 20 per cent more than
economy.
Singapore Airlines, which will introduce
its first aircraft with premium economy in
August, has lifted the bar once again.
The public relations blurb says it all:
“Premium economy (with a) book the
cook service, French champagne, a
specially-designed collector’s edition
amenity kit and the world’s most
advanced in-flight entertainment system
with a 34cm screen.”
The meals sound first class, with
offerings such as seafood thermidor,
roasted chicken in garlic cream sauce and
rosemary beef brisket.
But it’s all about the seat for many
travellers, who upgrade for the 20cm of
recline, 47 to 50cm of width (depending
on the aircraft) and 96cm of seat pitch.
That is almost 20cm more than economy.
The seats are finished in full leather
with calf-rests and foot-bars.
Passengers will find the airline’s
premium economy on its long haul fleet
of 19 A380s and 19 Boeing 777ERs. It will
also be fitted to its yet to be delivered
A350s.
Those aircraft models do not operate
to Perth so passengers will only be able
to book it from Singapore to destinations
in North Asia, the US and Europe.
The first premium economy-fitted
Singapore Airlines flight will be from
Singapore to Sydney on August 9.
After that you will find premium
economy on services to Beijing, Delhi,
Hong Kong, Frankfurt, London, Mumbai,
New York, Shanghai, Tokyo and Zurich.
Before you fly, visit
sit
For information, th
he latest
news and reviews from
f
experts and passen
ngers
Payment: Scott-Leonard Landers
accepts bitcoinPicture: Ian Munro
Bitcoin and other digital currencies are still in
the Wild West stage. There have been some
very serious hacking attacks and more can
be expected.
BPJ RADCLIFFE, SENIOR LECTURER AT RMIT UNIVERSITY
FROM PAGE 22
“There is a lot of fraud and misbehaviour, which is
impossible for legal authorities to handle.
“Take the case of several bitcoin purchases — US
dollars to bitcoin — from China using PayPal.
“After the transfer the buyer invoked a disputes clause
and clawed all their money back and had the bitcoin.
Legally nothing could be done.
“The seller reputation scores on Silk Road are a case of
the community sorting things out.
“If a seller misbehaved they got a bad rating and then
the community would not purchase from them anymore.
“The seller and purchaser anonymity which is a touted
strength of bitcoin, would stop most people from using
the currency.
“If I get ripped off I cannot even find out who the seller
is let alone start any legal action.
“There have been some very serious hacking attacks
and more can be expected.”
Then there is the matter of bitcoin’s volatility, which
borders on a Catch 22 situation: if the market does not
grow the currency will remain volatile, if the currency
remains too volatile the market will not grow.
T
his time last year Tsvetnenko looked like the
face of bitcoin in WA. The tech entrepreneur,
who made his money designing a computer
program to deliver text messages to mobile
phones, had just floated bitcoin mining
company Digital CC, backed by Navitas chief executive
Rod Jones and veteran promoter Craig Burton. Since
then the appeal of pegging the company’s share price to
the bitcoin price has dimmed and Digital CC has taken a
big step back.
The computer processing power once used to mine
bitcoin is now to be mostly leased out to others who want
to try their luck.
Recently the group moved into the remittance market.
Tsvetnenko, who made “a lot of money very quickly”
mining bitcoin, believes it will ultimately go
mainstream. People just might not realise it.
“I think it absolutely will become mainstream in one
shape or form,” he says.
“People may not be conscious of the fact that they’re
using bitcoin — that’s a very important point — but the
technology absolutely is going to become mainstream,”
he says.
“All the features of the bitcoin and block chain
technology are revolutionary.
“It’s decentralised, it’s secure, it’s backed by
cryptography, it is peer-to-peer.
“Those things are critical to new designs of systems.
“Things need to be able to talk directly to each other
without friction so you might have a lightbulb that
regulates its own power supply that directly pays with
bitcoin for the supply of electricity.
“When you are in the future working with any type of
system that uses peer-to-peer communication it is very
likely to be based on the block chain technology that
underpins bitcoin.
“Now of course there is no block chain without bitcoin
but a user does not need to know when they’re using the
block chain technology that they’re using bitcoin per se,
they just need to know that it works and it works well.”
Tsvetnenko still has about $150,000 of his own money in
bitcoin but he talks about it a little like a pile of chips on
a poker table.
“I wouldn’t advise anyone else to invest in bitcoin,” he
says.
“Bitcoin is highly volatile and hence when we talk
about investors’ money, when we talk about our company,
the decision has been made to diversify and get away
from being pegged to the bitcoin price.
“I personally still hold bitcoin because I still like to
have a punt.”
HURRY
Only 6 Da
ys Left
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taste
Favourite drop: Deidre Willmott
The HSV Maloo R8 sells for
$79,990 at Shacks Holden,
58-64 Queen Victoria Street,
Fremantle
SHEER UTILITY
Minister for Small Business and Corrective Services Joe Francis,
a self-confessed revhead, guest reviews the HSV Maloo R8
H
olden utes have been a
constant in the fabric of
Australian culture since
the first one rolled off the
production line in 1951.
Ford may have been first with the ute
— but Holden perfected them.
My garage at home has always had
a Holden ute as pride of place and my
current baby is a 1980 308 Silver WB
with obligatory Caprice front.
Cars have been a passion for me
since the Torana A9X ruled the
Mountain.
The aptly named Perfect Blue
coloured latest HSV Maloo R8 is at
the pinnacle of Australian motoring
— a world-class HSV product.
Everything about this fun-machine
is perfectly refined and presented. It
screams taste without pretention,
and patriotism without excess.
My teenage bedroom walls were
adorned with posters of Brock
Commodores; the forerunners to
today’s HSVs.
My favourite was the VK Group A,
and the Perfect Blue Peter Brock
tribute colour is a stroke of design
genius with religious devotion. It
would have to be the sweetest colour
Holden has ever sprayed.
With her front diffuser highlighted
by daytime running lights and the
flared guards barely housing 20”
alloy wheels, this lady brings back
memories of those VK Brock
Commodores.
Quad exhausts poke out from each
side of a sculptured rear diffuser and
red four-piston brakes sit behind the
alloys to rein in the 340KW of power
generated from the brutish heart of
this car — the 6.2 litre LS3 V8 engine.
As I sunk into her heated HSV
sports seats, it was immediately
apparent that this lady contained
more fruit than an orchard and the
luxury of the Onyx leather seats and
steering wheel were just the start.
Driver assists, such as head-up
display on the windscreen, reversing
camera and automatic park assist
are all standard, as well as lane
departure warning and forward
collision help to keep your attention
focused on the road.
They are fantastic additions which
ensure this vehicle is at the very top
end of the Australian-built car
market despite ancestral roots
residing firmly in the middle of the
last century.
But the technological wonders of
this car recede into the distance
when you start it up.
The real star of the show
announces itself with that
My love affair
with Holden utes
began years ago.
familiar and wonderful guttural low
V8 growl that reverberates with a
slight shudder through the cabin.
The steering was precise and light
for a car of its weight and the
well-weighted thick leather steering
wheel sat nicely in my hands.
The gear changes from the
six-speed auto transmission with
paddle shifters are as smooth as any
exotic, with the engine always
revving in the sweet spot.
My WB ute was built in a time
when people actually carried things
in the rear tray. I have used mine to
carry everything from timber and
rocks to mulch.
This Maloo’s tray is equally as
cavernous and is also equipped with
an electrically operated, hard
tonneau cover. But I just can’t see
this ute being used by too many to
pick up a load of mulch.
Some cars, like the HQ Coupe,
GTR-XU1 and VK Group A’s have
become absolute collectors. This
Holden ute honours the great Aussie
tradition of utes in spectacular
fashion.
Henry Kissinger once said: “Power
is the ultimate aphrodisiac.”
The 570Nm of torque that the
Maloo can unleash did not make me
fall in love with it. My love affair
with Holden utes began years
ago. This lady just reaffirmed
those feelings.
As I gave the keys back I
thought to myself, “I just want
one!”
Joe Francis
Chamber of Commerce and Industry
boss Deidre Willmott clearly
remembers the first bottle of wine
she tasted.
It was in her undergraduate days
at UWA and someone in her group
ordered a rather modest bottle of
Queen Adelaide Riesling.
“I can remember being very
impressed because it was the first
time anyone my age had ordered a
bottle of wine,” she said.
Thankfully, Willmott’s tastes and
her capacity to afford wines of more
prestige have changed as her career
has progressed through various
high-profile leadership roles in
government and business.
“When I was younger, as far as I
can remember people drank riesling,
mosel or claret, usually from a cask.
Now we have much more developed
tastes,” she said.
“I generally like to stick to West
Australian wines and particularly
like cabernet sauvignon or pinot
noir. In whites I like a chardonnay or
if I am looking further afield I like a
light white like a pinot gris.”
There is no better way to
experience the wines of the world
than to try them when travelling. It’s
a mantra Willmott follows with
husband lawyer Michael Lishman.
“We like to try local wines when
we are overseas. We were recently in
India and found their wines very
nice. We have been to New Zealand a
few times and really enjoy their
whites,” she said.
“They used to sell wine at very low
prices in their grocery stores and I
once decided to see if I could find one
I didn’t like but never did.”
IN THE CELLAR
ᔢ Cullen Kevin John
Chardonnay
ᔢ Cullen Diana Madeline
ᔢ DuBrul Cabernet
Sauvignon, from Yakima
Valley, USA
ᔢ Vasse Felix Heytesbury
ᔢ Philippe Livera
Gevrey-Chambertin
Burgundy
ᔢ Pierro Chardonnay
Ray Jordan
F
A
S
H
O
N
A CASUAL
AFFAIR
Clockwise from
right: Tateossian
cufflinks, $235;
Ermenegildo
Zegna reversible
brown and black
leather belt,
$495;
Kiton pocket
square, $125. All
available at
Parker & Co.
Professionals should avoid the sartorial
sin of dressing down in casual garb
that clashes with the polished image
they wish to present
W
hile the suit is the
trusty
cornerstone of the
corporate man’s
wardrobe, finding
the right casual
clothes to wear at
an after-hours work event can prove
more challenging.
Whether dressing for a pub dinner
with colleagues, a night in a corporate
box at the football or a work-related
cocktail party, professionals should not
make the sartorial error of dressing
down in casual garb that does not fit
properly.
Christian Tana, of Perth menswear
store Parker and Co, warns against
dressing too casually at any event
where you are likely to see your
colleagues or associates.
“Be cautious about dressing in such a
relaxed way that you no longer convey
authority or management potential,”
he said
“You are still required to project a
professional image with colleagues and
clients outside of work.
“This can be achieved with a pair of
casual trousers or jeans and a sharp
dress shirt, instead of a faded T-shirt.”
One of the most common mistakes
men make with their casual attire is
wearing clothes that do not fit correctly,
such as jackets which have a
disproportionate width in the shoulder,
which serve to diminish their profile.
Another regular mistake is not
paying attention to the finer details of
their casual wear, thinking they can get
away with poor quality shoes and belts.
The key to professional dressing after
hours is to add a polishing touch to
casual attire. A piece of tailoring gives
an instant edge and a sense of authority
and formality to your look.
“It reflects that you’re serious about
your professional relationship with
your clients and associates,” Tana said.
“Make sure you look for attire with
the same characteristics you would
look for in a quality suit.
“This means superior fabrics,
craftsmanship and an excellent fit.”
The most obvious wardrobe staple for
the casual corporate chic look is the
tailored jacket. The trans-seasonal
sports jacket is great for these types of
after-hours events and it adapts well to
all climates.
“Look for navy or black in a serge or
hopsack cloth. Another style direction
is a luxury houndstooth check jacket in
super fine wool, cashmere or silk
blend,” Tana said. “There are many
contemporary check sports jackets
available this season.”
Consider teaming your jacket with an
on-trend trouser option.
This season sees the slim leg, flat
front trouser return in high-quality
wools, as well as flannels and
corduroys, in shades of grey and blue.
For a natty option, add houndstooth
check trousers.
“Tailored trousers or denim jeans, a
dark rinse is preferable, as they can
look almost like a dress trouser, are a
great option for casual professional
dress,” Tana said.
Once you have invested in your
tailored items, add a good-quality dress
shirt, a pair of sleek upper casual shoes
and a hoard of good accessories to
complete your look.
“Complementing accessories with
classic pieces enables you to add colour
and character in an effort to refine
your total look,” says Tana.
“Accessories such as ties, pocket
squares and belts can play a major
factor in creating a different style for
various occasions.”
A quick guide on what to wear:
For a casual weekend pub dinner —
blouson leather jacket, tailored casual
shirt, jeans and stylish dress trainer.
A night in a corporate box at the
football — sports jacket, tailored
trouser, open-neck shirt and loafers.
The after-work cocktail party — dark
elegant suit, shirt and tie or a sports
jacket, shirt, pocket square, quality
cotton trouser and dress shoes.
Main image: Z Zegna
jeans, Kiton sports
jacket, Brunello
Cucinelli shirt,
Church’s shoes, Kiton
pocket square
Available at Parker &
Co. PH: 9321 8621
Picture: Lothar Konle
Elizabeth Clarke
JUNE 2015
29
D
I
N
N
G
LUNCH WITH
TONY GALATI
Spud rebel Tony Galati scrubs up for lunch with Kim
Macdonald and reveals his incredible work ethic
S
alt-of-the-earth farmer Tony
Galati is clearly
uncomfortable in a suit.
Sitting in the exclusive
Nobu Japanese restaurant,
he tugs at the lapels and explains his
regular work clobber is waiting for
him in his ute.
He assures WestBusiness Insider
that he will be back in his trusty blue
singlet and shorts before he leaves
the carpark.
By his own admission, Galati has
not changed much in his decade-long
transition from farmer to the head of
a multi-million dollar empire, which
employs more than 1000 people in the
Spud Shed supermarket chain, an
emerging property development arm
and 2000ha of farmland.
His simple taste — he is
disappointed there is no fried rice on
the menu and is emphatic he won’t
eat anything rare, raw or spicy —
sits in curious juxtaposition to the
fame and riches he seems to have
unwittingly acquired.
He shrugs off any suggestion of a
cult celebrity status when
approached by bejewelled lunching
ladies who just have to say hello and
an elderly couple from Mandurah
who are excited at meeting “that
bloke from TV”.
His profile has been buoyed of late
by appearances on programs like
The Footy Show and his high-profile
stoush with the potato regulator that
has attracted the attention of the
Premier and the Prime Minister.
But for Galati, the money and the
attention are simply byproducts of
his drive to work as hard as he
possibly can.
He works 13 to 16 hours a day,
seven days a week, 363 days a year,
allowing himself a half day’s work on
Easter Sunday and Christmas Day.
“I don’t have to do the work, but
the thing is, that’s all I know how to
do,” he says.
Galati, aged 54, started life as the
eldest of five children born to
Sicilian migrants in a staunchly
Italian pocket of Spearwood.
“There were 20 or 30 lots, Italians
on all of them, all along the street,”
he says.
“We stuck together and always
spoke Italian. On my first day of
primary school I thought, what the
30
JUNE 2015
hell? Because I did not even know
there was an English language. I was
six years old and I could not speak a
word of English.”
By the following year he was
translating for his parents, who
barely spoke English, and from the
age of 12 he had a central role in
running the family’s fresh produce
business. The weight of
responsibility fell heavy on his
young shoulders.
“When I was in Year 7 I used to run
the chequebook (for my parents), and
I used to worry and think, how am I
going to pay this bill? It started at
that age.”
He recalls how in Year 9 he would
nip out of class, pretending to go to
the bathroom. Instead, he would race
to the nearest pay phone to find out
the day’s produce prices, and then
call his mother with advice on
whether to sell the beans.
He left school in Year 10 for farm
work, surviving on $20 a week for
three years while he and his brother
Vince saved for their own land.
They reinvested their money,
eventually moving into retail with
the first of six massive
supermarkets. Another four are on
the cards, and some will be built by
his property development arm.
He says part of the motivation to
keep growing is to provide access to
fresh food at relatively cheap prices,
having seen many “needy people
needing help.”
“We’ve come from there and we’ve
seen how hard it is, especially with
my parents who didn’t have a lot,” he
says.
His passion for healthy living has
prompted his 20kg weight loss in the
past year, and is behind his ongoing
refusal to sell cigarettes in his stores,
foregoing an estimated $20,000 a
week.
“I believe if you do the right thing,
good things will come to you.”
He rarely drinks himself, and
having witnessed many families torn
apart by alcohol, refused to sell the
Family man:
Spud Shed boss
Tony Galati at
Crown’s Nobu.
Picture: Bill Hatto
I used to run the family
chequebook in Year 7 and
worry about paying the bills.
stuff until a few years ago. He caved
in when approached by a group of
South West winemakers making
“bugger all” after being overlooked
by supermarket giants. While he
regularly receives letters from happy
shoppers, not everyone is a fan.
The Potato Marketing Corporation
is suing Galati, claiming he is
hurting many small growers by
deliberately planting too many
potatoes. Galati denies he has
exceeded his quota.
He is unlikely to come across any
supply restrictions is his fledgling
export push into China. He believes
the billions of consumers in the
Middle Kingdom will become a
lifeblood for local farmers, and he
predicts Chinese interests will
inevitably buy up increasing tracts
of WA land too.
Family is his other major passion
in life. He divorced 10 years ago after
22 years of marriage, and now lives
with his partner, an accountant who
works in the business.
He says his grandchildren are his
priority these days, but admits his
long hours on the farm meant he was
often away from his own children
when they were younger.
He enjoys a close relationship with
them as adults, but often has to work
around the tough schedule they have
as parents and at the Spud Shed.
“It’s like that song, (Cat’s in the
Cradle) because now my kids have
grown up, and they’re so busy. I’m
ringing them and I can’t get
through.”
He says he and his children
promise each other a family day
soon. No doubt it will start before
sunrise.
Lunch
Yellowtail sashimi jalapeño
Black cod miso
Pork belly with spicy miso
caramel sauce
Scallop tiradito
Classic bento box
26
46
28
21
45
Wines
2013 Pierro ‘LTC’
semillon sauvignon blanc,
Margaret River
15/glass
2011 Penfolds Bin 28
shiraz, Barossa
16/glass
Crown Casino Complex,
Great Eastern Hwy,
Burswood WA 6100
(08) 9362 7551
www.crownperth.com.au/Nobu
OYSTER PERPETUAL
GMT-MA STER II IN 18 CT WHITE GOLD