Western Australia’s economic boom has not been all plain sailing for private companies. Our annual review of the sector identifies both winning companies and strugglers, and highlights the large number of sharemarket floats and trade sales.
Perron Investments chairman Stan Perron has ridden a few booms during his 84 years, but he reckons the current boom is the best he has ever seen.
Clough Ltd director Harold Clough is also very bullish, describing the boom as “a period of unprecedented prosperity, and I think it will go from strength to strength”.
Messrs Perron and Clough met last week with three other winners of Ernst & Young’s Champion of Entrepreneurship award, who all agree that Western Australians can look forward to a bright economic future.
In a wide ranging discussion, the men spoke about the benefits of keeping their business privately owned.
They agree that successful business operators have to enjoy what they are doing.
They also agree on the importance of spreading their wealth though philanthropic programs.
On a negative note, they share concerns about government policy – too much regulation, and not enough migration to support future growth.
Jack Bendat, who built a fortune in property, radio, television, and wine, remains positive about the state’s prospects.
“When I came here as a migrant 41 years ago I saw lots of opportunities, and it’s the same today,” Mr Bendat said. “The future is very, very rosy.”
BGC chairman Len Buckeridge is also positive about the economic outlook but is concerned about commercial and political risks facing business in WA.
“I don’t think this is a bubble, I’m quite convinced its going to last for a long time to come,” Mr Buckeridge said.
“Having said that, I’ve taken the view that I am not going to do anything under the current climate.
“You can put yourself at huge risk biting off more than you can chew, and then you can’t perform.
“We have got up to 1.8 billion (dollars) in turnover, and I’m sitting on that.”
Mr Buckeridge said the shortage of skilled workers was one of his main concerns.
“The obvious solution is to start importing people,” he said.
Mr Buckeridge is also cautious after recent dealings with by the state government, following a series of running battles over new projects, including a quarry expansion, a port at Kwinana and a brickworks at Perth airport.
“The political risk I find terrifying. Westminster law is out the door, a contract with the government doesn’t mean a bloody thing,” he said.
Gull Petroleum founder Fred Rae, who established Australia’s biggest independent petroleum company in 1976, is positive about the economic prospects but has a number of concerns.
He sees the big increase in housing costs as a major concern.
“That’s going to take a lot of levelling out and inevitably its going to be with wage increases because I don’t think those prices will come down,” Mr Rae said.
Like Mr Perron, he said the current boom had reversed the conditions that applied in the 1950s and 1960s.
Back then, there were plenty of workers but very little money for investing. Today, they see an abundance of money but a dire shortage of workers.
‘‘Today is completely different to any other era because of the amount of money that’s available to invest,” Mr Perron said.
Mr Rae believes it would be impossible for a new competitor to take on the big oil companies now.
He recalled building a 70 million litre storage terminal at Kwinana without his competitors finding out.
“That was a hell of a big thing for me to take on privately,” Mr Rae said.
“I had a wonderful experience then dealing confidentially with the state government people.
“I was able to construct that terminal and the major oil companies did not know it was me.
“If they had known they would have put me out of business. I could never do that now.”
Mr Buckeridge also laments the bureaucratic and regulatory hurdles facing business today.
“I started in 1959 and it was all so easy,” he said. “I was about six months out of architecture and I wanted to start a practice, so I just did it.”
Mr Clough put local conditions in context by remarking on the challenges of doing business in Asia.
“It’s infinitely easier in Australia, despite all our bureaucrats and everything else,” he said.
Mr Clough said the rule of law was not established in Indonesia or China, while the bureaucracy in India was much worse than other countries.
Commenting on the float of Clough during the 1990s, Mr Clough had fond memories of the time when his family owned the entire business.
“Its great being private, you only answer to yourself and you can do as you like, but as we got bigger, we gave about 20 per cent of the company to the staff and that became difficult to handle as a private company,” he said.
Mr Clough said the second main reason for floating was to deal with succession.
“If you bring your children into the business, in many respects they are on a hiding to nothing,” he said.
“If they do well it’s because the old man gave it all to them and if they do badly, they couldn’t even make a go of it.”
Mr Clough said he was currently working for his son, Bill, who was developing a range of mining projects around the world.
Mr Perron commented that his children had established their own business interests, and he had professional directors and managers running his business.
“I run it as a public company with a board of directors and I normally refrain from voting,” he said.
Commenting on succession planning, Mr Buckeridge said: “You’ve got to be careful you don’t inflict on your kids your own ego.”
He also acknowledged he doesn’t have a clear plan.
Gull Petroleum is a family-owned and run company and Mr Rae said it planned to stay that way.
“We’ve stayed a very close knit family company," he said.
We’ve never let it out of the control of the family.
“We’ve never had any problems getting access to capital, so [not floating] hasn’t held us back at all.”
Jack Bendat was the major shareholder of two listed companies, Consolidated Property Investments and South West Telecasters, but soon tired of the regulations, the reporting and the demands of minority shareholders.
He ended up buying out the minority shareholders, which was “the best thing we could ever do”.
Mr Bendat’s main focus now is his philanthropic activities.
“I’ve made as much money as I ever want to make. My philosophy today is: what can I put back into this country to make it better for future generations?”
Mr Perron has set up an innovative structure so that money drawn out of the business by his family is matched by charity contributions.
“I’ve got a charity and everything the family draw out of the business, ever, if they draw five million [dollars] a year, then five million goes to the charity.”
Mr Bendat, who often speaks publicly about his philanthropic activities, praised people like Mr Buckeridge who don’t talk about their charitable support.
True to form, Mr Buckeridge preferred to talk about his business plans, including his desire to take on arch rival Boral by building his own brickworks.
“I have to have a challenge,” he said. “And by attacking me, I’m the wrong guy to attack.
“I’ll build this bloody brickworks if it kills me.”
