16/08/2005 - 22:00

Managing growth the big challenge

16/08/2005 - 22:00

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The economic boom we are currently enjoying in Western Australia has wise old heads reflecting on the 1960s.

The economic boom we are currently enjoying in Western Australia has wise old heads reflecting on the 1960s.

That was the last time WA experienced consistently strong growth, year after year.

It was also the last time when growth and investment was con-strained by shortages of skilled labour and materials – the very problems now facing the state economy.

A lot of the commentary surrounding skills shortages and infrastructure bottlenecks implies that it’s a short-term problem – or at least that it should be, once government gets serious and fixes everything.

But the reality is that we will have to get used to capacity constraints.

There are no quick or easy solutions, and when businesses and governments plan future projects, they will have to accept there are finite resources available.

Managing the problem requires smarter planning by governments, to ensure that training dollars and infra-structure investment are effectively targeted to areas of greatest need.

It also requires smart planning by the business community.

Lessons in problems at EG Green & Sons

THE financial problems afflicting EG Green & Sons serve as a reminder to all businesses to be vigilant about the performance of their own company and that of their business partners.

EG Green is considered a ‘blue chip’ family business with an apparent record of success over 86 years.

However, as reported elsewhere in this paper, it has been trading at a loss in recent years and, by its own admission, fell unexpectedly into a “liquidity shortfall” that forced it to cease operations.

The cause of its woes remains unclear. The company said it was “embarking on several changes simultaneously and this put the company under significant and unnecessary pressure”.

Others say longer term problems were its high cost structure and resistance to change.

The current situation shows that outside appearances can be deceiving. The company had a great brand in Harvey Beef but how good were its internal management systems?

Its woes are bad news for not only the Green family, which owns the business and faces the prospect of a sharp fall in the value of its equity, but also for businesses that have been dealing with EG Green and now face worries about getting paid.

Many of those businesses probably thought EG Green was an impeccable credit risk, but it is dangerous to make that assumption about any business partner.

• Mark Pownall is on leave.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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