Many Western Australians, myself included, consider Ralph Sarich a household name, so I was surprised last week to discover that many people in Perth have little or no awareness of how he built his $1 billion fortune.
Many Western Australians, myself included, consider Ralph Sarich a household name, so I was surprised last week to discover that many people in Perth have little or no awareness of how he built his $1 billion fortune.
In conversations around Perth there was a vague awareness Mr Sarich was a wealthy property developer. But there was no awareness of his previous life as an inventor, company promoter and business celebrity whose orbital engine was touted as a radical breakthrough that would revolutionise the world's automotive industry.
Mr Sarich attracted legions of fans, including Australia's largest company, BHP, which helped bankroll his Orbital Engine Corporation.
Governments around Australia and overseas competed vigorously for the right to host Orbital's manufacturing plant, which was meant to create hundreds of jobs and millions of dollars in export income.
The company's annual meetings were also a big event, with hundreds of investors turning up to hang on Mr Sarich's every word.
Most investors failed to time their exit as well as Mr Sarich, however. He sold his stock in the early 1990s and went on to build a much larger fortune in property investment through Cape Bouvard Investments, which includes his son Peter Sarich in its management team.
It was announced last week that the 69-year-old Mr Sarich was sharing part of his fortune by donating $20 million to medical research (see page 4).
The Orbital story started in the late 1960s, when Mr Sarich, the son of Croatian migrants, developed his orbital rotary engine.
He was named inventor of the year in 1972 and became a national celebrity - the classic backyard inventor made good.
Mr Sarich quickly won the backing of BHP, which agreed to form a 50:50 joint venture to commercialise his invention.
The high point for the orbital engine was 1983, when General Motors signed an agreement to evaluate its potential.
It was a short-lived high, because Orbital concluded soon after that its namesake engine was too radical to ever win mainstream acceptance.
The company focused instead on applying its fuel injection technology - the Orbital Combustion Process (OCP) - to two-stroke engines so it could be used in cars.
This was also a radical departure from conventional practice; at the time, two-stroke engines were noisy, smoking engines on lawnmowers and outboards.
The change in focus did nothing to dampen investor interest.
Orbital was floated on the Australian stock exchange in 1984 and went on to sign General Motors, Ford, Fiat and others as licensees of its OCP technology.
These deals fuelled high expectations for the company, which led in turn to a bidding war between state governments in Australia and in the US for the right to build Orbital's manufacturing plant.
Orbital chose to build its plant near Detroit in the US, after winning concessions from the state of Michigan. That decision was seen as a huge loss for Australia, and the government of the day was roundly critcised for letting Orbital slip from our grasp.
The WA government tried hard to keep Orbital - in 1989 it provided a $19 million interest-free loan (a big amount in those days) to win the company's loyalty.
The terms of the loan illustrate the ambitious expectations of the time.
The loan was due to be repaid after 25 years, or when annual production of OCP engines exceeded five million units.
It never came remotely near that figure - and the loan has still not been repaid.
Mr Sarich exited the company in 1992, after it listed on the New York Stock Exchange and was valued at more than a $1 billion.
He sold his Orbital stock for prices between $1 and $3 a share and, ever since, has been a successful, albeit low-profile, property investor.
Critics like to claim the Orbital story was all hype, spruiked by Mr Sarich.
This ignores the licensing deals and extensive R&D programs Orbital undertook in partnership with automotive companies.
Those programs never turned into firm deals.
Orbital went to great lengths trying to convince automotive companies that its OCP technology was a winner.
In 1995 it bought 100 Ford Festivas and replaced the conventional 4-stroke engines with OCP-equipped 2-stroke engines.
The Festivas ran on the road for five years, clocking up 5.6 million kilometres, but the positive test results were not enough to sway the automotive manufacturers.
In the late 1990s, Orbital again came close to a big breakthrough when the OCP technology was applied to four-stroke engines and Mercedes and others evaluated its commercial potential.
The company's main focus over the past decade has been the marine and motor scooter markets.
Orbital technology is used on a range of products, including outboard engines, personal watercraft, and scooters.
The introduction of strict emissions standards around the world was meant to boost the take up of OCP technology, especially in China and India where it was hoped OCP technology would be used on millions of scooters.
European scooter manufacturers Aprilia, Piaggio and Peugeot have also adopted the OCP technology, as have Bajaj of India and Kymco of Taiwan.
These commercial applications plus a range of consulting and engineering services have kept Orbital in business, but it's all a far cry from the great hopes of 20 years ago.
