Buffet’s pearls of wisdom for investment and family businesses
The $4 billion purchase by Warren Buffet’s Berkshire Hathaway of 80% of Iscar Metalworking, an Israeli firm that manufactures metal working tools for customers in the global automobile, die and mold and aerospace industries, stunned the markets. It was Berkshire’s first acquisition of a company with headquarters outside the US. The world wanted to know what was so compelling about this Israeli firm that led Berkshire’s CEO Warren Buffett, to move out of his comfort zone and make such an unconventional investment.
During a recent visit to the internationally recognised IMD business school in Lausanne, Switzerland, Buffett described his approach to investing: The important thing is to buy into the right business with the right people, and at the right price. Further, he counsels individual investors not to expect rewards too quickly. Hard work and consistency of approach are critical, not only in stock purchases but also in managing companies. Buffett and family business owners share a belief in these values, along with a commitment to a long-term investment horizon, a robust corporate culture and a leadership team with a passion for its business.
There are times, however, when every family business will face a fork in the road. Either through a succession vacuum, family disunity or financial constraints, many family enterprises will need to examine their options for securing their firm’s future and the family’s wealth. Iscar’s second generation leader, Eitan Wertheimer and its managers recognised that both a familiar and a different future were needed to preserve the company’s long-term health. Several issues drove Iscar to consider its options. Retirement loomed in the medium-term for the family chairman and the next generation’s interest in hands-on management of the company seemed uncertain. Besides, Wertheimer wanted to give his family a valuable gift – the freedom to pursue their passions. They could choose to become involved in the family company or they could indulge their interests in law, medicine or art.
The Iscar search team was made up of both family and key management representatives. Wertheimer wanted both transparency and direct involvement of the key stakeholders in this important decision. And he was prepared to give priority to the continuity of the business over maximizing shareholder return. The search team finally agreed on the answer. Berkshire Hathaway was the perfect home for a firm that was passionate about its business and thrived on innovation, independence and delighting each customer. Story sourced from an article by Professor Joachim Schwass, Professor of Family Business at IMD and Director of the Leading the Family Business program and Colleen Lief, an IMD Research Associate. For more go to www.imd.ch
World's fastest train gets an Olympic start
The fastest rail service on the planet began just before the Olympics, linking Beijing with one of China's Olympic co-host cities, nearby Tianjin.
The spacious interiors - more like aircraft cabins than train carriages - ferry passengers at speeds reaching 350 kilometres per hour, cutting the current journey time by 1 hour to 30 minutes. In tests the trains have reached 394kph.
"Its operational speed is the fastest in the world. It's very comfortable and quiet," said Zhang Shuguang, head of the Railway Ministry's Transport Bureau. "There's a French train that has gone 500kph in tests, but only in tests."
French high-speed trains currently hold the record for greatest operating speed. On the LGV Est Line between Paris and Strasbourg, trains are able to reach 320kph.
The new Chinese trains zip through the lush countryside past massive housing developments and deserted highways. Trains can run on the 20 billion yuan ($2.93 billion) new Tianjin line every three minutes, and each train can carry around 600 people between landlocked Beijing and the port city of Tianjin.
The cavernous new Beijing South railway station is the largest in Asia. As well as the Tianjin line, the station will house connections to two subway lines, and a future high-speed railway to Shanghai.
This story was sourced from www.NewScientist.com news service by Glen Moore, Director of Wollongong Science Centre and Planetarium (http://sciencecentre.uow.edu.au ).
Glen asks why can’t Australia have one of these? For example, why not from Canberra to Sydney including a link from Wollongong?
Believe it or not – Three Water Ideas!
Idea 1: Build a power station underwater!
The WA government has granted Carnegie Corporation (ASX: CNM) an exclusive wave energy license and option to lease a 30,000ha site off the Albany coast in southern WA for the purposes of investigating and developing a commercial CETO Wave Energy farm. Named after a Greek ocean goddess, the CETO system involves an array of submerged buoys tethered to pump units anchored on the ocean floor. Passing waves move the buoys, driving the pumps and forcing pressurised seawater ashore via a pipeline. turbines, generating base-load, zero-emission electricity. It can also be used to supply a reverse osmosis desalination plant, producing fresh water with no greenhouse emissions.
Photo: Ceto inventor Alan Burns inspects sub-sea testing
Carnegie (http://www.carnegiecorp.com.au/) says Albany is one of a number of sites it is assessing for the world’s first demonstration commercial CETO installation, and it will now move forward with site investigation and design evaluation activities, including environmental assessments and stakeholder consultations. A wave farm of 125 fully submerged CETO units would be able to produce 20MW of electricity, enough for 15,000 households.
The state’s Planning and Infrastructure Minister Alannah MacTiernan said that the WA government was keen to see the project progress. “Wave energy will play an important role in the mix of renewable energy sources,” she says. “Alongside the existing wind farm, and with the potential for a carbon-neutral power biomass power station, Albany may well be on the doorstep of becoming the first city in Australia, if not the world, to be more than 100% self-sufficient in green energy.”
Carnegie will apply for funding for a demonstration project under the state’s recently announced Round 2 Low Emission Energy Development Fund, with submissions closing in September. It claims its technology is on track to be commercial-ready in 2009. Sourced from www.EnvironmentalManagementNews.net
Idea 2: Water from air!
Envirosource reports that it is an international company that has developed technology to harvest pure drinking water from air. This technology is available at a personal and office level, and also on a large-scale commercial level. The system works by drawing air into the unit, filtering it and then passing it over a cold surface to condense it into water droplets. These droplets are collected and treated by filters and UV light to ensure all bacteria or organic substances are removed.
The industrial-sized CI-2500 and CI-5000 commercial units eliminate the need for companies to be completely reliant on regional rainfall, which is especially useful for operations in the dry interior of the Australian continent.
Envirosource’s smaller Aqua V air-to-water purifier can provide an office with pure drinking water without pipes, taps or water bills. It can provide up to 24 litres of drinking water a day, simply by harvesting moisture from the air. Since its foundation in 2004, Envirosource International has refined and developed water condensing technology through a series of prototypes, leading to the range of products it now supplies.
Company director Peter Kagioglou has been responsible for making a series of improvements to the technology, which has been embraced throughout Europe and Asia. For more information go to: www.envirosource.com.au
Idea 3: Water from Coal!
Queensland Gas Company has welcomed the Queensland Government’s decision to set aside $5 million for a feasibility study into the use of water produced from coal seam methane production.
“This is a far-sighted and timely allocation of funds to benefit all Queenslanders who use water,” QGC managing director Richard Cottee said recently.
QGC said large quantities of water are produced daily from its Surat Basin coal seams as part of the CSM production process. This water is currently considered a waste by-product and pumped into purpose-built evaporation ponds. QGC has the capacity to produce about 17 megalitres of water a day and is negotiating an agreement with the Dalby Regional Council to supply half a billion litres a year to the town of Miles. This supply of water is expected to rise with the step up of gas exploration and production to supply the Queensland Curtis LNG Project.
“Water extracted as a by-product of CSG (coal seam gas) production comes from the coal seams themselves, not underground aquifers,” Cottee said. “We have already produced potable water in our own reverse osmosis trials. Let's use this plentiful resource – not let it slip through our fingers.” Story courtesy of www.petroleumnews.net
Engineer shortage could double in 10 years
Australia is facing an ever increasing shortage of qualified engineers with the country already falling 28,000 short, an industry leader warns.
Engineering Australia chief executive Peter Taylor said the number of engineers for every $100 million of engineering, construction and building work halved from 600 to 300 in the period 2001 to 2006. He estimated this country has a shortfall of 28,000 engineers by extrapolating the results and consulting with major employers.
"Whichever way we look at the numbers, we come inevitably to the conclusion that Australia, like many other developed countries, has taken its eye off the engineering ball," he said.
The shortfall looks set to get worse with heightened activity in the resources sector, increased government spending on infrastructure projects and the effects of climate change putting more pressure on the already overstretched sector. Taylor said the problem started early with fewer than 12 per cent of year 12 students studying advanced maths.
"Radical action is needed to improve the science, engineering, technology and mathematical literacy of students if we are to increase the numbers of domestically trained engineers," he said.
According to Engineering Australia 66 per cent of year 12 students do not study advanced or intermediate maths with the same proportion giving physics and chemistry a wide berth.
Taylor warned that action must be taken soon adding that even if the education situation was addressed tomorrow it would take 15 years to filter through to graduate level.
"If governments continue to ignore the evidence, the current shortage of 28,000 engineers will more than double in the next 10 years or so," he said. "The result will be that infrastructure programs promised by governments will not be delivered, Australia's desperate water situation will remain unaddressed and engineering solutions to combat the effects of climate change will not be developed. More importantly, Australia's economic development and our envied lifestyle will be jeopardised."
For more information www.myfen.com.au. Story supplied by Illawarra Innovative Industry Network (www.i3net.com.au)
Innovation, Strategy and Impact of Leadership
Registrations for the Australian Human Resources Institute (AHRI) HR Leadership Conference to be held in Wollongong close next Friday 29 August. The conference is to be held from 1.45 – 6pm on September 4 at Novotel Northbeach, Wollongong. Conference Speakers are:
Paul Dundon, Chief Executive Officer, Direct Health Solutions
Lucy Rowlands, Chief Organisational Psychologist - Head of Learning & Research, Direct Health Solutions
Allan Ryan, Executive Director, Hargraves Institute, Director, Managed Innovation International
For more details go to: www.ahri.com.au/hrleadership
Be a part of Small Business September 2008
Exciting events in your area to help you start, manage and grow your business.
Small Business September, the State’s most comprehensive small business program, is designed to help business operators deliver results for their enterprises by connecting with clients and other business operators, encouraging innovation, and creating new possibilities and new opportunities.
Small Business September is run for business owners across regional and metropolitan NSW by the NSW Department of State and Regional Development. It consists of more than 300 seminars, workshops, expos, award ceremonies and more. Over 150 partners from business, industry, professional and government organisations support the program by delivering events.
Small Business September events provide ideas and techniques to "future-proof" your business and help businesses navigate a challenging business environment. To register for the above events visit www.smallbusinessmonth.nsw.gov.au and select your region.
Your Ideas, Innovations or Events?
If you want publicity for an idea, innovation or technically related event, contact the I&I editor, Colin Seaborn on 4254 0200 or 0419 841829 or click here->
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