Eliminating threats and debts

As boss of a family group of small companies, you become the recipient of the minority "good ideas" people and the dumping ground for concerns of the majority of those around you.

As a good leader should, I learnt to discern whether these concerns were, or could be, a threat to the company or indeed the family.

However, many years ago, my instincts were not good enough when my first economic storm arrived. This was the imposition of a "Recession We Had to Have" by the Labor Prime minister Paul Keating, which led to 18% interest rates and 22% overdraft rates.

We were production building a series of small commercial vessels 25-40 metres long and had successfully secured six orders via the Federal Government's Export Finance Program (EFIC), where if an overseas client was approved, the client would pay us the 20% deposit and EFIC would pay the balance on the agreed schedule of progress payments. The six clients were approved.

The contracts were worth $15m in total, and now in our 13^th year, we had a modest asset base of industrial waterfront land, buildings, offices, etc., worth another $12m and a $2m overdraft facility. Despite high overdraft rates being applicable, we raced towards 2^nd stage payments by EFIC.

Mistake number 1, assuming an Australian Government department was efficient.

We kept getting letters from EFIC saying that the paperwork process was slow due to our clients having banks in strange low tax places like Bermuda and the Isle of Man. We passed all vessels stage payment number two with no progress payments from EFIC. Seeing the enormous bills coming in from the Bank for the overdraft every 2 weeks started to concern me, and despite many calls to EFIC I detected that they were not going to perform in the short term.

To try and speed up EFIC, I rang the Minister for Trade, John Button, whom I had helped in a project in Tasmania and "he owed me". He responded later the same day, apologizing for the CEO of the NAB, Nobby Clark, saying it was "wholesale slaughter of middle and small business" and he could not help me in the short term.

Two weeks later, the funeral directors of the banking Industry, "The Receivers", marched in, as we had passed the 24 hours allowed on the Overdraft's Notice of Demand. They took all the keys of the property which included our house, they took over our bank accounts, the cars and laid off the entire staff of 300.

All this because I hadn't recognized the threat emerging in front of me, despite a successful order book, but with time demands and an inept Government bureaucracy. I took little solace in watching other companies fail, due to dealing with EFIC and most others falling over due to the crippling high interest rates, but as Captain of my ship, I was responsible. One friend, Neil, losing his company, suicided leaving his wife and family distraught.

Four weeks down the track and my wife and I were unemployed, in a rental property in a low socio-economic area with a borrowed dual cab ute, four sons at Christian schools, and a big dog that ate more than the four boys. I didn't mind being beaten by competition, but I did object to being beaten by a bank, so we chose the hard path, instead of getting a comfy job within Government.

With the benefit of hindsight, my wife and I working 85 hours a week, we slowly rebuilt the business without any debt or overdraft facility. My overseas trips funded mainly by frequent flyer points, were 2- 6 weeks long, travelling the globe in economy class and low budget accommodation, trudging through remote airports in the dead of night like some modern day version of Monssarat's Master Mariner, Matthew Lawe, whose indestructible soul was driven by guilt, while my driver was the hot sting of poverty on my tail. My wife did the even harder yards at home book-keeping, feeding four boys and the dog. We were stoney broke and it all happened so fast!

Many years of highs and lows later, approaching semi-retirement and hoping only to work just 75 hours a week, I noticed during our self-inflicted Covid lock down, that skilled and experienced people became hard to find. This was the creation of a new level of laziness and a whole raft of "precious princesses" that feel entitled to work from home, taking as many sickies as possible, and avoiding boldness or decision making, steering companies towards failure.

Lord Esher in 1904 after the British Army failure in the Boer War commented "An inordinately centralized system has destroyed initiative. Most minds trained to attend to process and paperwork details, cannot be expected to take bold decisions, particularly in war"

Last year, a close pal in the same industry, with a similar amount of battle scars, was suspicious of whether his senior team were experienced enough to read a major client. He jumped on a plane and travelled overseas to a hotel near the shipyard, and was summonsed to the meeting room with key people from his client's company. They were visibly angry, and immediately dumped on him the threat of contract cancellation, refund of monies and cancellation of future work. He had no doubt that such an action would totally bring down his company. They made it clear that the only remedy was to "pull a rabbit out of the hat". His project managers, attending to process and paperwork, had not read the "threat level".

The next morning at the shipyard meeting room, with a full attendance of the client team, his project managers, sub-contractors, yard owners and managers, he took control of the narrative.

Firstly, he apologized profusely but quietly to the client. As captain of his ship, he had appointed the shipbuilder and the project managers, so he was totally responsible for the program slippages. In order to redeem his credibility, he declared to the assembled group, that he wanted the vessel out of the shed and in the water as soon as possible, and with 2 outer engines and the steering, he would personally take her on a two hour "Yard Trial".

One precious princess on his payroll (a PPP), without engaging her brain before her mouth, declared "this is totally unsafe and I will not attend". Berating a paymaster in front of seriously good long-term clients, is never a good tactic. She was asked to leave the room. The fact that this fool could not recognize the threat, showed why this PP would never succeed in running her own business. She is no longer on his payroll.

Anyway, a few days later, my pal did complete the trials with just 2 engines and the steering, which was a resounding success and the client's trust in him was redeemed.

These tales are very minor indeed compared to what we faced with Iran, wherein the US stepped up in recognizing the huge global threat from this epicentre of Islamic hatred, and moved to eliminate this threat.

Good on you Donald !

Unfortunately, there are plenty of PPPs around, siding with the murderous Ayatollah, who slaughtered hundreds of thousands of his own people of his own religion, just for peacefully protesting against his regime. I was in Iran just prior to the theocracy takeover and it was Persia at its best, a culmination of culture, education and prosperity, a delight to visit.

As for Australia, it's totally unacceptable that our Prime Minister Albanese and the precious princesses around him are all focusing myopically on the voter polls. Not one of this leadership team have the commercial or operational expertise to run a chook raffle.

Sitting on many trillions of dollars of minerals and energy reserves, they have hermetically sealed those resources with layers of green tape to appease the environmental activists and the green party into capturing their votes. They have reinforced Fort Fumble, aka Canberra, with 2.6 million bureaucrats to inflict maximum obstruction, frustration and financial punishment to the 6 million Australians struggling in small business

These inept fools in Team Albo cannot remotely recognize the threats staring them in the face with a huge mountain of debt, no fuel reserves, a faltering economy, low productivity, a non- existent defence capability and a host of self-professed Islamist enemies already within the gates.