Portfolio Exclusive to Emirates First Class and Business Class
ISTANBUL PROPERTY Boom Turning to Bust? UGLY FRUIT Tackling Food Wastage GERMAN BAKERS Fighting for Survival
Mary
Barra Leading by Example
Issue 103 â– July 2014
This issue JULY 2014
Portfolio
Exclusive to Emirates First Class and Business Class
Cover Story 20 Baptism of Fire Mary Barra taking over as the first female CEO of a major automaker in January was a milestone in corporate America. But instead of being able to settle into her job she has had to deal with the ‘ignitiongate’ scandal that caused the deaths of at least 13 people and led to the recall of 16.5 million vehicles in North America.
Features 28 Istanbul’s Property Boom
44 Hands Finds Solace in Gardening
A huge building boom has altered the Turkish city’s skyline,
Guy Hands, infamous for buying EMI, has a new lease of life
but some experts are worried that a property bubble is
with the Garden Centre Group.
forming.
32 Europe’s Gas Cache on Shaky Ground
48 US Companies Head to Mexico Rising labour costs in China have prompted US companies
The Netherlands’ Groningen gas field accounts for about
to look at their southern neighbour in a move that is mutually
one-third of the European Union’s natural gas production.
beneficial.
But seismic shifts and earthquakes, as gas pressure declines, are now threatening production.
54 Fungus Cripples Coffee Farms Coffee rust in Central America, coupled with drought in
38 Tempting Europe With Ugly Fruit
Brazil, has pushed up coffee prices on the global market. But it is the small farmers who are the worst hit.
Europe wastes 89 million tons of food a year, mainly due to strict labelling laws. Fruta Feia, a cooperative, is tackling this wastage.
58 An Elusive Jackpot Female CEOs’ compensation packages compare favourably
38
to their male counterparts. However, women remain woefully underrepresented in top leadership positions.
58
48
3
Portfolio
4
Exclusive to Emirates First Class and Business Class
Essentials 63 Walking in Gran Canaria The Canary Islands are known for spectacular beaches and resorts, but great rewards await those who venture on walking trails away from the tourist crowds.
68 Gastronomic Black Gold The Truffle Festival 2014 in Canberra and the Capital Region of Australia is a must-visit for fans of the exotic fungus.
63
72 The World Cup In an Album In Colombia football fever has hit hard as fans try to collect the stickers necessary to complete the Panini Group’s popular FIFA World Cup album.
76 German Bakers an Endangered Species Industrial-scale baking is taking its toll on Germany’s traditional bakeries, whose numbers are in steady decline.
68
80 Tailoring That Fits Naples Neapolitan tailoring has successfully adjusted to the 21st century by opening bespoke stores around the world.
84 Bearing Witness Reportage illustration is something of a lost art. George Butler is one of today’s leading exponents and he recently travelled to Lebanon to document the refugee crisis.
88 Other Business
72
Portfolio takes a light-hearted look at the latest business news.
Departments
84
7 Notebook World business in a nutshell.
11 Observer Spotting and analysing business trends.
18 Column: John Naughton The Internet of Things
Published for Emirates by
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Portfolio
OF
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EX PL CLU A N SI RE VE LE AS E
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Miles to Location* 5 Bond Street 5
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The City
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City Airport
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Heathrow Airport
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Stansted Airport
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Notebook
7
getty images
BUSINESS NEWS IN BRIEF
China Home Prices Fall New home prices have falleN
compared with the same period in 2013.
official data, showed overall prices dropping 0.2 per cent in May, the first
in the highest number of Chinese cities
The weakening property market is
in more than two years due to officials
seen as the biggest risk to the Chinese
decline in 19 months. It estimated prices
rushing to sell apartments and over-
economy this year, as it has been the key
rose at an annual rate of 5.6 per cent in
building in regional areas.
driver of growth for much of the past
May, the slowest pace in 13 months.
The National Bureau of Statistics
decade. The property sector contributed
Official data released in June showed
said in June that prices fell in half the
15 per cent of China’s GDP in 2013,
property investment had slowed to an
70 cities surveyed during May, the
compared with a peak of six per cent in
annual rate of 14.7 per cent, from more
most since February 2012. Prices are
the United States in the lead-up to the
than 20 per cent last year. Newly started
unchanged in 20 cities and rose in 15.
2008 sub-prime mortgage crisis.
construction fell 21.6 per cent in the first
It is estimated that China has about 50
Among the so called first-tier cities,
five months of the year, compared with the same time last year.
million unoccupied homes, equating to
Shanghai and Shenzhen saw prices fall by
a vacancy rate of 22.4 per cent. That is
0.3 per cent and 0.2 per cent respectively
double the peak seen in the US during
in May, while prices in Beijing rose
somewhat offset by a pick-up in
the sub-prime mortgage crisis.
slightly and Guangzhou was flat.
government spending on roads,
Government figures released on May
Ratings Agency Standard & Poor’s
The weak property data is being
railways and healthcare. Fiscal
13 put the number of newly completed
expects prices to decline five per cent
expenditure jumped 24.6 per cent
but unsold apartments across China at
this year, compared with a rise of 11.5 per
in May, after Premier Li Keqiang
3.5 million. This is a 25 per cent increase
cent in 2013.
directed local governments to do more
over the first five months of the year, July 2014
Calculations by Reuters, based on
to boost growth. n
Notebook Greenpeace Loses €3.8 miLLion
Numbers Game
95
floors in 43 seconds is the speed at which the
ultra-high-speed elevator being
Greenpeace International
built by Hitachi will service the
has been added to the
new Guangzhou CTF Finance
ranks of losers in the $5.3
Centre in China. The 530-metre-
trillion-a-day global foreign
high tower is due for completion
exchange market. The
in 2016 and will have two rapid
Amsterdam-based non-
elevators along with 93 standard
profit organisation said
ones.
it lost ¤3.8 million ($5.2 million) last year after an
100
-self driving cars are being manufactured
by Google revealed co-founder Sergey Brin at a conference in California on May 28. Google’s prototype has no traditional
18.7
million game consoles sold by Sony defeats Nintendo’s sales tally of 16.3 million video games as per the financial year ending March 2014 according to Japan’s Nikkei business news site. Sony has overtaken Nintendo for the first time in eight years; its PlayStation 4 has emerged as the bestselling “new-gen” console.
to the corners and controls,
The World
steering wheel and pedals replaced by a stop-go button.
In Figures
GlaxoSmithKline (GSK) will clear
The loss added to Greenpeace’s ¤6.8 million budget deficit. Greenpeace
2024 for those who fail to get
million in 2013 out of a
themselves insured.
global budget of about ¤300 million.
£21,000
in fines
Greenpeace said it is funded with many
have been slapped on 25 British
different currencies and
for about 13 per cent of the
employers who failed to pay
valuations change rapidly.
world’s obese people, followed by
workers the minimum wage of
The non-profit said it will
China and India, which together
£6.31 an hour. HM Revenue
make changes to planned
represent 15 per cent.
& Customs investigated the
infrastructure projects,
employers after members of staff
and won’t reduce spending
million people will be paying
called a free helpline to report
4
on its core campaigns on
$4 billion in penalties for not
they were being underpaid.
environmental change.
getting health insurance by 2016
The minimum wage is said to
charges for wrongly promoting
under ObamaCare’s individual
increase to £6.50 an hour from
its drugs in 44 US states and the
mandate, according to the
October.
District of Columbia. The drugs
Congressional Budget Office. This
wrongly promoted are asthma
figure will grow to $5 billion every
medication advair, and anti-
year and the government would
depressants Paxil and Wellbutrin.
collect $46 billion from 2015 to
the UK pharmaceutical giant of
other currencies.
country was the US, accounting
million penalty coughed up by
wouldn’t strengthen against
said it had income of ¤72.9
bonnet; the wheels are pushed
£63
employee bet that the euro
$152
trillion of private wealth was
owned by households globally last year, marking a 14%
1/3
rd of the world’s
surge, boosted mainly by rising
population was
stock markets. asia-Pacific,
obese or overweight last year
excluding Japan, led the surge
according to a study funded
with a 31 per cent jump to $37
by the Bill & Melinda Gates
trillion according to a Boston
Foundation. The heaviest
Consulting Group report.
aFP
8
Portfolio
9
Swatch waitS on SmartwatcheS As technophiles speculate about Apple’s
fast. The company
plans to join Samsung Electronics, Sony
still has unsold
and LG in making electronic gadgets for
models of a 1991
the wrist, the world’s largest watchmaker is
pager that flopped,
steering clear of a market it unsuccessfully
and of the Paparazzi,
tried to pioneer over the past two decades.
a mid-2000s attempt with Microsoft to sell
said he doesn’t mind losing the lead in
a watch that could
smartwatches. For now, he’s happy to wait
receive messages and
and see whether anyone actually wants to
stock quotes.
buy them.
Apple could add as much as $11 billion
ReUteRs
Swatch Group CEO Nick Hayek has
frequent visits from tech companies
in annual revenue by selling a smartwatch,
interested in its smartwatch expertise,
technology it needs to make a smartwatch.
RBC Capital Markets predicts. Samsung
Hayek said. Yet he remains sceptical of
His plan is to sell components to others,
and Sony already sell second-generation
the concept, saying the disadvantages
a quiet way to benefit from a potential
versions of their offerings. Google’s Glass
include small screens, the need to recharge
revolution in the $62 billion watch
eyewear, with features similar to those
batteries, and that they often require two
industry. If demand appears, the company
found on smartwatches, went on sale
hands to use effectively. Consumers also
is ready to jump in and push a smartwatch
this year. UBS analysts say Apple may
want to change their timepieces and don’t
through its extensive distribution network.
introduce a smartwatch by year-end.
wear the same thing to an opera and to the
Hayek says his company has all the
Swatch knows the perils of moving too
Swatch has been getting increasingly
China Blocks European Shipping Pact
beach, he said.
after the Copenhagen-based company announced that the P3 plan would be scrapped. “I did not foresee problems in
China has blocked the formation of a
June to establish an operational pact with
China. We only received what I would call
global alliance by the world’s three biggest
the aim of reducing costs on Asia-Europe,
positive feedback.”
shipping lines, ignoring Western approval
trans-Atlantic and trans-Pacific routes.
of the plan.
Container lines have been battling industry
255 vessels deployed on 29 trade loops
The companies had planned to commit
The Chinese Ministry of Commerce
overcapacity after a boom in ship orders
to a joint centre that would have run a
said that the proposed P3 vessel-pooling
collided with the global financial crisis,
combined fleet independently. Maersk
accord, which included Moeller-Maersk
triggering the worst slump in prices for
was slated to contribute 42 per cent of
A/S, Mediterranean Shipping Co.
the carriage of cargo since containerisation
the total, including its Triple-E class, the
and CMA CGM SA, would “restrict
became global in the 1970s.
largest-ever container ships with a capacity
competition” on the busiest Asia-Europe container routes. Maersk and its two allies agreed last
“The decision does come as a surprise,” Maersk Chief Executive Officer Nils Smedegaard Andersen said in an interview
of 18,000 boxes. The Commerce Ministry said that the P3 plan might have benefited Maersk, MSC and CMA CGM at the expense of other operators, and that in “numerous discussions” the applicants had failed to show that the positive elements would outweigh any adverse impact. The three companies – which had always pitched the arrangement as “operational, not
ReUteRs
commercial” – control a combined 46.7 per cent market share, it said. July 2014
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Observer
11
BUSINESS NEWS IN BRIEF
Tourists visit The Wizarding World of Harry Potter in Orlando, Florida.
Harry Potter Helps Florida Magic
new to sell to visitors when consumer
During the recession, Florida’s private sector kept investing. The result is that the Sunshine State’s economy has rebounded quickly, reports Tim Mullaney.
Transformers ride and a resort with 1,800
spending rebounded. Universal opened its Harry Potter theme park in June 2010, topping a list of new attractions, including a $100 million rooms that opened this year. Merlin Entertainments of Britain opened Legoland on the site of the shuttered Cypress Gardens in late 2011, and is building a 122-metrehigh knockoff of the London Eye that will dominate Orlando’s skyline.
again, shaking off the dead weight of a
businesses were almost universally hoarding
housing bust that hit Florida harder than
get better, and we knew it would be much
cash in a struggle to survive the financial
almost any other state in the US. This year,
less costly because construction wasn’t
crisis, Harris Rosen made a different call.
Florida has led the country in job growth
doing well,” said Rosen, 74, chief executive
and it has chalked up the third-best record
of Rosen Hotels and Resorts. “If we’d waited
over the past 12 months.
until construction came back, the same
Instead of pulling back, Rosen, the biggest independent hotel owner in Orlando © 2014 New York Times News service
“We did it because we knew things would
In 2008, when AmerIcAn
that is built on tourism, surged ahead.
The roots of the comeback can be found
work would have cost us $175 million to $200 million.”
He committed to spend $130 million to
in decisions like Rosen’s. In contrast to
renovate his seven hotels, then added more
US business in general, which slashed
In Florida, as tourism goes, so goes the
international marketing staff members to
spending after the collapse of Lehman
state, in part because the industry supplies
sell them to tour groups from faraway places
Brothers, tourist operations all through
one in six private sector jobs. And as
like Brazil and South Korea.
Central Florida invested through the
tourism rebounded – Orlando reported
downturn, giving operators something
59 million visitors in 2013, up 27 per
Today, Florida’s economy is on the rise July 2014
12
Observer cent from 46.6 million in 2009; visitors statewide numbered 94.7 million – other sectors have indeed followed. The tourism surge was not the whole story, but it ignited the economic kindling the recession left behind, fuelling a recovery that has now spread to construction and other businesses. Migration from other states, which turned negative during the financial crisis, resumed in 2010, adding as many as 20,000 new consumers each quarter. And, crucially, the financial markets bailed out Florida’s residents. As the value of existing bonds rose and the stock market took off, Floridians’ income from interest, dividends and rents rose 25 per cent between 2010 and last year, with the biggest
Orlando reported 59 million visitors in 2013.
gains in 2011, according to the Bureau of Economic Analysis. That’s the long version of Florida’s
“You have to give all the credit to the private sector,” said Governor Rick Scott,
challenge Florida’s recovery as well. But housing is still undervalued in most
recovery. Here’s the short one, a refrain
who faces a tough re-election campaign this
of the state, in part because foreclosures
repeated by everyone from multimillionaires
autumn in which the economy is the most
continue to trickle onto the market, said
like Rosen to security guards at Universal:
important issue. “We in government can do
Jed Kolko, chief economist of Trulia.com,
Harry Potter did it. “What happened was
all the right things, but the private sector
“leaving the median home within reach
Harry Potter – there’s no doubt about
has to show up.”
of the average family in most of the state.” Pressure on prices from old foreclosures
it,” said Anthony Crocco, Central Florida
In one sense, things became so bad in
regional director of Metrostudy, a new-
Florida that it opened the door to bargain
has spared most of Florida the sharp home-
home industry consulting firm.
hunters looking to make money off the
price spikes now cramping California
misery of others. Both consumers and
builders, he said. And the tourism openings are still
Statewide, leiSure and hospitality
businesses are moving to exploit assets,
jobs are up 16 per cent, for an additional
especially land, left much cheaper by the
coming. Walt Disney World is introducing
149,300, since the Wizarding World of
collapse in housing prices after 2006.
attractions that will nearly double the
Harry Potter opened, almost double the
Merlin built Legoland at a deep discount
size of Fantasyland. Disney says that the
rate of job growth generally. Leisure and
partly because Cypress Gardens “landed
Fantasyland additions, some of which are
hospitality companies have added 54,500
in our lap in 2008,” the park’s general
open and some still forthcoming, represent
workers in the past year, including 14,800
manager, Adrian Jones, said.
the largest expansion ever of the Magic
in Orlando. Universal alone plans to add 3,500 local jobs this year, according to John Sprouls, chief administrative officer of Universal Parks and Resorts Orlando.
Despite the improvement, there are still
Kingdom park at Walt Disney World.
clouds hanging over the Sunshine State,
Universal, exploiting its greatest asset, is
economists say.
unveiling another Harry Potter attraction
The state’s reliance on low-wage
this summer.
industries means personal income is
“We came for Harry Potter – we’re big
lower than the national average, and
fans,” said Jennifer Murphy of Watertown,
topped out at 11.4 per cent in early 2010
Florida depends more on part-time
Connecticut, who was taking her daughter
– well above the national peak of 10 per
jobs. A slowdown in home building in
Mackenzie, seven, around an entertainment
cent – fell to 6.2 per cent in April, below the
recent months, caused in part by a rise
site that had not opened when they last
national rate of 6.3 per cent.
in mortgage rates since last spring, may
visited Florida. “It was time.” n
And Florida’s unemployment rate, which
Portfolio
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theo fennell
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Observer O N E 2 W AT C H TExT: HildA d’sOuzA
David P Abney United Parcel Service (UPS), the American global package delivery company, has promoted chief operating officer David Abney to chief executive officer. Abney will take over the reins from Scott Davis, who worked at UPS for 29 years, including the past seven years as CEO. Under his successful leadership the company’s share price rose 50 per cent and revenues increased to $55.4 billion in 2013 from $49.7 billion in 2007. Davis will continue as non-executive chairman and both moves are effective September 1. Abney, 58, started at UPS in 1974 as a part-time package loader and held various operational positions while climbing the rungs of the corporate ladder over his 40-year career. As chief operating officer Abney focused on UPS’s sustainability and engineering and was responsible for leading the company’s investment in alternative fuel fleets. Prior positions within the company also included president of UPS international, where he oversaw several global acquisitions and led freight division in Canada and Latin America. The key trends impacting UPS’s volumes are growth in e-commerce sales and international trade as online shopping is not only convenient but has also become more accessible due to the increase in smartphones and tablets. Abney plans on capitalising on this growth by focusing on expanding UPS’s global presence. Trade among emerging markets is growing rapidly and UPS expects that eventually 95 per cent of its clients will be outside the US. “We are going to continue to focus on making those (emerging market) investments. Growing internationally and diversifying our customer base are extremely important to us,” he said in a telephone interview. Abney also plans to expand UPS services into healthcare, which is its fastest-growing segment after e-commerce. Rising demand for drugs and medical devices will create a large revenue opportunity for UPS. Abney also intends to initiate investing in non-diesel trucks and is working to reduce driving. For instance, all new tractor-trailers purchased this year will run on liquefied natural gas. As COO, he was overseeing the global transportation network. Whether Abney, a native of Greenwood, Mississippi with a bachelor’s degree in business administration from Delta State University, is the right choice to steer the world’s largest parcel delivery company remains to be seen. The confidence expressed by the outgoing CEO may help dispel any doubts. “David possesses tremendous depth of understanding the rapidly evolving transportation and logistics market. His capabilities to anticipate global trends, identify risks and guide the company and our clients to capitalise on opportunities have proven invaluable.”
Russia Needs Western Tech
REUTERS
14
Through its existing oilfields, Russia is the world’s largest producer of crude, with daily output of 10 million barrels a day last year, according to the EIA. To maintain that output, Russia will have to use the latest technology to squeeze oil out of shale rocks in Western Siberia. The problem is that Russia will require Western companies to provide the modern drilling and production gear – and techniques such as hydraulic fracturing – that are essential to unlocking its $8.2 trillion worth of barrels still underground. Without Western expertise and technology it’s unlikely Russia could sustain its current production levels, much less grow them. However, Russia’s latest aggression towards Ukraine has heightened political tensions, making it more difficult for Western companies such as ExxonMobil, Halliburton and BP to navigate a shifting geopolitical landscape. Russia already is the second-largest market outside North America for fracking, measured by about 1.1 million horsepower of pumps used to blast water, sand and chemicals underground to free trapped hydrocarbons. China ranks first with 3.1 million horsepower. North America is still the world’s fracking king with 19.7 million horsepower. Halliburton, Schlumberger and Weatherford are some of the energy service companies working to resuscitate ageing fields and unlock shale formations in Siberia. They’re counting on exploration and production companies to spend about $30 billion a year in Russia. However, if the US were to impose more sanctions on Russia due to events in Ukraine, Both Russia and Western oil firms would lose out. Portfolio
15
Dubai REIT Targets Offices
Demand for offices from large companies and startups is expected to increase as Dubai’s preparation to host the Expo 2020 global trade fair creates about 277,000 jobs, broker Jones Lang LaSalle said in April. Emirates REIT was founded in 2010
Dubai’s only real estate investment trust
speculation-driven construction exceeded
may spend about $184 million on Dubai
demand from tenants. A recovery that lifted
and the company raised $175 million in an
office buildings, betting on a part of
homes, shops and hotels over the last two
initial public offering on April 8. The stock,
the market that missed out on the city’s
years did little to improve the office market
traded in dollars, has gained about seven per
property rebound.
as larger businesses shunned buildings sold
cent since the company’s debut, giving the
to multiple owners under a system known
company a market value of $434 million.
Emirates REIT will only consider buildings with a single owner after properties with multiple landlords contributed to the
as strata title. Office prices increased
office market’s stagnation, executive deputy
by nine per cent in the
chairman Sylvain Vieujot said in an interview
year through March
in Dubai.
while rents gained 11 per cent, up from a one per
sold to 200 people,” Vieujot said. “This is
cent rise a year earlier,
what gave the office market a bad reputation,
according to broker
but it also gives us an opportunity because we
Colliers International.
think it’s mispriced.”
Values remain
Office values tumbled with the rest of Dubai’s property market after 2008 as
getty imAges
“We won’t look at a tower that has been
significantly lower than their pre-crash levels.
China Online Retail Surge China’s internet sales are surging as Alibaba Group Holding and
growth of 20 per cent to 30 per cent in internet purchases over the
rivals lure more of the nation’s 618 million users to shop online.
next three to five years.
Online retail sales, first reported by the statistics bureau in April,
The numbers underscore the shift in citizens’ spending habits as
jumped 52 per cent in the first four months of 2014 from a year
Alibaba, the world’s biggest online bazaar, prepares for a US initial
earlier. Shanghai-based iResearch Consulting Group sees annual
public offering with an estimated market value of $168 billion. China’s online shoppers reached 302 million in 2013 and more than double that number were using the internet, according to China Internet Network Information Centre. The shift isn’t unique to China. South Korea’s imports through e-commerce sites rose 47 per cent to about $1 billion in 2013. In the US, e-commerce sales rose 15 per cent in the first quarter to $71.2 billion, representing 6.2 per cent of total sales, according to the government. Virtual shops and marketplaces have given Chinese consumers access to a wider variety of goods amid a supply of bricks-andmortar stores that lags other major economies. China’s per-capita retail floor space was 0.6 square metres in 2013, compared with 2.6
AFP
in the US, 1.3 in the UK and 1.3 in Japan, according to Euromonitor
July 2014
International data.
Observer The World
CompIled by Hilda d’souza
Top 10
Taxi App Anger
Countries witH tHe HigHest gross domestiC produCt rank
Country
1.
US
(uS$ billions) 17.5
2.
China
10.0
3.
Japan
4.8
4.
Germany
4.53
ReUTeRS
16
5.
France
2.88
6.
United Kingdom
2.82
Several major European cities ground to a halt in June as
7.
brazil
2.2
8.
Italy
2.1
licensed taxi drivers took to the streets in mass protests against
9.
Russia
2.0
10.
India
1.9
the smartphone taxi app Uber. Demonstrations in London, Paris, Madrid, Barcelona, Berlin, Milan and Rome caused travel chaos and long tailbacks, as
SoURCe: ImF WoRld eConomIC oUTlooK, ApRIl 2014
Countries witH tHe HigHest gdp based on ppp valuation rank
Country
1.
US
(uS$ billions) 17.5
2.
China
14.6
3.
India
5.4
4.
Japan
4.8
5.
Germany
3.3
taxi drivers protested against the app, which they argue is unregulated and threatens their livelihood. In London, Trafalgar Square and Whitehall were jammed from the start of the planned “go slow” as thousands of black cabs gathered, bringing total gridlock to the centre of the capital. A spokeswoman for Uber, the US start-up that links minicab
6.
Russia
2.6
drivers to passengers via a GPS-based smartphone app, said the
7.
brazil
2.5
protests had boosted new users in London by 850 per cent, as
8.
UK
2.4
people tried to cope with the gridlock.
9.
France
2.3
10.
mexico
1.9
SoURCe: ImF WoRld eConomIC oUTlooK, ApRIl 2014
But the company, based in San Francisco and backed by Google and Goldman Sachs, came under increasing pressure to be more transparent about its tax set-up. Taxi associations
Countries witH tHe HigHest real gdp growtH rank
Country
PerCentage Change
1.
Sierra leone
13.9
2.
mongolia
12.9
claim Uber routes its payments through headquarters in the Netherlands to minimise its corporation tax payments in France, the UK and Germany – in a similar manner to Apple and
3.
Chad
10.8
Starbucks, which have found themselves in the firing line for
4.
Turkmenistan
10.7
the practice.
5.
democratic Republic of the Congo
8.7
Uber has expanded rapidly since it was launched in 2010 by
6.
mozambique
8.3
two US technology entrepreneurs, Travis Kalanick and Garrett
7.
Cote d’Ivoire
8.2
8.
Republic of Congo
8.1
9.
myanmar
7.8
10.
China
7.5
Camp. The company, which was valued at $18 billion in an oversubscribed fundraising, operates in more than 100 cities in 37 countries and has faced opposition in most of them. It is banned in Las Vegas and Miami and is facing lawsuits in Chicago, San Francisco and Washington, DC. Portfolio
Commentary
18
John NaughtoN
The Internet of Things Good morninG! or eveninG, if
an oxymoron, like “military intelligence”,
lapses involving connected gadgets. I mean
you happen to be reading this on the other
but the whole of the tech industry takes
to say, how could TRENDnet have known
side of the world. Our topic for today is the
these guys seriously because everyone needs
that its “secure” security webcams weren’t
internet. What? You already know about the
numbers to justify their investments. How
really secure at all? It’s not its fault that a
internet? No, no, I don’t mean that internet,
else would Facebook have known that
hacker broke into the SecurView camera
the boring old one you use to access YouTube
WhatsApp was worth $19 billion?
software and told other people how to do it. The result, according to the US Federal
and send Facebook updates, email and tweets and stuff. That’s the internet of people
everybody who is anybody in the
Trade Commission, was that “hackers posted
and it’s so, well, yesterday. I’m talking about
tech business is very excited by the IoT.
links to the live feeds of nearly 700 of the
the new internet, which is going to be the
It’s going to make lots of money – oh,
cameras. The feeds displayed babies asleep
latest thing Real Soon Now.
and it’ll change the world, too. Of course
in their cribs, young children playing and
there are some boring old creeps who
adults going about their daily lives”.
It’s called the Internet of Things or IoT
keep raining on the parade. Spoilsports,
Silicon Valley, where they hyperventilate a
I call them. There are, for example, the
makes security cameras. Why should it know
lot about technology. When you ask them
“security” experts who think that the IoT
anything about internet security? Same
what it is they say things such as “a global,
opens up horrendous vulnerabilities for our
story for Toyota and Volvo and co. They
immersive, invisible, ambient networked
networked society. Hackers in Azerbaijan
make cars – good ones, too. Sure, they have
computing environment built through
could get control of our “smart” electricity
a lot of electronics in them, but that’s just
the continued proliferation of smart
meters and shut down the whole of East
standalone engine-management kit. Nothing
sensors, cameras, software, databases and
Anglia with the click of a mouse.
to do with networks. Why should they be
massive data centres in a world-spanning information fabric”. Translated into English, that
Or some guy in Anonymous could remotely jam the accelerator in your car so that you drive into your garage at
pilloried just because they know nothing about network security? What’s that? You’ve found an IDC report
means billions of gadgets, each one of
130mph even when you have your foot
from last October saying the Internet of
them connected to the internet and
firmly on the brake.
Things would produce $8.9 trillion in sales
communicating madly with one another without much in the way of human
That’s why it’s so annoying when the media publicise scare stories about security
by 2020. So the IoT has “lost” $1.8 trillion in eight months? Well, yes, I have to agree
intervention. So your fridge can talk to your
it doesn’t look good,
smartphone to tell it that you’re running out
especially for the Next Big
of milk, while your bathroom scale messages
Thing, but, hey, what’s
your GP’s computer to let it know that
$1.8 trillion between
you’re not sticking to your diet plan, and the
friends when we’re
webcam in your living room sends you a text
talking about the future
to tell you that the cat has been sick on the
of civilisation? And no, I
sofa, and cool stuff like that.
don’t think that William Goldman’s crack that
You think I jest? Think again. I tell you, © 2014 Guardian news & Media
This is so unfair. Poor old TRENDnet
and it’s got everybody very excited over in
this thing is Big. Why, only the other day,
“nobody knows anything”
an outfit called IDC said that the Internet
has any relevance here.
of Things is going to generate a staggering
He was writing about Hollywood, for goodness’
$7.1 trillion in sales by 2020. Who is this IDC? It’s a “market intelligence” firm, apparently. And yes I know it sounds like
The Internet of Things raises many security issues.
sake. We’re talking about the tech business. Different thing entirely! n Portfolio
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Profile
20
Portfolio
21
Baptism of Fire
Mary Barra taking over as the first female CEO of a major automaker in January was a milestone in corporate America. But instead of being able to settle into her job she has had to deal with the ‘ignitiongate’ scandal that caused the deaths of at least 13 people and led to the recall of 16.5 million vehicles in North America, reports Guido Duken. July 2014
Profile
22
HEN MARY
Barra learnt she was going to become
“Mary may have been here 30-odd
Barra was
CEO a few days before the actual
years, but I can tell you that I believe and
announced
announcement. “Obviously I was
know – and I think the board believes
as GM’s (General
thrilled,” said Barra. “I didn’t dream this
and knows – that Mary is a change
Motors) new
would happen. This is an industry that’s
agent,” Akerson said on the day of the
CEO on December 10 last year it was a
in your blood, it’s an exciting industry,
announcement. “There are a lot of great
milestone. Barra, 52, became the first
a tough industry.”
things, a lot of great people at General
woman to run any major automaker when she took office on January 15 this year. Just as remarkable was how she attained the top position. Barra is an engineer by trade and has been a GM lifer. Her father spent 39 years as a dye maker at GM, while Barra began 33 years ago as an intern. Her first job after school was as a plant engineer at the assembly factory in Pontiac, Michigan, where her father had worked. To say that Barra’s life has revolved around cars is an understatement. According to her she was about 10 when she fell in love with her first car, a red Chevy Camaro, late 60s vintage,
When the global financial crisis hit, GM was forced to file for Chapter 11 bankruptcy reorganisation on June 1, 2009. The filing reported $82.29 billion in assets and $172.81 billion in debt.
Motors. There was a generation, I would say Mary’s generation of management, that had to learn from mistakes that were made. … Young up-and-coming leaders of General Motors learned a lot from the prior generation, good and bad, and Mary was a very astute student.” Among the mistakes referred to by Akerson was GM’s long history of financial trouble. In 2005 the company posted a loss of $10.6 billion. In 2006, its attempts to obtain US government financing to support its pension liabilities and also to form commercial alliances with Nissan and Renault failed. For fiscal year 2007, GM’s
driven by her older cousin. “It was just a beautiful, beautiful vehicle,” she said of that experience. When it came time for her first car, she put down a deposit on some American muscle in the form of a Pontiac Firebird. But, being bound for college and needing to watch her budget, she changed her mind and bought an affordable, boxy Chevrolet Chevette. At GM, Barra has had a steady climb to the top. She made it into a fast-track training programme, followed by a GM fellowship to Stanford (MBA, 1990). She went on to master diverse jobs such as assistant to CEO Jack Smith; assembly plant manager; vice president of global manufacturing engineering; HR chief; and head of global product development, purchasing, and supply chain. In 2013, as GM’s board prepared for CEO Dan Akerson’s eventual departure, Barra became one of four candidates quietly considered for the top job. “I PHOTOS: GETTY IMAGES
wanted to make sure she was absolutely the right choice,” Akerson said. “The fact that Mary is a woman is great. But she earned this job on the merits of her performance and her potential.”
GM CEO Mary Barra with her predecessor Dan Akerson, who resigned last year to look after his wife after she was diagnosed with cancer. Portfolio
23
Barra introduced the 2015 GMC Canyon truck at the 2014 North American International Auto Show.
losses were $38.7 billion, and sales for the
When Akerson was brought in by the
or long-range planning. Akerson began the
following year dropped by 45 per cent.
US government in 2009 to clean up the
transformation to the “new GM”, but it is
When the global financial crisis hit, GM
faltering corporation (he became CEO
now up to Barra to complete it.
was forced to file for Chapter 11 bankruptcy
in 2010) he apparently thought that GM
reorganisation on June 1, 2009. The filing
was one of the worst companies he’d
Barra took over as CEO – the “old GM”
reported $82.29 billion in assets and
ever come across. Although Akerson
resurfaced when the company was rocked
$172.81 billion in debt.
denies having said that he acknowledged
by allegations that it failed to properly
frankly that there were “systemic issues”.
correct an ignition problem that is blamed
WHEN BARRA took the reins on
Engineering and parts suppliers were so
for at least 13 deaths in Chevrolet Cobalts,
January 15 this year, GM was stronger
separate “we could have outsourced both
Saturn Ions and other GM vehicles. This
than it had been in decades after three
of them,” he said. “They just hated each
was compounded by the recall of about
straight profitable years. Filing for
other.” He appointed Barra to end that
510,000 Camaros worldwide in June this
bankruptcy had resulted in lower labour
conflict by linking product development
year for key problems. In all, GM has
costs, less debt and the shedding of
and purchasing under one leader. IT
recalled 38 models of cars, trucks and
weak brands. By December 9 last year,
functions were centralised and the
SUVs for a grand total of 16.5 million in
GM officially seized to be ‘Government
platforms on which cars were being built
North America. In the US, GM recalled
Motors’ after the Department of the
were reduced and streamlined.
14.4 million vehicles, ‘bettering’ its old
Treasury announced that it had sold
This was all part of Akerson’s effort to
Unfortunately – just two weeks after
US full-year recall record of 10.75 million vehicles set in 2004.
its last shares in the company, which
move the company away from the “old
allowed the US federal government
GM” where an entrenched group of ego-
It is also a huge financial hit. GM has
to recoup about $38 billion of its $50
fuelled executives ran the company and
already earmarked $1.3 billion for the first
billion investment.
paid scant attention to financial statements
quarter and is expecting to take another hit
July 2014
Profile
24
Mary Barra is sworn in before testifing during a House Energy and Commerce Committee hearing on Capitol Hill, in Washington, DC.
of $400 million in the second. It also agreed
was appointed as CEO to take the fall. “I
CEO Akerson pointed out, the “old GM”
to pay a $35 million fine to the National
do not believe that at all,” said Barra. “I
was a mess in which employees worked
Highway Traffic Safety Administration
believe this issue came up, and we learned
largely isolated from other departments
(NHTSA) – an embarrassing record. And
about it, the leadership learned about it on
and were unlikely to share information.
GM is already facing nearly 80 lawsuits,
January 31 and we’re dealing with it, and
GM executives have denied any cover-
seeking a total of about $10 billion in
it just happened to be two weeks after I
up, and they blame the flawed internal
damages, with more to come.
officially came into the job.”
process that they say kept knowledge
The fact that GM acknowledged that
After two congressional hearings there
some of its engineers were aware of the
is little reason to disbelieve Barra, who has
ignition problems as far back as 2001 has
a strong reputation for straight-talk and
given rise to conspiracy theories that Barra
accountability. Furthermore, as former
of the defect from travelling up the company’s chain of command. Barra even took the unprecedented step of issuing a public apology. “I am very sorry for the loss of life that occurred, and we
The fact that GM acknowledged that some of its engineers were aware of the ignition problems as far back as 2001 has given rise to conspiracy theories that Barra was appointed as CEO to take the fall.
will take every step to make sure this never happens again,” she said. “Something went wrong with our process in this instance and terrible things happened.” Barra, in an interview with The Wall Street Journal, said that senior executives will now be informed of vehicle safety problems when they are first reported and would expect to expand, but never Portfolio
Profile
26
reduce, any potential recalls if they are
– Chevrolet, Buick, GMC and Cadillac –
GM, its board of directors, its employees,
deemed necessary. “I am trying really
now rank highest in customer satisfaction
the dealers and, most important, the
hard to communicate that we have
with dealers. GM sold 9.7 million vehicles
people who buy its cars. If she remains as
made great strides to reduce the
globally last year, earning a net $3.8
forthcoming as I’ve seen her on television
bureaucracy within GM,” Barra said.
billion on revenue of $155.4 billion.
with Congress, she will enjoy a long
ONE THING is clear, being the face of GM
we’re there, but we still have work to do to
is not an easy task at the moment. Instead
restore the company’s reputation,” Barra
of mentors and well wishers. But she has
of celebrating her historic achievement
said. “Rebuilding takes time.”
no doubt on the persons who influenced
“I think from the product perspective
as the first female CEO in a traditionally
One person who knows the challenges
tenure at the helm.” It is clear that Barra has no shortage
her most. “My mom and dad were great people,” she
male-dominated industry – a feat that
facing Barra is former Chrysler CEO Lee
landed her at No. 7 on Forbes’ 2014 list of
Iacocca, who is revered for his revival of
said. “They worked hard. They taught my
the world’s Most Powerful Women, No.1
the bankrupt Chrysler Corporation in the
brother and I the value of a hard day’s work
on Fortune’s 50 Most Powerful Women in
1980s. On Barra’s appointment he wrote
and that we could accomplish anything we
Business, and Time magazine’s 2014 most
in Time magazine: “In a perfect world,
wanted if we worked hard enough. They
influential people list – she has had her
gender shouldn’t matter. So it’s about
also taught us the power of integrity, and
leadership severely tested.
time someone of Mary Barra’s calibre and
they continue to guide me every day.”
It has also raised questions about whether the 33-year company veteran – or anyone – can really change the culture in an organisation as vast as General Motors,
experience was appointed to the coveted position of General Motors CEO. “Only time (and the pundits) will judge Barra and the kind of job she’ll do for
Those values will come in handy as Barra tries to get past the ‘ignitiongate’ scandal and steer GM on a new and more profitable course. n
a company that has run through five CEOs in the past six years. But despite all the negative publicity, there is also a lot going for GM. The company is currently producing the best vehicles in its history, winning a string of awards from consumer reports,
“Only time (and the pundits) will judge Barra and the kind of job she’ll do for GM, its board of directors, its employees, the dealers and, most important, the people who buy its cars.”
the Insurance Institute for Highway Safety and others. GM’s four US brands
In the last three years GM has become profitable again, due in part to the introduction of new models.
Portfolio
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Real Estate
28
Istanbul’s ProPerty boom A huge building boom has altered the Turkish city's skyline, but some experts are worried that a property bubble is forming, reports Landon Thomas Jr.
“We are invading istanbul again,” the real estate agent said enthusiastically as she ticked off the selling points of Turkey’s most ambitious development extravaganza to date: Maslak 1453. Named for the year this bicontinental city passed from Christian to Muslim hands, Maslak 1453 has been planned as a vast complex of
The Mall of Istanbul is currently Turkey’s largest mixed-use development.
24 towers, shopping malls galore and, not least, a 1,453-metre-long shopping promenade that celebrates the most consequential date in Turkish history. Upon completion in 2015, Maslak 1453 will be the largest real estate development in all of Europe and perhaps the ultimate expression of the pell-mell construction boom that has underpinned Turkey’s decade of rapid growth under Recep Tayyip Erdogan, the nation’s Islamist prime minister. Erdogan’s timing was perfect, coinciding with the global liquidity glut unleashed by the world’s leading central banks to restore growth in the advanced industrial economies after the Great Recession. One result was
© 2014 New York Times News service
a sharp increase in lending by Turkish banks, much of it directed toward property developers. But as Turkish interest rates spike, and the economy slows, local bankers and real estate experts are becoming increasingly worried that Istanbul’s real estate market may be heading for a fall. They are reminded of similarities between the situation in Turkey and what happened in Spain and Ireland, where alliances among banks, developers and politicians contributed to the creation of real estate
Portfolio
29
Maslak 1453 is Europe’s largest real estate development.
bubbles that popped once interest rates began to rise, puncturing the overall economies as well. “The official numbers are showing signs of risk,” said Hakan Eren, a real estate investment adviser. “The result could be a bust if this is not well managed.” According to research by Mustafa Sonmez, author of numerous books on the Turkish economy, Erdogan has favoured the construction and real estate sectors at the expense of important export sectors. “It’s a shame,” said Sonmez, who calculates that construction spending is now about nine per cent of the overall economy, a level that the International Monetary Fund has found to be associated with problems in other countries. “We have used all this free money to build houses and feed the domestic market.” To date, the local market had been remarkably resilient, overcoming a global rise in interest rates caused by last year’s “taper tantrum” surrounding the Federal Reserve’s decision to begin cutting back on stimulus, as well as the anti-government, anti-development street protests at Taksim Square, here in Istanbul. But in the first three months of the year, unit sales for new apartments were down about 60 per cent compared to the same period last year, according to Emlak Konut, the country’s largest real estate investment company. Moreover, Eren said, the inventory of unsold housing units has risen to 1.5 million, compared to levels close to zero several years ago, a clear sign that the slowing economy and higher interest rates are cutting into demand. The potential for a real estate crash highlights the role of the relatively obscure Housing Development Administration, commonly known as Toki, in fuelling the boom. Traditionally a bureaucratic backwater with a mandate to push for more affordable homes, Toki emerged as a housing power centre when its bylaws were changed in January 2004 to bring it under the direct control of Erdogan less than a year after he was elected. Under his sponsorship, Toki amassed choice properties at little or no cost, auctioned them off to developers and took a cut of the profits. According to Sonmez, Toki has been particularly aggressive in backing high-end projects undertaken by developers with ties to Erdogan. They include Ali Agaoglu, the billionaire businessman behind Maslak 1453, who late last year was one of a number of business executives, bankers and politicians questioned by the police as part of a broad corruption investigation. Also questioned were two Toki board members. “The rise of Erdogan and the construction industry in Turkey have been one and the same,” Sonmez said.
July 2014
Real Estate
30
Ongoing construction of Maslak 1453, a huge luxury shopping and living complex.
In light of Istanbul’s extraordinary growth spurt over the last decade, of course, a metamorphosis of the city’s skyline was to be expected, and many of Istanbul’s new development projects have been financially successful. But some of the more recent, highly ambitious real estate schemes are proving more problematic.
The Mall of Istanbul has soaring towers, a cavernous mall and even an indoor amusement park with roller coasters. And until Maslak 1453 opens for business, the Mall of Istanbul holds the distinction of being Turkey’s largest mixed-use development.
One Of the most closely watched is the Mall of Istanbul, a grandiose experiment conceived by a business magnate, Aziz
the Turkish central bank made a drastic
the airport and, of course, the on-site
Torun, who in the early 1970s was a friend
move to prop up the lira by doubling
amusement park.
and classmate of Erdogan at a religious
interest rates, Torun did his best to address
vocational school in Istanbul. The Mall of
these concerns. He promised that the Mall
Turkish professionals snap up pricey
Istanbul has soaring towers, a cavernous
of Istanbul would open in April – although
apartments or flock to yet another opulent
mall and even an indoor amusement park
the grand opening is now set for June, with
shopping mall? Especially one located in
with roller coasters. And until Maslak 1453
Erdogan expected to attend – and said
an industrial park at the intersection of two
opens for business, the Mall of Istanbul
his company had “stuck out our neck” by
major highways, more than 16 kilometres
holds the distinction of being Turkey’s
striking rental agreements with prospective
outside central Istanbul?
largest mixed-use development.
retailers, which track the value of the
Sonmez, the author and real estate
dollar, at a favourable exchange rate.
expert, remains unconvinced. “All this is
Real estate experts point out, however,
But will wealthy foreigners or aspiring
problematic,” he said, citing the project’s
that these types of big projects are likely
During a visit in April, a sales agent
to suffer from the economy’s increasing
was quick to catalogue Mall of Istanbul’s
location. “The Mall of Istanbul could be the
volatility. This past January, the day after
attractions: easy parking, proximity to
Titanic of shopping malls in Turkey.” n Portfolio
Energy
32
D
A worker repairs the brick walls of a farmhouse damaged during the increasingly frequent minor earthquakes.
eep below the cow pastures and farming villages in the picturesque northeastern corner of the Netherlands, lies an extraordinary resource: Europe’s
largest source of natural gas, known as the Groningen gas field. Since its discovery in Groningen province in 1959, the field has powered the economy of the Netherlands and has been a reliable supply of gas for Northern Europe. Five decades and counting is a remarkable run of productivity for a field of fossil fuel. But as it enters old age, Groningen has grown cranky. A half-century of extraction has reduced the field’s natural pressure in recent years, and seismic shifts from geological settling have set off increasingly frequent earthquakes – more than 120 last year, and at least 40 this year. Though most of the tremors have
Pieter Stapel lives in a converted church that will have to be torn down due to damage.
been small, and resulted in no reported deaths or serious injuries, they have caused widespread damage to buildings, endangered nearby dikes, and frightened and angered local residents.
euRope’s GAs CAChe on In light of those problems, the Dutch government is now demanding that the field’s operator, a joint venture of Royal Dutch Shell and Exxon Mobil, curtail production, making the Groningen field much more than a local worry. The field accounts for about one-third of the natural gas produced in the European Union. Any reduction in Groningen’s
A crack in the brick wall of a 110-year-old farmhouse.
© 2014 New York Times News service
output might be especially hard for the European economy to bear now that tension in Ukraine is making the receipt of gas from Russia uncertain and as Moscow pivots its energy attention towards China. “Groningen is one of the few facilities able to swing up in terms of production when demand rises,” said Jonathan Stern, chairman of the gas programme at the Oxford Institute for Energy Studies. Portfolio
33
A natural gas production facility in the Groningen field.
He and other analysts say the cuts
shaky Ground
could influence gas supplies and prices in Europe in the event of a tight market this year. “We don’t know how this will affect us in a cold winter,” Stern said. People living atop the Groningen field
The Netherlands’ Groningen gas field accounts for about one-third of the European Union’s natural gas production. But seismic shifts and earthquakes, as gas pressure declines, are now threatening production, reports Stanley Reed.
are trying to cope with the on-the-ground consequences. Nienke Pastoor and her husband, Jaap, spent years restoring a 110-year-old farmhouse. But an earthquake in 2012 left cracks in the outer brick walls and inflicted more serious structural damage to the home of Jaap Pastoor’s parents across the road, causing them to suspend plans to swap homes so the younger couple would be closer to the family farmland. “I have four children,” Nienke Pastoor said. “If they go to sleep and it starts to shake, what is going to happen?” The Groningen field was developed
July 2014
Energy
34
with traditional drilling techniques. But the geological problems posed even by a conventional gas field could provide additional fodder for critics of the hydraulic fracturing technique, commonly known as fracking, which is being used elsewhere to extract gas from shale rock and has been known to cause minor earthquakes in Britain. As part of a three-year test, the Dutch government has ordered the joint venture that operates the Groningen field, Nederlandse Aardolie Maatschappij, or NAM, to cut production by about 20 per cent from last year’s level. It has also demanded other corrective measures, including reinvesting some of the profit from the field into the local economy. About 150,000 people live above the field, which occupies about 906 square kilometres. In a delicate balancing act, the government is taking those steps to avoid curbing output even more at Groningen, where production was already expected to start declining steeply in the next decade. The field contributes as much as ¤12 billion ($16.4 billion) to the national
Albert Rodenboog, the mayor of Loppersum, an epicenter of the region’s frequent minor earthquakes.
government each year, or more than four per cent of its revenue. Shell and Exxon do not disclose their profits from Groningen, but the companies are thought to split around one billion euros a year in earnings from the field. Despite the government action, many
In a delicate balancing act, the government is taking those steps to avoid curbing output even more at Groningen, where production was already expected to start declining steeply in the next decade.
local people are sceptical that anything will really change. “The main question is, ‘Can you rebuild trust?’” said Jacques
they caused. Still, “it is a very unpleasant
subject to earthquakes, he said, buildings
Wallage, a former member of the Dutch
problem that I would rather not have,”
in the region were not designed to
cabinet and a former mayor of Groningen
Jacobs said in NAM’s hulking white-stone
withstand them.
who is co-chairman of an effort to create
headquarters in Assen, a town about a
a dialogue between the gas company and
half-hour drive south of Groningen.
local citizens’ groups. “NAM has spoiled trust over the last 20 to 30 years.”
The Groningen tremors have been
During the three-year test, NAM will hold overall output to about 80 per cent of what was produced in 2013. Even with the
occurring relatively near the Earth’s
cutback, Groningen will remain a large
surface – about three kilometres deep –
producer. The new annual production
director for the Groningen field, made
which magnifies the impact, said Bernard
ceiling, at 42.5 billion cubic metres, would
clear during an interview that the
Dost, director of the meteorological
still be higher than the 38 billion cubic
company accepted responsibility for the
institute’s seismology division. And
metres a year that Russia recently agreed
earthquakes and for fixing the damage
because Groningen was not previously
to supply to China.
Jan Willem Jacobs, NAM’s project
Portfolio
Energy
36
are in Groningen’s “sweet spot” – its most prolific zones for gas extraction. The company and various government
Blanken, secretary of the 2,000-member citizens group Groninger Bodem
year, ¤1.2 billion package to repair and
Beweging, or Groningen Earth Movement. Blanken’s organisation would like to
including more than 20 of the medieval
see gas production at Groningen cut by
churches in the region that have sustained
about 40 per cent, and wants independent
substantial damage.
monitoring of the company.
The government says the construction
“People don’t consider NAM a
work will create 3,000 jobs in the region.
neighbour,” she said. “They consider it
Some of the money is also to be spent
an intruder.”
on bolstering the rural electrical and
Groningen’s most accessible gas further
whole surroundings will die,” said Daniella
authorities have also agreed on a fivereinforce homes and other buildings,
But the Dutch government is placing
“What a lot of people fear is that their
Dost, the seismologist, said that
telecommunications grids and to help
lowering production in the epicenter will
compensate homeowners who have had
probably reduce the earthquake risk, but
to sell at depressed prices because of
only time will tell.
earthquake-related problems. The hope is to win over locals. The field
“We should see over the next one to two years,” he said. It is a test that residents say Groningen
out of reach. It has ordered the company
has never been a big source of jobs, and
to sharply curtail production at five sites
the local governments have never received
in the Loppersum area, which has been
any special tax revenue before. Groningen
the epicentre of the quakes. Jacobs, the
residents say NAM’s biggest challenge
different here,” Blanken said. “One casualty
NAM project director, says those sites
may be in repairing community relations.
is going to put the region on fire.” n
cannot afford to fail. “If there is one casualty, everything is
Residents fear for their families' lives as earthquakes and tremors damage buildings and infrastructure.
Portfolio
Agriculture
38
Volunteers fill boxes of fruits and vegetables at a distribution facility for Ugly Fruit.
TEMPTING EUROPE WITH UGLY FRUIT
© 2014 NEW YORK TIMES NEWS SERVICE
Europe wastes 89 million tons of food a year, mainly due to strict labelling laws. Fruta Feia, a cooperative, is tackling this wastage, reports Raphael Minder.
I
SABEL SOARES WENT
They were perfect for her.
Fruta Feia, or Ugly Fruit, which, in its
shopping for produce on a recent
At a time of lingering economic hardship
short life, is already verging on a kind of
morning in Lisbon, carefully
for many in the European Union, whose
countercultural movement. It has taken off
selecting her fruits and vegetables
penchant for regulation has extended even
with hard-pressed consumers, won applause
with a discriminating eye. She
to the shape, size and colour of the foods
from advocates outraged by Europe’s
picked up some spinach whose leaves had
its citizens eat, Soares has bet that there is
skyrocketing food waste, and provided
turned an unappealing yellow. Then some
a market for fruits and vegetables deemed
a backhanded slap to conceited EU rule
tomatoes whose skin had been damaged
too ugly by government bureaucrats,
makers. In its own way, Fruta Feia has even
by sunburn and insect bites. Finally, she
supermarkets and other retailers to sell
quietly subverted fixed notions of what is
set on some zucchini that had grown
to their customers.
beautiful, or at least edible.
so large and deformed that they curved almost into a doughnut shape.
About six months ago, she and a handful of volunteers started a cooperative called
“The EU norms are based on the mistaken idea that quality is about Portfolio
39
appearance,” said Soares, 31, who formerly
European Commission. Such “private
improve sell-by date labelling, as well as
worked in Barcelona as a renewable
standards,” he added, “are obviously
channel more unwanted produce to food
energy consultant. “It’s, of course, easier to
controversial for the farmers.”
banks or animal feed.
interior features like sugar levels, but that
THE COMMISSION is set to publish
scientist, said he supported any initiative
is the wrong way to determine quality.”
new recommendations in June to fight
that reduced the control of large producers
She said her goal was “to break the
food waste. They will include proposals to
and retailers over European farming.
measure the exterior aspect, rather than
dictatorship of aesthetics, because it has really helped increase food wastage.” Europe wastes 89 million tons of food a year, according to a study presented in May by the Dutch and Swedish governments, which called on the European Union “to reduce the amount of
João Barroso, an environmental
For products like tomatoes, which remain on the list, the European legislation sets minimum requirements, including that the tomatoes arrive “clean, practically free of any visible foreign matter” and “fresh in appearance.”
food waste caused by the labelling system.” For her part, Soares estimates that a third of Portugal’s farming produce goes to waste because of the quality standards set by supermarkets and their consumers. She says the waste is also a striking example of misplaced regulatory intervention by the European Union, which has tried to unify food standards across the 28-nation bloc. In fact, Europe’s food rules, adopted as part of the 1992 completion of the EU single market, have long helped fuel antiEuropean sentiment, particularly in Britain, where tabloid newspapers ridiculed Brussels bureaucrats for supposedly trying to ban “bent bananas” or “curved cucumbers.” Faced with such criticism, the European Commission cut back six years ago its
Lemons to be sold by Ugly Fruit, a cooperative marketing produce deemed below grade by grocers or European Union regulations.
listing of marketing rules for fruits and vegetables from 36 to 10. For products like tomatoes, which remain on the list, the European legislation sets minimum requirements, including that the tomatoes arrive “clean, practically free of any visible foreign matter” and “fresh in appearance.” The law then places them into three classes, including a lower one that allows for defects. Supermarkets, however, generally opt for a class that permits only “a slight defect in shape and development” of the tomatoes. In addition, “many supermarkets set their own standards – whether or not there are EU standards,” said Roger Waite, an agricultural spokesman for the July 2014
Members receive a weekly food crate that costs $4.77 for around 3.6 kilograms of fruit and vegetables.
Agriculture
40
said, Fruta Feia had built a waiting list of 1,000 customers. The association has 420 registered customers, who also pay a $6.81 membership fee on top of the cost of their weekly food crate, which costs $4.77 for a crate containing about 3.6 kilograms of fruits and vegetables. At first, Soares said, she struggled to persuade farmers to sell her their unwanted food. “I think some suspected that I was an undercover sanitary inspector,” she recalled. Nowadays,
GETTY IMAGES
however, she gets a warm embrace from
Supermarkets set their own quality standards, which means a quarter of produce is rejected.
Paulo Dias, who runs a family farm in Cambaia, about 72 kilometres from Lisbon, which supplies Sonae, one of Portugal’s largest supermarket companies. The farm covers 7.5 hectares, of which
“The EU has set standards and follows
EVEN THOUGH Fruta Feia had been
four are greenhouses.
an agricultural policy that is focused
growing “exponentially,” she said she
on what the big players in the food
would maintain a scale that allowed her to
a tomato than in the open air,” Dias said,
supply chain want, even if that means an
visit her producers regularly. “We want to
“but that doesn’t mean the taste gets better.”
incredible amount of waste,” Barroso said.
work with local farmers because we want
Soares said she could sell her food without contravening EU legislation
to know who we help,” she said. Soares started her venture in November,
“In a greenhouse, it’s a lot easier to control
Of his annual production of about 907 kilograms of tomatoes, Dias said, a quarter do not meet quality standards
because Europe’s marketing rules apply
after winning a $20,000 prize from the
– covering colour, size and skin texture –
only to food that is labelled or packaged,
Gulbenkian Foundation, which held
and are, therefore, dumped.
which is not the case with the produce
an entrepreneurship competition for
that goes into her crates.
Portuguese living overseas. Since then, she
Fruta Feia buys the unwanted food at about half the price at which producers
Paulo Dias inspects a greenhouse on his family farm in Cambaia, Portugal. Portfolio
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Agriculture
42
Andrea Battocchi carries sacks of lemons and onions at a distribution facility for Ugly Fruit.
Isabel Soares is the founder of Ugly Fruit in Lisbon. She currently has a waiting list of 1,000 customers.
sell it to supermarkets. Dias said that “any extra income, of course, helps.” But, he added, “It also makes me feel good to know my tomatoes aren’t wasted and that people who perhaps have little money get to eat something that is just as good as if they could afford the supermarket.” JOSÉ MANUEL Santos, another farmer outside the town of Mafra, estimated that half of his spinach harvest would be thrown away this year because abrupt weather fluctuations had helped turn the leaves yellow. “The market has decided that spinach absolutely needs to be green, so I’m having to throw out spinach that is of the same quality,” he said. So far, Fruta Feia has a staff of only three people, including Soares, as well as a
Workers box up zucchini for Ugly Fruit.
At a time of austerity and 15 per cent
Neves, a call-centre worker. “I’ve looked
handful of volunteers, some of whom are
unemployment in Portugal, Fruta Feia
closely at some of this stuff and can’t see
foreigners living in Lisbon.
has attracted customers because of its
why it can’t make it to the supermarket.”
Andrea Battocchi, a 30-year-old
low pricing, but most customers said they
As her last customers were leaving,
architect, said his plan was to present
mainly wanted to support local agriculture
Soares checked to see whether any fruit
the Fruta Feia project at Expo 2015, an
while reducing waste.
remained in the crates in which volunteers
international exhibition that will be held
“This food is, of course, cheap, but it’s
put any surplus food, which customers are
in his native Milan and will have “feeding
also local, fresh and would otherwise go to
encouraged to take home free. “Of course,
the planet” as its theme.
waste, which really bothers me,” said Ana
nothing can go to waste here,” she said. n Portfolio
Profile
44
A shopper browses at the Syon Park Garden Centre, a part of the Garden Centre Group, in London.
HANDS FINDS SOLACE IN GARDENING
© 2014 NEW YORK TIMES NEWS SERVICE
Guy Hands, infamous for buying EMI, has a new lease of life with the Garden Centre Group, reports Jenny Anderson.
G
UY HANDS TRIED
Firma, a British private equity firm,
up 50 per cent last year, to £42.7 million
to make money from
bought Garden Centre Group in 2012
($70.8 million).
the likes of Katy Perry
for £276 million ($459 million). The
and Coldplay when he
purchase of the company – a collection
is the second-most popular pastime after
bought music giant
of 129 stores of varying size and success
television,” Hands said. “Even sex came
EMI in 2007. But he has had much more
scattered throughout England and Wales
after the garden, which the French would
success selling resin garden animals and
– has shown that Hands has a green
say sums up the British.”
bedroom slippers to retirees in garden
thumb, at least for gardening investments.
centres across Britain.
The Garden Centre’s earnings before
scent of roses to make up for the mess
taxes, depreciation and amortisation were
left over from EMI, the music company
Hands, who founded and runs Terra
“For men over 45 in England, gardening
But Hands will need more than the sweet
Portfolio
45
he bought at the top of the market for
£7,000, three-piece living room set and
are being overhauled – the company
£4 billion ($6.3 billion) in the largest
the £18,000 bonsai. In came Comfy Feet
owns 100, making it a significant
private equity deal ever done in Britain.
slippers, fresh-brewed cappuccinos and a
restaurant chain in Britain – and farm
The company, facing crushing amounts
wide assortment of resin animals, which
stores introduced with butcher and fruit
of debt, was seized by its lenders in 2011,
tallied more than £1 million in sales last
stands alongside specialty beer producers.
erasing two-thirds of Hands’ wealth and
year. (Bunnies were the top sellers, even
Because customers like experts, and
his reputation as one of Britain’s savviest
beyond the popular Easter season. “This is
horticulturalists are not usually well
investors. (He has since moved to Guernsey,
the new gnome,” Williamson said.)
versed in high-protein puppy food,
an island that is not part of Britain and, therefore, not subject to its taxes.)
Since Terra Firma bought the company, it has also changed the management team,
With private equity booming again – in
concession licenses are now being sold to pet suppliers, high-end clothing brands and aquatics experts.
2013, firms around the world raised $493 billion in new funds, the highest level
STILL, £1 million worth of resin rabbits
since 2008, and had $311 billion in exits,
cannot erase the black mark left by EMI.
according to the data provider Preqin –
Hands had to write down £1.75 billion
Hands is clearly aiming to get back in
on the investment after funding dried
the game. Investors say he hopes to raise
up in the financial crisis. (He also called
a fund of $2 billion in addition to finally
the label’s artists lazy, and then later
closing on an initial round of capital for
elaborated that he was misunderstood.
his renewable energy infrastructure fund,
The issue, he said at the time, was that
which has had a rocky start.
they could not handle the truth.) He then
Hands said that the Garden Centre gets
sued Citibank and his banker, charging
back to Terra Firma’s roots – buying asset-
that they rigged an auction to get him to
backed businesses in need of restructuring
pay a higher price for EMI. The suit was
in essential industries. Gardening is a £5
recently moved to Manchester, where it
billion business in Britain, and eight out
will continue.
of 10 people have gardens. The company
The debacle hurt Hands’ reputation,
was an amalgamation of garden centres
say private equity executives, who insisted
built by gardening enthusiasts with no
on anonymity because they sometimes
retailing experience. And yet the retailing
do business with Hands. “If you are a
opportunity was ripe. “It’s a business that grew up by small, family-owned businesses being taped together,” said Julie Williamson, financial managing director at Terra Firma. “It was not properly integrated.” Terra Firma’s research showed that people spent two to four hours at garden centres, with only five per cent arriving to buy a specific gardening product. “They look at the flowers. They buy something. They have a cup of tea,” Hands said. Terra Firma set about transforming the local horticultural hubs into buzzing retail
teachers’ pension fund and you have Hands had to write down £1.75 billion on his EMI investment.
trustees looking at you, do you really want
Terra Firma set about transforming the local horticultural hubs into buzzing retail centres, with fish and chips made with regionally brewed beers to complement the begonia bulbs..
all over the press for its lawsuit?” said
to be associated with the fund which was one London-based fundraising executive. “Most people say, ‘No, there is too much political risk.’” Hands says he believes the EMI troubles are behind him. “EMI was a long time ago,” he said. “I think investors are now focusing on what we have achieved since 2010.” Last year, he took public Infinis, a generator of renewable energy, and Deutsche Annington, a German
centres, with fish and chips made with
putting in a chief executive who worked
property company, while acquiring Four
regionally brewed beers to complement
at Avis and a head of retail operations
Seasons Health Care, an older-adult care
the begonia bulbs.
with experience at Marks & Spencer and
specialist firm. In 2012, he completed
Pret a Manger. The supply chain has been
the acquisition of Annington Homes,
centralised, and parking improved.
the largest leveraged buyout since EMI,
That meant reassessing the rather puzzling stock of goods. Out went masses of expensive Le Creuset cookware, the odd July 2014
Restaurants at Garden Centre locations
according to Preqin.
Profile
46
With the purchase and overhaul of the Garden Centre Group, Guy Hands and his private equity firm, Terra Firma, are aiming to get back in the game.
In 2013, Terra Firma Capital Partners
strategy had shifted from “large elephants”
Hands said that turnover of
III, the fund that bought EMI, showed a
– or securing large investments – to
management for his portfolio companies
net return of 0.67 times its cash investment
smaller ones, as many of the sovereign
was good when necessary, but investors
and posted a negative nine per cent rate of
wealth funds and large pension funds
may not share the same sentiment when it
return, compared with a net return of 1.28
want to go it alone. Hands said that
comes to the management of hundreds of
times cash investment for the average fund
the fund’s focus on renewable energy
millions of their dollars in his funds.
that was started in 2007 and an eight per
generation assets tended to attract those
cent rate of return, according to Preqin.
who took the time to get to know it.
Private equity investors generally look for 15 to 20 per cent returns. THE FIRM faces other headwinds. Terra Firma has faced high turnover, most recently when it fired the head of its renewable energy team during fundraising. That fund is aiming to raise ¤2 billion, down from an original goal of much more, say people familiar with the efforts. It has not closed its first round of fundraising yet, and the broader sector is notable for its meagre returns. Market sources say that the fundraising
Market sources say that the fundraising strategy had shifted from “large elephants” – or securing large investments – to smaller ones, as many of the sovereign wealth funds and large pension funds want to go it alone.
“Institutions like stability in the team,” said one market expert, who would not speak on the record because he occasionally worked with Terra Firma. “I don’t know if it should be the end-all, be-all, but it is.” Hands set aside £35.6 million for wages and salaries for the year through March, compared with £17.6 million the year before, as a way to hold on to restless talent. Hands seems to take the ups and downs in stride. A famous workaholic, he may not be able to overcome one formidable foe for his Garden Centre investment: the English weather. “It is a bit unpredictable,” he conceded. n Portfolio
Manufacturing
48
US CompanieS Head to mexiCo Rising labour costs in China have prompted US companies to look at their southern neighbour in a move that is mutually beneficial, reports Damien Cave.
J
ason sauey calls them lemmings – all the US companies
Revenues at its Mexican plant have
economists describe as an eagerness not seen since the early years of the North
that rushed to China to make
grown by 80 per cent since 2010, according
American Free Trade Agreement in the
things like toys and toilet brushes,
to company records, prompting a search
1990s. From border cities like Tijuana
only to be searching now for alternatives
for a second location near Mexico City. And
to the central plains where new factories
in Mexico and the United States. His
in the past year, a dozen corporations have
are filling farmland, Mexican workers are
own family-owned plastics company,
come to Flambeau and requested bids on
increasingly in demand.
Flambeau, nearly made the same mistake
projects worth tens of millions of dollars for
around 2004, he said, when competitors
things like smartphone cases and car parts.
grown by nearly 30 per cent since
“They’re all looking for a new model,”
2010, to $507 billion annually, and
contracting with China undercut prices and © 2014 New York Times News service
reaping the rewards, Sauey said.
seized market share. Flambeau resisted, turning instead to its factory in Satillo in central Mexico. And now the company – which makes
American trade with Mexico has
Sauey said at his offices in Middlefield,
foreign direct investment in Mexico last
Ohio. “It’s not just about cost; it’s about
year hit a record $35 billion. Over the
speed of response and quality.”
past few years, manufactured goods from
With labour costs rising rapidly in
Mexico have claimed a larger share of
Duncan yo-yos, hunting decoys, plastic
China, US manufacturers of all sizes
the US import market, reaching a high
cases and an array of industrial items – is
are looking south to Mexico with what
of about 14 per cent, according to the Portfolio
49
Realistic decoy cranes are dried at a factory run by Flambeau in Saltillo, Mexico. July 2014
Manufacturing
50
“Mexico has become the most competitive place to manufacture goods for the North American market, for sure, and it’s also become the most cost-competitive place to manufacture some goods for all over the world.”
Yo-yos manufactured by Duncan at a Mexican factory.
brushes (Casabella); grills and outdoor furniture (Meco Corp); medical supplies (DJO Global); and industrial cabinets (Viasystems Group). And while in some cases a move to Mexico is tied to job cuts in the United States, economists say that the US economy benefits more from outsourcing manufacturing to Mexico than to China because neighbours tend to share more of the production. Roughly 40 per cent of the parts found in Mexican imports originally came from the United States, compared with only four per cent for
A worker shows the resin beads which Flambeau uses in manufacturing.
International Monetary Fund, while
Chinese imports, according to the National Bureau of Economic Research, a private research group. Many US companies are expanding in
Such compariSonS appear to have
Mexico – including well-known brands
blunted some of the scorn that greeted
like Caterpillar, Chrysler, Stanley Black &
US companies moving production to
doubling every few years, it changes
Decker and Callaway Golf – adding billions
Mexico in the 1990s. And yet, for the
the whole calculus,” said Christopher
of dollars in investment and helping
economic relationship to reach its full
Wilson, an economics scholar at the
to drive the economic integration that
potential, experts, officials and executives
Mexico Institute of the Woodrow Wilson
President Barack Obama and President
say, the United States needs to make
International Centre for Scholars in
Enrique Peña Nieto have both described as
trade efficiency as important as border
Washington. “Mexico has become the most
vital to growth.
security. Long waits at the border continue
China’s share has declined. “When you have the wages in China
competitive place to manufacture goods for
As that happens, some companies
to frustrate many companies. At the
the North American market, for sure, and
are cutting back in China and heading
same time, Mexico needs to overcome
it’s also become the most cost-competitive
to Mexico to manufacture an array of
longstanding problems like education,
place to manufacture some goods for all
products, like headsets (Plantronics);
organised crime and corruption.
over the world.”
hula hoops (Hoopnotica); toilet
However, for every successful Flambeau, Portfolio
Manufacturing
52
there seems to be a KidCo, another
is fine,” said Edward Treanor, Flambeau’s
Midwestern manufacturer, which gave up
factory manager in Saltillo.
trying to move production from China to Mexico last year. “It’s a lot more convenient to fly to
Worker turnover, maintenance troubles and inconsistent quality have been a drag on the bottom line for years. But because
Mexico than to China,” said Ken Kaiser, the
Mexico is closer than China, Treanor added,
company’s owner. “But we just couldn’t find
Flambeau could do more about it: A few
a way to get an advantage by moving. It
months ago, the company sent a trusted
took forever just to get a price quote.”
American employee to oversee maintenance
executives, officials and experts say, Mexico
full time and improve factory operations.
and the United States will need to become
Dozens of interviews with executives, economists and US and Mexican officials
Experts say that these are the kinds of
better neighbours, more focused on sharing labour and moving products.
over the past year show that what many
companies succeeding now in Mexico,
companies are discovering is that there
those big enough to manage their own
Wilson at the Mexico Institute called
is not one Mexico, but many. Despite
factories and those that did not give up
specifically for a focus on “globally literate
many signs of promise, Mexico is still a
their technical knowledge by outsourcing
workforces in both countries.”
country of vast differences in efficiency and
to China.
“At a very basic level, that means teaching more Spanish in the US and more English
education, where only a small minority of
“There are a lot of examples of clients
the population has the training needed to
who were in Mexico, went to China and
in Mexico,” he said. Other, more immediate
compete with the world. Especially for the
now want to come back, and most of
changes are also necessary, he added,
crowded middle of US manufacturing – the
them have given up their expertise in
including shorter wait times at the border,
family-owned, medium-size businesses like
manufacturing,” said Scott Stanley, a
better roads and productivity gains in
KidCo and Flambeau – Mexico disappoints
senior vice president at North American
Mexico – lowering the cost of electricity,
as often as it satisfies.
Production Sharing, one of the largest firms
for example. After all, as the rise of China
to help US companies set up production
showed once before, there is no guarantee
facilities in Mexico.
that Mexican and US manufacturing will
Flambeau is not immune to the problems that kept KidCo in China. “In Mexico,
To draw more companies now,
stay attractive for long. n
reuters
almost right is good enough; second best
Mexico now accounts for about 18 per cent of North American auto production. Portfolio
54
FUNGUS CRIPPLES COFFEE FARMS
Spraying fungicides has been largely unsuccessful in halting the plant-choking coffee rust.
Coffee rust in Central America, coupled with drought in Brazil, has pushed up coffee prices on the global market. But it is the small farmers who are the worst hit, reports Elisabeth Malkin.
W
HEN COFFEE RUST
rust, or la roya, has swept across Central
attacked the farms
America, withering trees and slashing
clinging to the volcanic
production everywhere. As exports have
slopes above San Lucas
plunged over the last two years, the effects
Toliman, a Mayan town in Guatemala, the disease was unsparing, reducing
have rippled through the local economies. Big farmers hire fewer workers to pick
mountainside rows of coffee trees to lattices
the ripe coffee cherries that enclose the
of grey twigs.
beans. Smaller farmers go into debt and
During last year’s harvest, Román Lec,
sell livestock or tools to make up for the
who grows coffee on a few hectares here,
lost income. Sales fall at local merchants.
lost half his crop. This year, he borrowed
Teenagers leave school to work on the
about $2,000 for fertiliser and fungicide
farm because their parents can no longer
to protect the plants, as he did last year.
hire outside help. At the very end of the
But the disease returned and he lost even
chain are the landless migrant workers
more. “There are nights when you cannot
who earn just a few dollars a day.
sleep, thinking how to pay back the money,” said Lec, 65.
coffee, it’s a very serious problem,” said GETTY IMAGES
A plant-choking fungus called coffee
“If you frame this in terms of everyone that is connected to the economics of
Roberto de Michele, a specialist at the Inter-American Development Bank, who is based in Guatemala City. The coffee rust has spread far and fast, driven by higher temperatures in the region that have allowed the fungus to thrive at higher altitudes. Many experts say climate change is largely to blame for the shifting weather patterns. © 2014 NEW YORK TIMES NEWS SERVICE
The economics of the business have added to the farmers’ plight. After years of low coffee prices, smaller farmers could not afford to replace aging coffee plants, which have proved more vulnerable to the rust’s attack. “There was nothing to hold it back as the farms were in very poor Otto Rene Cabrera, left, who works for Guatemala’s National Coffee Organisation, and Roman Lec discuss plant health on Lec’s farm in San Lucas.
shape,” said Maja Wallengren, a coffee expert based in Mexico. Portfolio
Commodities
55
The trouble here is just one of several factors that are pushing up prices in the global commodity market, increases that
estimated Nils Leporowski, the president of Anacafé, the country’s coffee board. The rust outbreak has pushed many
reduce the spread of the rust. “People are scared of the roya,” said Nicolás Leja, who farms about 2.8
may carry over to supermarket shelves
families to the edge of survival. “Roya
hectares in plots in San Antonio Palopó, a
and the specialty coffee houses that sell
has exposed the depth of the social and
nearby municipality. He pruned his trees
the high-grade arabica coffee for which
economic problems in terms of people’s
and sprayed fungicide, but it proved futile.
Central America is known. Market
vulnerability to the market and to climate
He has lost as much as 60 per cent of his
prices have risen 70 to 80 per cent since
change,” said Peter Loach, the Guatemala
production over the last two years. Instead
November, driven mostly by drought in
director of Mercy Corps, an aid agency.
of hiring four workers for the harvest as
Brazil, the world’s largest producer.
“What makes it different and complicated
he usually does, he relied on extra labour
is that it’s a slow-onset natural disaster
from his 18-year-old son, who put off
over two to three years.”
plans to study medicine.
IN CENTRAL America, the pain is acute. Four million people there and in
As the coffee rust has taken hold,
The changing fortunes of Guatemala’s
southern Mexico rely on coffee for their
farmers have been spending much of their
small farmers raises the question of
living, according to the Inter-American
time and money trying to fight the disease
whether some of them should continue
Development Bank. Twenty per cent of
by spraying fungicide, replacing or cutting
to grow coffee at all or instead switch to
the half-million jobs in Guatemala directly
back old plants, and managing the shade
food crops. Some say they could not make
tied to the crop have already disappeared,
trees that filter sunlight and appear to
the change even if they wanted to. “Beans
July 2014
56
Coffee harvests fell by 15 per cent in Guatemala last year, while neighbouring countries had similar or even bigger loses.
and corn don’t grow well here,” Leja said, pointing at the steep hillside. “The coffee income is very important. It pays for corn and beans.” The latest epidemic of coffee rust began in Central America three years ago. It spread rapidly last year, prompting most governments to declare states of emergency. Last year’s harvest fell 15 per cent in Guatemala, and neighbouring countries had losses as big and even bigger. Export figures suggest that Guatemala’s harvest this year has fallen an additional 10 per cent. Nobody has escaped. Guillermo Ríos, a midsize producer who grows coffee on 15 hectares near the Mexican border in Huehuetenango, said he had sprayed
Nicolas Leja picks dead branches off an aging coffee plant attacked by coffee rust in the village of Tzampetey, Guatemala.
fungicide four times and managed to limit the outbreak to just 10 per cent of
WHILE RUST hit Central America in
Ríos, a climate change specialist at the
the plantation.
the 1970s and 1980s, the outbreaks were
Inter-American Development Bank.
contained at lower altitudes. This rust
With the changing conditions, the
invested,” he said in a telephone interview.
outbreak has advanced to the highest
industry is intensifying efforts to breed
But his profit was minimal, and the higher
altitudes, including the steep slopes here
varieties that are resistant to rust and heat
costs have halted his plans to add plants
around Lake Atitlán. Rising temperatures
stress while maintaining their quality.
on additional land he owns. He will hire
and extreme weather, like flooding, have
But the research is only beginning, and it
fewer workers than he expected.
encouraged roya’s spread, said Ana R.
may take 25 or 30 years before resistant
“My priority is to rescue what I
Portfolio
hybrids reach farmers, said Leonardo Lombardini, the deputy director of World Coffee Research at Texas A&M University. “The problem is that farmers are struggling and also the climate is changing rapidly,” Lombardini said. “The window of climate conditions for arabica is relatively narrow.” Researchers are also growing plants from seeds collected all over the world and sending them to different countries for field trials to see where they thrive. That should give farmers who do not have much money to invest some assurances that when they replace their old trees, the new ones will be productive. IN THE meantime, the priority is returning the farms to health. Guatemala’s agriculture ministry Domingo Javier Uipan Perez holds a diseased, withered leaf next to a healthy coffee plant in the village of San Juan La Laguna, Guatemala.
provided small farmers with fungicide last year, although many complained that it reached them too late or that it was not enough. Others simply sold it. The government has increased the amount of money in a fund to provide low-interest loans to $100 million and extended it to 2026. The fund had only $28 million when the measure was approved last autumn. “The coffee here is positioned for its quality like the wines of France,” said José Sebastián Marcucci, Guatemala’s vice minister of agriculture. “The majority of coffee comes from the small producers. I hope that they can be motivated.” With help from Anacafé, the government is showing farmers how to prune and replace their trees. They also plant beans and vegetables between the coffee seedlings to provide food while
As coffee harvests fall, children are forced to leave school to help on the farms.
Researchers are also growing plants from seeds collected all over the world and sending them to different countries for field trials to see where they thrive. That should give farmers who do not have much money to invest some assurances that when they replace their old trees, the new ones will be productive. July 2014
they wait three years for them to start producing. More and more farmers are listening. Servando Santos, 56, the manager at the San Miguel Integrated Agricultural Cooperative in Tzampetey, said he fought off the rust by spraying fungicide, using fertiliser and controlling the shade over his plants. “You have to adapt to the roya,” he said. “You have to make friends with it.” n
Commodities
57
Gender
58
Marissa Meyer’s career took off at Goggle before she was appointed CEO of Yahoo.
An ElusivE
JAckpot Female CEOs’ compensation packages compare favourably to their male counterparts. However, women remain woefully underrepresented in top leadership positions, reports Claire Cain Miller.
Portfolio
59
If you were MarIssa Mayer of
Those academic studies, along with the
chief-level executives known as the C-suite – and whatever you do, don’t quit.
Yahoo, making nearly $25 million for one
careers of the women on the list, provide
year’s worth of work – not to mention
a window into understanding why their
getting $50,000 in company-paid
numbers are so stubbornly low and why it
list was born a man. Martine Rothblatt,
personal security – the gender pay gap
seems to be easier in certain industries –
born Martin Rothblatt, was the married
would probably not be a major concern.
most surprisingly, perhaps, in technology
father of four children and started Sirius
Women scaling the heights of corporate
– for women to achieve the same level of
Satellite Radio, now SiriusXM, before
America tend to have compensation
success as men in terms of rank and pay.
undergoing gender reassignment surgery
packages that are as jaw-droppingly
For a woman whose career goal is to
in 1994. After one of her children was
gigantic as those of men at a similar level.
make scads of money, here are the basics:
diagnosed with a disease, she founded
But here’s the thing: They hardly ever
Get a job in tech, start at the highest-level
United Therapeutics in 1996 and helped develop a drug to treat the illness.
get there. On The New York Times’ annual list of the 200 highest-paid chief executives in the United States, there were just 11 women. That’s 5.5 per cent of the total and similar to the 4.9 per cent representation of female chief executives at the 1,000 biggest companies. The Equilar Top 200 Highest Paid CEO Rankings, conducted for The Times, raises questions about whether executive compensation is out of hand and whether it is to blame for national economic inequality. But the numbers also reflect another imbalance – the lack of women at
The highest-paid woman on the Equilar
The Equilar Top 200 Highest Paid CEO Rankings, conducted for The Times, raises questions about whether executive compensation is out of hand and whether it is to blame for national economic inequality.
Last year, she was paid $38 million in compensation, most of it in stock options, putting her at No. 10 on the list. She declined to be interviewed. “Her equity grant is awarded based on company performance, the best way to be aligned with the interests of shareholders,” said Andrew Fisher, deputy general counsel at the company. Its stock price more than doubled last year, largely because it received Food and Drug Administration approval for a new drug, Orenitram. Mayer, at $24.9 million, was the second best-paid woman, followed by Carol
the pinnacle of corporate America.
Meyrowitz, who made $20.7 million as
Equilar, an executive compensation data firm, looked at companies with
job possible, work your way up to run a
head of TJX Cos., owner of T.J. Maxx, the
market values of $1 billion or more that
piece of the company’s business (meaning,
discount apparel store. Both also received
had filed proxies by May 30. In April,
don’t become the general counsel or head
the bulk of their pay in stock and options.
Sunday Business reported the findings
of human resources), work for a company
of a preliminary Equilar study based on
with women on its board or among the
Consumer goods companies have historically had the most female chief
data for companies that had filed proxy statements by April 4 and that met a minimum threshold for revenue, not market capitalisation. Median pay for the women on the list of 200 CEOs is $15.7 million – $1.6 million less than the median for men and for the group overall. There are too few women in the Equilar study to make
© 2014 New York Times News service
anything of that difference in pay or to come to any definitive conclusions about gender and pay at the CEO level. But the findings of a range of economists who have studied chief executive pay suggest that high-ranking women tend to do as well as high-ranking men – with some important caveats. July 2014
Indra Nooyi, left, chief executive of PepsiCo, with former Prime Minister Manmohan Singh of India.
60
Sheryl Sandberg, chief operating officer of Facebook.
Meg Whitman, chief executive of HewlettPackard, in Palo Alto, California.
executives, and two of the highest-paid
Studies show women in chief executive posts are paid less than men. But two of the most comprehensive and respected studies of executive compensation found little evidence of a gap between male and female chief executives after controlling for age and years of experience.
women on our list are in that industry – Indra Nooyi of PepsiCo, who made $13.2 million, and Irene Rosenfeld of Mondelez International, formerly part of Kraft Foods, who made $14 million. But last year, two women became chief executives in a less traditionally female industry:
Virginia Rometty is the CEO of IBM. Women appear to fare well at tech companies.
military contracting. They are Marillyn Hewson at Lockheed Martin ($15.7 million) and Phebe Novakovic of General
StudieS Show women in chief
job of chief executive are actually paid
Dynamics ($18.8 million.)
executive posts are paid less than men.
more than men, one study found. Their
But two of the most comprehensive
lower pay largely results from the fact that
Barra of General Motors, in the news
and respected studies of executive
they tend to become chief executives at
because her company is in trouble over
compensation found little evidence of
a much younger age. Still, the question
the safety of its cars, would have been
a gap between male and female chief
remains whether a woman deserves
on the list had she been in that position
executives after controlling for age
equal pay to a man with the same job
last year. Her target pay for this year,
and years of experience. When those
responsibilities, even if she hasn’t worked
according to Equilar, is $14.4 million.
differences are factored in, women in the
the same number of years.
Another female chief executive, Mary
Portfolio
penalty for negative performance. One found they reap less of the benefit for a positive performance. And men, more than women, receive bonuses for getting lucky – that is, when their companies perform well because of factors that have nothing to do with their own skills, according to a study by Karen Selody, now an economist at the Federal Reserve in Washington. She attributed that difference to bias on the part of boards. “The old boys’ club insulates men,” Gayle said. “Women aren’t a part of the club, therefore their boards are not willing to do the same thing they are for men.” Another indication that gender plays a role in executive pay is that female executives earn up to 20 per cent more in companies where a woman is the chief executive or heads the board than at similar companies led by men, according to a paper by Linda Bell, an economics professor who is now provost and dean of the faculty at Barnard College. Companies senior executives.
getty images
getty images
led by women also have more women as
Lockheed Martin President and CEO Marillyn Hewson has made inroads into the world of military contracting.
“The help of women by women is an important factor in the career outcomes of Carol Meyrowitz made $20.7 million as head of TJX Cos, owner of T.J. Maxx.
women,” Bell wrote. If that is true, the most troubling sign might be that the increase in the number
in other compensation. Take pay-for-
of women in high-ranking jobs has stalled,
by George-Levi Gayle of Washington
performance, a metric meant to tie a
according to the 2013 census of the 500
University with Limor Golan and Robert
chief ’s pay to the success of the company
biggest companies by Catalyst, a non-
Miller, when all three economists were at
itself. Three studies show that women
profit research firm studying women in
Carnegie Mellon, analysed the Standard
in high-level jobs take the brunt of the
business. Women hold 16.9 per cent of
One of those studies, written in 2011
board seats and 14.6 per cent of executive
& Poor’s ExecuComp database of 2,818 companies and 30,614 executives, and demographic information from Marquis Who’s Who. The other study, by Marianne Bertrand of the University of Chicago and Kevin Hallock of Cornell, found women in the executive ranks earned about 45 per cent less than their male counterparts, but the gap was almost entirely explained by the fact that the women tended to be younger and to run smaller companies. Pay packages, however, are complicated. Studies have found that subtle discrimination seems to come into play July 2014
Women hold 16.9 per cent of board seats and 14.6 per cent of executive posts, and account for 8.1 per cent of the top five earners at those companies – all numbers that have stopped growing.
posts, and account for 8.1 per cent of the top five earners at those companies – all numbers that have stopped growing. The percentage of female chief executives at the 1,000 largest companies is growing, but at a tortoise-like rate – from 1.7 per cent a decade ago to 4.9 per cent now. “I wouldn’t call four per cent representation progress, and certainly not rapid progress,” said Heather Foust-Cummings, leader of the Catalyst Research Centre for Equity in Business Leadership. n
Gender
61
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Essentials
63
The besT of leisure and lifesTyle
Walking in
gran Canaria The Canary Islands are known for spectacular beaches and resorts, but great rewards await those who venture on walking trails away from the tourist crowds, reports Robin McKelvie.
July 2014
64
Essentials
Travel
Puerto de Mogán is a picturesque resort and fishing village on the southwest coast.
Pinus Canariensis is endemic to the Canary Islands.
The rough topography is typical of islands formed by volcanic activity.
Gran Canaria is often dismissed
declared the entire island a Biosphere
as some sort of giant tourist aircraft carrier
Reserve in 2005?
floating off the African coast. Deemed
I was not disappointed. Within hours of
fine for Northern Europeans wanting to
touching down I had left the British theme
sunbathe for a week on the beach, but not
pubs behind and was clambering over
surely somewhere for a walking holiday?
some of the most impressive sand dunes in
Look closer, though, and Gran Canaria
Europe, just on the fringes of the southern
emerges as an island oasis where you
resorts in the Dunes of Maspalomas Special
can descend year-round into volcanic
Nature Reserve. Rearing up behind the
calderas, scramble along some of Europe’s
Atlantic beaches a hinterland awash with
highest cliffs and stride through endorphin
thick forests and sky-scratching mountains
pumping forests.
tempted me, with Pico de Las Nieves
The first time I ventured to the third
soaring to 1,949 metres. This wildscape is
largest of Spain’s Canary Islands a few
home to around 50 species of nesting birds
years ago I admit that I was also sceptical.
and alive with 100 plant species endemic to
I had feared the ‘Continent in Miniature’
Gran Canaria.
epithet was just tourist office hype but then
If you were to conjure up a European
surely UNESCO couldn’t be wrong, having
island that is ideal for hiking, the chances
This remarkably attractive island boasts myriad hiking opportunities, from testing mountain tracks, through to hikes down into volcanic craters and more relaxed rambles around the old barranco river valleys that run between the whitewashed traditional mountain villages. Portfolio
65
whitewashed traditional mountain villages.
before a steep climb back out. The interior
From the air Gran Canaria appears like
of the crater was remarkable, like a scene
one giant volcano. It has a classic volcanic
from Jurassic Park, with its lush vegetation
cone shape and it was formed millions of
and exotic plants bursting through the
years ago by volcanic action, so the first
harsh volcanic terrain. After lunch we spent
impressions are not misleading.
the afternoon circling the rim of the crater
Walking tourism is really starting to catch on here. The local authorities have
Valley, a fascinating place where some of
as new waymarking signs, and they are
the local people still live, as their ancient
also getting much better at providing
gaunche ancestors did, in cave dwellings
information for walkers.
hewn into the steep hillsides. It was a the effort was worth it for the views we
on a trip that eased out the island’s
enjoyed during our lunch, with hills and
myriad walking trails in the safety of a
forest all around and the island capital of
group. The trails were generally in good
Las Palmas clearly visible in the distance. blue skies our last day brought some rain
walk began up in the Cumbre mountains
and mist at the start and made us realise
in the dizzy heights of Cruz de Tejeda. It
how good the weather had been. This was
may have been a 12 kilometre walk (which
short-lived, though, as we soon descended
proved the average length of our walks),
through the clouds from the Mirador Pinos
but there was only 200 metres of ascent,
de Galdar and pushed on to the small
compared to 900 metres of descent,
town of Firgas. En route wild flowers
meaning we had a gentle introduction to
exploded all around, the wonderful fresh
Gran Canarian walking.
aroma of eucalyptus forests filled our
getty images
Crater. This dormant (note not extinct!)
With one last steep uphill section we were at journey’s end in Firgas. We
Canaria. This remarkably attractive island
July 2014
better with the sunshine.
weave our way to the base of the crater
are it would probably quite like Gran
barranco river valleys that run between the
senses and the scenery just got better and
volcano offered a real test as we had to
All the walking trails are well signposted.
more relaxed rambles around the old
After another couple of days of brilliant
back to Spanish colonial times. Our first
The next day we made for the Bandama
to hikes down into volcanic craters and
testing pull up through the barranco, but
charms of Ramblers Worldwide Holidays
condition, mainly old caminos that date
from testing mountain tracks, through
Day three kicked off in the Guayadeque
invested in improving the paths, as well
I spent a week wrapped in the cosseted
boasts myriad hiking opportunities,
enjoying views out over the Atlantic.
Gran Canaria’s walking trails range from easy rambles to strenuous workouts.
Essentials
Travel
The harbour of Las Palmas, the biggest town on Gran Canaria.
getty images
66
congratulated ourselves and thanked
On a self-guided hike there is no idling
cafés without any other tourists in sight as
each other for all being such good
at the back just admiring the scenery –
you discover villages largely untouched by
company. I have hiked in over 20
though there is plenty of scenery to admire.
mass tourism.
countries, but have enjoyed few walking
After a first day breakfast on the hotel
trips as much as this spectacular adventure
terrace gawping up at the improbably
burning another 450 metres up narrow
on an island that could not be better suited
precipitous mountains it was time to get
paths, using my hands and feet at one
to walking year-round.
in amongst them. It was out with the map
point, to reach a height of over 600 metres.
Determined to go back late last year I
and route guide – mercifully, unlike some
Up here it was just me and the kestrels,
returned to tackle Gran Canaria on a self-
walks I have tackled elsewhere in Spain,
though they get ospreys in these parts too.
guided walking trip. Autumn and winter
they were accurate.
On the descent the Atlantic unfurled ahead
Soon it was time to seek higher ground,
as I approached the famous cliffs south of
are good times to come as the mercury dips a little with daytime temperatures sitting
This firsT day was typical of my week-
the fishing village of Puerto de Las Nieves,
in the low 20°Cs and the skies are often
long Macs Adventure trip. I eked my way
which vault over 700 metres vertically
still clear. This was to prove a more testing
up a barranco to the small village of San
from the ocean. Across the cobalt blue
winter week, as I embarked on tougher
Pedro, stopping at a tiny bar for a café
Atlantic the unmistakable peak of Mount
trails that really opened up the wildness of
con leche. This is one of the joys of a self-
Teide (at 3,718 metres Spain’s highest
much of the island.
guided trip as you get to pop into little
mountain) rose regally over a bank of Portfolio
67
A typical whitewashed mountain village on Gran Canaria.
Determined to go back late last year I returned to tackle Gran Canaria on a self-guided walking trip. Autumn and winter are good times to come as the mercury dips a little with daytime temperatures sitting in the low 20°Cs. July 2014
Canary Islands the Canary islands are an atlantic territory of spain on the west coast of africa, near morocco, Cape Verde and the archipelagos of the azores islands and madeira islands, both Portuguese territories.
clouds on neighbouring Tenerife.
gran Canaria is the largest island by population and its capital city (Las Palmas de gran Canaria) has the shared title of capital of the Canaries. green and steep in the north, dry and flat in the south. Fuerteventura is a windsurfer’s paradise. Lanzarote is low lying and arid, with a spectacular volcanic landscape in the west of the island. tenerife has many museums and monuments that serve as portrayals of its rich history. as the largest island of the seven, its oldest mountain ranges are young compared to its neighbouring islands. the capital city is santa Cruz de tenerife, home to the Canary island Parliament. La gomera is a walker’s paradise. it is shaped like an orange that has been cut in half and split into segments. the terrain is rough, which has left deep ravines or barrancos between them. these barrancos, in turn, are covered by the laurisilva (laurel rainforest). La Palma’s geographic layout is a result of the volcanic formation of the island. the southern part of La Palma is dominated by the Cumbre Vieja, a volcanic ridge formed by numerous volcanic cones built of lava and scoria. el Hierro, ‘the edge of the world’, is also known as the meridian island.
the time, but much of this day was spent
Local musicians play in Las Palmas.
The next day’s walk was a tough 16 kilometre hike from El Sao to Tejeda, with 1,300 metres of ascent and low cloud and mist. One of Gran Canaria’s charms is that the weather is wonderfully benign most of alone in mountains that vault well over 1,000 metres, making for a fairly tough day. I had found the island’s walking routes largely devoid of day-trippers and other hikers. Indeed I saw more goats than people. That may be about to change as 2012 saw the inaugural Gran Canaria Walking Festival, which is helping to finally put the island on the walking map with an array of guided walks at all levels. The second festival last year proved even more successful and they are already planning this year’s routes. Flying out of Gran Canaria on my second visit I had a quiet smile out the window. Unfurled below was an island fringed with some of Europe’s finest beaches, but also a hinterland blessed with vaulting mountains, rugged volcanoes and rich ravines, a wonderland unknown to anyone not willing to leave their hotel pool. I left behind an island that is still criminally underrated as a walking destination. That may be about to finally change, so if you want to enjoy Europe’s great walking secret I would get your walking boots on soon. For information on the Gran Canaria Walking Festival see www. grancanariawalkingfestival.es. n
getty images
Roque Nublo, a famous landmark, is protected as a natural monument.
68
GASTRONOMIC BLACK GOLD The Truffle Festival 2014 in Canberra and the Capital Region of Australia is a must-visit for fans of the exotic fungus, reports Nick Rice.
Portfolio
Essentials Culture TRUFFLES IN AUSTRALIA? YES, they are now cultivated there and the Truffle Festival 2014 runs parallel to the local truffle season from June 21 to late August. The event promotes truffle appreciation and interest is snowballing, with more than 60 local restaurants, cafés, wineries, breweries, market places, cooking schools and hotels all helping build this growing industry. Attending the festival as the patron of honour is the Italian celebrity chef, restaurateur and global authority on truffles, mushrooms and fungi, Antonio Carluccio. He has had a lifelong passion for the exotic fungus. “I first got involved with truffles as a child around five or six years old when I was taken on a truffle hunt in Asti (Italy) by a local truffle hunter. It was here that the mystery of
Chef Christophe Gregoire from Le Tres Bon, talks truffles to an audience at Lerida Winery.
the elusive truffles engaged my mind.
truffles are largely found underground. This
melanosporum), named after the Périgord
From that moment I was hooked.”
subterranean aspect, which makes them
region in France. The white truffle can
Carluccio, a regular at truffle festivals,
difficult to find, contributes to their allure.
sell for more than $15,000 per kilogram,
is a strong supporter of them and the role
There are theories that truffles grow
with the largest ever truffle, weighing 1.5
they play in encouraging the enjoyment
underground to withstand forest fires,
kilograms, sold in 2007 to Hong Kong
of truffles. “The festivals, like the one
drought and severe cold, but regardless of
businessman Daniel Ho for $330,000. In
being held in Canberra, are much more
the reason, people will go to great lengths
2010, Ho matched his record by paying
important than people think. They help
to unearth them. And with the truffle’s
$330,000 again for a pair of white truffles
to elevate and improve the industry a
status as a delicacy in Middle Eastern,
amounting to 1.3 kilograms.
great deal,” he says.
French, Spanish, Italian and Greek cooking,
The Black Périgord truffle is the second-
as well as in international haute cuisine,
most commercially valuable species and
the most revered and expensive foods on
connoisseurs will pay an extraordinary price
is the centre of attention at the Truffle
earth. Hailed by gourmands, this vaunted
for these ‘gems of the kitchen’.
Festival. While truffles are historically
Truffles, for the uninitiated, are one of
fungus is treasured for its pungent
There are hundreds of types of truffle,
associated with France and Italy, Australia
aroma and distinctive taste that’s a vital
but the most prized are the ‘White truffle’
has emerged in recent years as a real
ingredient in any self-respecting kitchen.
(Tuber magnatum) originating from the
contender in terms of harvest, distribution
Piedmont region of northern Italy and
and quality. The country currently
mentioned back in 400BC when
in the countryside surrounding Alba and
produces more truffles than Chile, New
Theophrastus, successor to Aristotle,
Asti, and the ‘Black Périgord truffle’ (Tuber
Zealand and South Africa combined, with
This mysterious fungus was first
wrote about their therapeutic and aphrodisiac qualities. As much as the ancient Greeks and Romans ascribed such powers to the truffle, today they are mainly appreciated for their unique and intense flavour. A result of a symbiotic relationship with the roots of certain trees, such as hazelnut and oak that are infected with the appropriate mycorrhiza (fungus roots), July 2014
There are hundreds of types of truffle, but the most prized are the ‘White truffle’ (Tuber magnatum) originating from the Piedmont region of northern Italy. The white truffle can sell for more than $15,000 per kilogram, with the largest ever truffle, weighing 1.5 kilograms, sold in 2007 to Hong Kong businessman Daniel Ho for $330,000.
69
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with Peter managing the forest, Kate working with their professional dogs, and sons Keith and Gus travelling to study the industry and learn about the many dishes that can be concocted. As truffles distribute their spores via fungivores – animals that eat the mushroom and spread the spores via their scat (dung) – many creatures can be trained to help humans find the elusive truffle. As Peter says, “Wombats, potoroos (kangaroo-like marsupial), foxes, crows and wallabies do very well without our encouragement.” He uses trained dogs to unearth the elusive fungus. Historically, boars were used as the truffles emit a scent similar to the testosterone of the male. The problem with this scenario is that the female sow will often eat the truffles. Dogs can detect the aroma of truffles and locate them without subsequently eating them, preferring a less refined Potato and rosemary pizza with fresh shaved black truffle.
Specially-trained dogs are used to sniff out the buried truffles.
doggie snack as a reward. As the dogs play such a vital role, the methods for training
over 300 kilograms of truffle produced in 2013. As more trees mature this quantity may increase tenfold. FOR PEOPLE discovering truffles for the first time, the principal element of interest is their taste – a divisive and extremely particular ‘umami’ or savoury flavour. “When it comes to truffles there is no indifference, you either love or hate them. Fortunately, most people love them. It is a real jewel of nature,” Carluccio explains. Antonio Carlucci is an Italian celebrity chef, restaurateur and a global authority on truffles.
Kate Marshall, an Australian truffle farmer, trains her dogs Sal and Shadow.
expertise, these passionate truffle farmers
dedication is required to establish a
them can be a closely guarded affair. As
help create a fascinating event. Attending
truffle business. The Marshalls spent 20
Peter proved when asked about his own
this year, as usual, will be Peter and Kate
years improving the soil and hydrology
techniques, “Would you ask an expert
Marshall of Terra Preta Truffles. Their
of their land before embarking on their
fisherman where their favourite trout
productive family-run truffle farm,
truffle venture. As Marshall explains,
stream is? Or a gold miner to point you
located near to the historic town of
“Truffles don’t like being forced into an
to the best vein of precious metal? It’s the
Braidwood in New South Wales (NSW),
industrial style of agriculture. We just
same with asking for training secrets.”
exports internationally.
try to recreate their natural habitat and
Forming part of the Truffle Festival are 10 local growers that maintain various sized ‘truffieres’. Bringing their wares and
Discussing the industry with Peter Marshall, it is clear how much time and
make them feel at home.” Terra Preta involves the whole family,
Damian Robinson, the owner of Turalla Truffles in Bungendore, NSW, is a little more forthcoming. “Training Portfolio
Essentials Culture a dog to do anything is about patience and repetition,” he says. “You make it fun for the dog and reward-based. Some dogs are easier than others to train. Most importantly, they don’t eat the truffles because they much prefer dog treats!” Robinson planted the first of his two truffieres in 2005 and has built a small but successful venture. Explaining how he began he says, “I have French heritage and had been following with interest the attempts to produce truffles from inoculated oak trees in Tasmania. Oak trees have always grown well in my area so it seemed a natural fit.” Robinson is a regular exhibitor and a
The award-winning Wolgan Valley Resort & Spa is hosting the first culinary event of the Truffle Festival.
big fan of the Truffle Festival, describing it as a valuable learning experience. “Each year there’s something different going on according to the variation in seasons. There are lots of ideas on how to do things better, but much is still unknown. Overall, it’s a great way to promote our new industry and give people a chance
Chef Anthony Fullerton’s presents his truffled lamb cutlets at a festival cooking class.
FOR ANTONIO Carluccio, the best way
a unique opportunity for food lovers to
to prepare and enjoy truffles is the simplest
learn from a true master.
way. “The truffle can be used in so many
Black truffles live in a symbiotic relationship with the roots of certain trees.
to learn what to do with truffles... it’s all
The luxury conservation-based resort
different ways but the maximum flavour is
is the ideal venue to host this special
achieved by adding them to simple dishes.
weekend event as the Wolgan Valley
For example, cook taglierini (thin ribbon
resort has built a solid reputation on a
pasta) and mix it with butter, cheese and
food philosophy of seasonal and organic
shaved truffle and you get perfection.”
produce sourced from the region.
During his visit to Australia, Carluccio
Carluccio is as passionate about truffles
about sharing information and building
will be heading to the award-winning
today as he was as a little boy on his first
the excitement.”
Wolgan Valley Resort & Spa in the Blue
hunt. “I am really looking forward to the
Asked why truffles are so voraciously
Mountains. As the first culinary event
festival in Australia and very thankful for
admired Robinson says: “I’d have to quote
of the Truffle Festival from July 18-20,
everything they are doing. Thanks to these
JL Vauloyer, who apparently said, ‘There
Carluccio will host a special event where
events more and more interest is being
are two types of people who eat truffles:
he will create a signature degustation
shown in truffles, and this will hopefully
those that think truffles are good because
dinner, teach guests how to prepare
lead to more knowledge and enjoyment.
they are dear, and those who know they
truffles with a cooking demonstration,
That’s the most important thing: that the
are dear because they are good.’”
and finally host a fireside Q&A session –
truffle should be an enjoyment of nature.” n
July 2014
71
Essentials
72
Sport
Š 2014 NEW YORK TIMES NEWS SERVICE
With Colombia back in the FIFA World Cup for the first time in 16 years, Panini fever has hit the country hard.
Portfolio
73
THE WORLD CUP IN AN ALBUM In Colombia football fever has hit hard as fans try to collect the stickers necessary to complete the Panini Group’s popular FIFA World Cup album, reports Jessica Weiss.
T
RANSACTIONS ARE made at dozens of
A Panini factory in Brazil handles
established meeting spots
supply for most of Latin America, printing
in Bogota, Colombia:
nine million sticker packs a day. Carla
122nd Street at 15th; the
Ruosi, a Panini Group export manager,
plaza in Pablo VI; 97th Street at 11th.
said the album had always been well
They are made outside universities, office
known in the region, “but in certain
buildings and supermarkets, by young
countries, qualifying can increase the
people, old people, men and women, all
perception and enthusiasm.”
in search of stickers. Yes, stickers.
This year, Continente S.A., the
As Colombia headed to the World
company responsible for distribution in
Cup for the first time in 16 years, World
Colombia, authorised more than 25,000
Cup sticker-book fever hit the country
sales points, from commercial locations
hard, with more than a million albums
to roving street vendors. The company
circulating and many more in demand. The
estimated that 1.4 million Colombians
72-page, 639-sticker album is neither easy
had albums, each costing $2.
nor cheap to fill. But around the country,
A box of 500 stickers costs $60, and
people are lining up by the hundreds to
each envelope of five stickers costs 60
trade stickers with strangers. Smartphone
cents. On the street, stickers for popular
apps are available to help traders track
players like Lionel Messi, Ronaldo and
what they are missing, and even pirated
Radamel Falcao were going for up to
albums have entered the market.
$2.50 a sticker, fuelling a myth that some
“I’ve seen people of absolutely every age and social class filling the album,” said Mariano López, 62, standing next to his wife, Estella Gómez, 57. The pair had travelled from the opposite side of the city to take part. “We’ve been out here every weekend.” The Panini Group, a family-run operation based in Modena, Italy, that produces collectibles and comics, is well known for its popular World Cup album, sold worldwide, featuring adhesive stickers for participating teams and their players, tournament stadiums and FIFA emblems. The album first hit the market in 1970, for the ninth World Cup, the first to be televised, in Mexico. It officially July 2014
arrived in Colombia in 1982.
stickers were harder to find than others – a claim Panini denied.
74
handwritten lists to tally their missing stickers. Others use colour-coded highlighters and spreadsheets. Still others have smartphone apps. In addition to the official Panini Collectors app, the iSticker Checklists app, designed and developed in Guatemala, is popular in Colombia. Of the app’s 130,000 users, 71,000 are from Colombia, according to the
REUTERS
developer, Jose de la Roca. OTHERS TAKE more desperate measures. Recently, a distributor’s van carrying 300,000 Panini stickers was
The Panini factory in Brazil prints nine million sticker packs a day.
stolen during a delivery in Rio de Janeiro. FOUR STICKERS were all Juan Novoa
Panini has provided no details of the theft.
needed: Australian midfielder Mark
In April 2010, before the South Africa
Bresciano, Ecuadorean defender Gabriel
World Cup, 135,000 stickers were stolen
Achilier, Bosnian goalkeeper Asmir
in Brazil from a São Paulo distribution
Begovic and the Argentine team sticker.
company, resulting in three arrests. Richi Escobar, an avid collector with
“The fewer you need, the harder it gets,” Novoa, a 36-year-old entrepreneur, said
a popular trading group on Facebook,
recently as he walked briskly toward a
said he had seen counterfeit cards and six
parking lot, a popular trading spot. There,
pirated albums circulating in Colombia
next to vendors selling snacks and World
in addition to the official Panini album.
Cup paraphernalia, hundreds of people
Escobar, 58, has filled every Panini album
stood shoulder to shoulder, in pairs or in
since Mexico 1970 (which now sells,
small groups, making trades.
completed, for nearly $7,000). He said REUTERS
“There’s sort of a protocol,” Novoa said as he approached, pulling out the doubles that he would try to trade. “The person with fewer missing stickers gets to ask first.” Juan Carlos Castillo, 39, mans his stand from 6 am until 9 pm, seven days a week.
José Eduardo Martins, Panini’s chief executive in Brazil, poses with a packet of FIFA’s Brazil World Cup football stickers at Panini’s factory in São Paulo.
He sells food and drinks, Colombia soccer
a random pack of five, but the pack
flags, shirts, balls, mascot-themed items,
turned out to have none of his
magnets and more. “It doesn’t matter
missing stickers. On his 10th
if you’re rich or poor, old or young; the
try, Novoa found his Argentine
album is bringing us together,” Castillo
team card, for which he traded
said. “It’s nice to watch people help each
two player cards.
other out. I have not seen one argument here. Only smiles.” Novoa tested his luck in front of
his home in Medellín. “Panini is No. 1, and no one can compete,” he said. “But that doesn’t mean people aren’t going to try to make money
Traders can buy individual cards from hundreds of distributors across the city, but most agree that is not as
Castillo’s stand around lunchtime,
fun. “People ask me why I don’t just
approaching people, including a chef, a
buy the ones I need,” Novoa said. “I
businessman and a mother-son pair, in
guess there’s a bit of romanticism in me.
search of his last four stickers: Nos. 412,
Buying is not the real way to do it. I want
433, 361 and 176. After five minutes,
to fill the album through trading.”
Novoa traded three of his stickers for
he had more than four million doubles in
The stickers of top players like Messi and Ronaldo are particularly sought after.
Trading techniques vary. Some use Portfolio
Essentials Sport
Collectors and traders meet at an intersection in Bogota, Colombia, to trade Panini stickers.
off this craze.” He said many stickers have
ON THE streets of Bogotá, traders did not
also entered illegally from neighbouring
seem concerned about supply running out.
Venezuela and Panama.
They were far more concerned with finishing their albums before the end of the Cup.
Carmen Alicia Contreras Nieto, an
“It will give me serious bragging rights
authorised distributor in Colombia who
man who had just arrived. “Maybe you have the one card I’m missing,” Novoa said. “176.” The man looked through his stickers and pulled out what Novoa needed. With a smile, Novoa accepted and
works at the University of the Andes
over my friends and a certain amount of
in Bogotá, said supply had failed to
pride,” Novoa said. “It’s also a really nice
offered 10 stickers in return, “out of
meet demand this year. She is part of
souvenir of the World Cup.”
gratitude for helping me complete the
By midafternoon, Novoa was missing
an intricate sales chain. There are large
album,” he said.
distributors who invest hundreds of
just one sticker: Bresciano, the Australian
The two then posed for a photograph.
thousands of dollars and make bulk sales,
midfielder. The plaza was largely cleared
As he walked away, smiling, Novoa said he
and there are street-level vendors who
out because traders had returned to work,
was proud to have filled it “the right way.”
largely sell by the card or the pack.
but Novoa stayed. He tried his luck on one
“Finishing is bittersweet,” he said. n
The larger the quantity sold, the larger the distributor’s cut of the earnings. “In the first month, we sold the same quantity that we sold four years ago in the entire season,” Contreras said. “So we’re waiting and waiting for more product to arrive.” She said the albums and stickers had not yet hit many small cities and towns across Colombia, which would further fuel demand. “You earn from this, but we haven’t she said. “People call us, and we don’t have, we don’t have, we don’t have, and then the day the products arrive, we sell out.” July 2014
REUTERS
moved the money we were hoping to move,”
The demand for Panini stickers has outstripped supply in Latin America.
75
Essentials
76
PHOTOS: GETTY IMAGES
Culture
Fritz Trefzger rolls out traditional pretzels at his bakery in Schopfheim.
GERMAN BAKERS AN ENDANGERED SPECIES Industrial-scale baking is taking its toll on Germany’s traditional bakeries, whose numbers are in steady decline, reports Melissa Eddy.
sat in the café attached to the bakery that he took over from his father in 1989. “It is important that people learn to appreciate the traditional craft of baking bread.” For now, it seems, they have all but forgotten. Industrial-scale baking and advanced freezing technology have made it possible for mass-produced loaves, rolls and pastries to be frozen and shipped around the country to supermarkets, where they can be heated up and sold for a fraction of the price of a hand-thrown equivalent from a traditional bakery.
ON SUNDAY MORNINGS, THE LINE at the backdoor of Fritz Trefzger’s bakery in
That was the point, he said, of opening
The shift in culture is so worrying to bakers like Trefzger that they are
Schopfheim snakes through the courtyard
his kitchen to the public, something not
taking extraordinary steps to raise the
as customers wait for their chance to step
normally done at traditional German
awareness of Germans, and the world, to
into the inner sanctum of his kitchen.
bakeries. The idea was born not only
the uniqueness of their threatened baking
to attract customers, but also to send
traditions. They are reaching out to young
oblong white bread rolls, and their darker,
a message to anyone who might be
people via social media in an effort to
seeded cousins, fresh off the oven racks.
tempted to pick up their Sunday rolls
attract more of them to the job. Last year,
Just as important for the master baker,
at the local supermarket, which have
the German bakers’ association even
they can also watch him twist a rich,
made the traditional German bakery an
applied for the country’s baking tradition
brown-crusted pretzel to perfection –
endangered species.
to receive special recognition and
Once there, they can pick his small, © 2014 NEW YORK TIMES NEWS SERVICE
with a few deft turns of his wrist.
thick in the lower belly, with arms thin enough to drape neatly on either side –
“I wanted them to see for themselves, up close, what we do,” said Trefzger, 58, as he
protection by adding it to the UNESCO list of cultural heritages, where it would Portfolio
77
Employee Gerlinde Ernst arranges the bread display at the Schmidt bakery.
Bakers’ Association. “People would even make a cross on the bread as a sign of thankfulness. That significance has been lost.”
There is the convenience of modern, mass-scale food production, which has enticed Germans as it has people in other industrialised countries. It can be hard to compete with.
Like many traditional bakers, Trefzger came to his profession through his father, who instilled in his son the passion for his craft. But, Trefzger said, many parents no longer want to see their children enter a profession with such gruelling hours – craft bakers usually begin mixing dough for the next day’s bread just after midnight – often discouraging even those who show an interest in baking. Then, there is the convenience of modern, mass-scale food production, which has enticed Germans as it has people in other industrialised countries.
Germany has around 3,000 varieties of bread.
It can be hard to compete with. gain a spot alongside French cuisine and
That is a long fall for German culinary tradition, more commonly associated with
SIEGFRIED BRENNEIS, 48, a
sausages, sauerkraut and potatoes. Yet
certified baker and pastry chef from the
has reversed the seemingly inexorable
from the days of Charlemagne until the
village of Mudau and a member of an
decline of the German bakery. Last year,
end of the previous century, a staple of
elite group of German bakers who take
the number of German bakeries dropped
the German diet was thick, hearty slices
part in international competitions, said
3.6 per cent. Only 13,171 now remain
of sourdough-leavened bread made from
that supermarket bakeries had allowed
in a country of about 80 million people
grains such as rye or spelt. The German
discounters to attract customers through
that some six decades ago counted more
word for supper, “Abendbrot,” means
what he called “aroma marketing,” the
than 55,000 bakeries in the former West
“evening bread.”
pretence of handcrafted breads and
Croatian gingerbread. So far, however, none of those steps
pastries, even though the goods are not
Germany alone. In the past seven years,
really made on the premises.
the number of young people training to
“UNTIL THE 1960s, bread served as the
become bakers has dropped by a third,
central source of nourishment in Germany,”
Comparing the situation to that in
to 26,535 in 2013.
said Peter Becker, president of the German
neighbouring France, where a decline
July 2014
78
Essentials
Culture
There is the convenience of modern, mass-scale food production, which has enticed Germans as it has people in other industrialised countries. It can be hard to compete with. even if they had yet to arrest the decline in the numbers of German bakeries. The Baker Tobias Goetz forms a traditional Bavarian pretzel at the Goetz bakery
association also plans to make a reality television show that will take viewers into bakers’ kitchens across the country in an effort to find Germany’s best baker. SOME OF the most promising ideas, however, have come from the newest generation of bakers, like Jörg Schmid, 29, and Johannes Hirth, 28. The pair have created films of what they call extreme baking, that include stunts such as baking in a converted pickup truck mounted with a couple of beer tables and an oven into a kitchen-on-the-go. They run a series of courses, like “Bread Baking 2.0,” or “Fingerfood Reloaded,” at their home bakeries, which have attracted hundreds of participants.
Master baker Steffen Haensch takes the potato bread out of the oven at his bakery.
“It shows that people are interested in baking,” Hirth said, adding that he did not
in baguette consumption has also
man campaign to elevate the profile
view teaching people to bake as a threat to
caused concern, Brenneis lamented that
of his craft. On any given Sunday, he
his business. “Those who want to bake at
Germans, too, had failed to appreciate the
will sell 200 to 300 of the rolls that in
home will always do so anyway, and it still
cultural importance of their bread, which
various corners of the country are called
raises the interest in bread.”
includes some 3,000 varieties, many
“Wecken,” “Schrippen,” or most commonly,
specific to certain regions.
“Brötchen” – which translates as “little
with a bakers’ revival. Caspar
breads” – a staple of the extended Sunday
Oehlschlägel, who lives down the road
breakfasts beloved by Germans.
from one of the oldest bakeries in Berlin,
Schopfheim, nestled in the lush hills of the Black Forest, stands out as an exception. For a town of just 19,000
He also hosts three trainees, who take
Not everyone, of course, is concerned
said that since his local supermarket
residents, it has an unusual density of
classes at the regional vocational school
started offering whole-meal bread baked
traditional bakeries. Yet farther down
to earn certification through Germany’s
in the store, it was all he ever bought.
the Wiese River, the neighbouring city of
acclaimed dual-training system, which
Lörrach has twice as many inhabitants,
lasts two to three years.
but only one traditional bakery.
Becker, the head of the national bakers’
“Honestly, it’s the best bread that I have ever had,” Oehlschlägel said. “Just because it is industrial-made bread doesn’t mean
The difference can be credited to
association, said that similar efforts had
that it is bad. Making bread by hand is fine,
bakers like Trefzger, who is on a one-
already helped raise the profile of bread,
but it is really something for romantics.” n Portfolio
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Essentials
80
Fashion
TAILORING
THAT FITS
Neapolitan tailoring has successfully adjusted to the 21st century by opening bespoke stores around the world, reports Suzy Menkes.
I
N A BASEMENT ROOM on a street
rise and fall along the coastline, they have
impeccable jacket and one of the same
where motorbikes and honking horns
had good years and bad. But, today, the
smart ties on sale in the store beneath a
drown out even the insistent church
bespoke suit is back and doing well, even
picture of his father. Yet he and his family
bells, Davide Tofani is working on a
against the challenge of factory-made
are constantly travelling. His son Luca
ready-to-wear.
is the brand’s creative director and he
typical Neapolitan soft jacket. “When I make a suit, it is like shaping a second
“is always in a plane from Kazakhstan to
turned, the big names in Naples have
New York, Korea or Singapore,” Rubinacci
cannot imagine making a suit without
opened stores around the world. They
said. His daughter Chiara complements
knowing the body that will use it.”
also fly experts to their clients or offer
her twin brother by running the seven-
them a home-away-from-home welcome
year-old store in Mount Street in London.
Over the last century, the personal tailor, working one-to-one with a client, has become as symbolic of Naples as its
© 2014 NEW YORK TIMES NEWS SERVICE
To show that the tide of tailoring has
skin of my customer,” the tailor said. “I
in Italy. Rubinacci is one of those names. The
Out of the city centre, in the industrial area of Arzano, is the home of Kiton.
Roman sculptures and Baroque churches.
store in Naples is above Via Chiaia in
The brand is recognised for its tailoring,
Many men socialising with friends
part of the Palazzo Cellamare, with its
created in a cluster of buildings linked
on the city streets or sitting on public
imposing staircase and history of lodging
by a glass corridor that displays formal
benches wear elegant jackets, in tweed
the artist Caravaggio. The tailors, who
pieces from the wardrobe of the Duke of
or linen, lightweight, unstructured – and
work by hand in rooms above the shop,
Windsor, the British king who abdicated
indisputably tailor made.
have views of the vast stone building right
for love.
And the Neapolitan tailors seem to
down to the swell of the sea in the bay.
be more successful than the chaotic city
Mariano Rubinacci, sitting in the
Kiton was founded in 1956 by Ciro Paone, a fifth-generation fabric merchant
itself in moving further into the 21st
April sunshine on a bench in front of the
who made a visionary move into tailoring,
century. Like the waters of the bay that
store, looks like an old-school tailor in an
according to his nephew, Antonio Portfolio
81
Luca Rubinacci, the brand’s creative director, models the latest jacket.
GETTY IMAGES
NAPLES
July 2014
Essentials
Fashion
De Matteis, now the company’s chief
nobleman. Today’s aristocrats are likely to
was to have a young, newly trained tailor
executive. Another nephew, Antonio
be Russian oligarchs or Malaysian royals.
in every Kiton store worldwide.
Paone, is president and runs the business in the United States.
De Matteis said his “people factory”
You do not have to be a billionaire
needed human hands more than high
to order a Kiton suit (unless it is in
In the workers’ canteen, Paone, who
tech, though the Neapolitan work is
white vicuña). But it is mostly
uses a wheelchair as a result of a stroke,
complemented by a knitwear factory
millionaires, some from Silicon Valley
lunches with other working members
in Fidenza and one for sportswear in
in California, who buy bespoke, at an
of his family, including his daughter
Parma. On the retail side, Kiton has 45
average cost of ¤7,000 ($9,670) for a
Raffaella and her cousins.
stores in Europe, the United States, the
typical suit, plus the trimmings, like
Middle East and across Asia, including
handcrafted neckties and shirts. A suit
Azerbaijan, Kazakhstan and China.
jacket takes 26 hours to make, and a shirt
The company is housed in an elegant palazzo decorated with historic furniture and modern art bought to celebrate each profitable year. Behind these flourishes,
A new project is a Milan headquarters,
attached to the back of the building, is the
in the palazzo on Via Pontaccio, that the
vast workshop for Kiton’s 350 tailors, who
designer Gianfranco Ferré used before
create front panels, backs, collars, pockets
his death. This centre will act as Kiton’s
or lapels in the handwork factory. (A
hub for international clients, where they
traditional bespoke tailor would make the
can be measured for bespoke suits, buy
entire jacket with his own hands.)
accessories and, eventually, dine in a
As with all these Neapolitan tailors, there is no computer in sight, although
restaurant where fresh food will be driven in daily from Naples.
Tofani promotes his work via Facebook
The Kiton team is constantly on the
and Rubinacci keeps records online of
move, aiming to fly within 24 hours to a
his international clients. They once were
client anywhere in the world. Kiton trains
entered in a ledger, dating from 1934,
its own new generations in a school near
which is displayed in the Naples store so
the factory. Each year its 12 students
customers can peruse the orders of King
either join the company or find jobs
Umberto II or Count Leonetti, a local
elsewhere. De Matteis said that the goal
As with all these Neapolitan tailors, there is no computer in sight, although Tofani promotes his work via Facebook and Rubinacci keeps records online of his international clients.
getty images
82
A tailor works on a blazer at Kiton’s handwork factory in Arzano, a suburb of Naples. Portfolio
83
requires five hours. Shoes, too, are now made-to-order by Kiton. The overall high quality for both bespoke and ready-made seems to satisfy consumers. When De Matteis
Kiton has 45 stores around the world and around €105 million in annual sales.
arrived at the company in 1986, annual sales were ¤4 million; in 2010, sales hit ¤60 million, and last year they reached ¤105 million. The last word on the philosophy of Neapolitan tailoring goes to Tofani. Now 47, he started to learn tailoring from his father when he was 13 and works with his brother Enea, who specialises in trousers. Together, they make one suit a week, depending on the type and the customer’s demands. getty images
“You have to understand that Neapolitan tailoring is an art and not a job,” said Tofani, who hopes his own son will learn the skill. He added: “My father always said to me, ‘There is no reason to make a big store, but it’s important to be a great tailor in a small store.’ It would be a nightmare for me to think of making a big company. I don’t think about making
The Kiton team is constantly on the move, aiming to fly within 24 hours to a client anywhere in the world. Kiton trains its own new generations in a school near the factory.
a lot of money. I am an artist.” n Antonio De Matteis, chief executive of Kiton, at the bespoke tailor’s headquarters in Arzano.
Ready-made jackets at a Kiton store. July 2014
Essentials
84
Profile
illustrations by george butler
S
urrounded by a huddle
head back to the refugee camp where
marginalised by the advent of
of curious children, George
the parents of the scattering children
photography in the 1860s. The widespread
Butler works quickly. With deft
are also eager to see his work. They are
use of photography within the mass
hand and keen observation
unanimously impressed and pore over the
media, notably as the primary graphic
he scratches black ink across thick paper.
details. Would the reaction be the same
depiction of war, may have caused
Unperturbed by the fidgeting onlookers,
if they had been shown a photograph
reportage illustration to be sidelined, but
the wind flapping around us or the
of their home? Not at all‌ there is
it never entirely disappeared. Throughout
precarious grip on his ink pot, Butler soon
something distinctly evocative about
the decades a steadfast number of
paints a picture of the makeshift tented
painting. It captures more than reality.
intrepid non-conformists have kept this
settlement with precision and flourish. After just half an hour he’s content to
Reportage illustration was once a common discipline but it was
journalistic art alive. For Butler, a very worldly-wise 29, Portfolio
85
Bearing
Witness
Reportage illustration is something of a lost art. George Butler is one of today’s leading exponents and Nick Rice travelled with him to Lebanon to see him at work.
the attraction was natural. “I studied
Since 2006, Butler has been finding
commissioners, editors and art directors
illustration at Kingston University and
stories to paint all over the world, ranging
are beginning to realise that a photograph
reportage seemed to be the area that
from endangered elephants in India
does not attract as much attention as it
most of my favourite illustrators
and oil fields in Azerbaijan, to the New
used to.”
contributed to. People like Ronald Searle,
York Fire Department and the civil war
The value of the illustrations is found,
Paul Hogarth and Gerald Scarfe. The
in Syria. Responding to the notion that
in part, in their emotive quality. Butler’s
concept that interests me most is the
his trade is a lost art, Butler says, “I’m
interpretations are imbued with the
premise that the story behind the picture
sure it is – having been superseded by
experience of each place. This particular
holds as much weight as the aesthetics of
photography. I think it’s often considered
distinction is concisely described by E.H.
the image. By that I mean – it can’t just
old fashioned. But it’s an interesting
Gombrich in The Image and the Eye –
look good,” he says.
time to be drawing though because
a study of the psychology of pictorial
July 2014
86
representation. “The camera can never achieve the tact and selectivity which the painter can display in this effort to evoke
George Butler at work in a Syrian refugee camp.
subjectively truthful visual experience.” Observing Butler work and interact with the people we meet, it’s clear that he wishes to capture moments in time that tell a story with integrity and honesty. “Reportage illustration is much more unique in this day and age,” he explains. “The process of sitting down and observing and interpreting a scene contributes a different angle. Not that it should compete with photography, but the time spent making the image is an important factor. The circumstance as well… it’s open, it’s unthreatening. The terminology of photography is aggressive; shoot, cut, manipulate – drawing is none of the World (Médecins du Monde).
population. Sprawling refugee camps have
This international humanitarian health
been established in several regions near
Butler’s paintings have appeared
organisation provides worldwide
the border with Syria and throughout
in a wide range of international
emergency and long-term medical care to
the Bekaa Valley. Butler has visited Syria
of these things.”
publications and he’s been profiled on
people in need
twice to document the aftermath of the
several TV news channels. Butler has
and struggling for
war and it’s a subject that is obviously
also had numerous solo exhibitions
healthcare access.
close to his heart. “The work for Doctors
and racked up a slew of accolades, including Overall Winner at the Victoria & Albert Illustration Awards
The majority of the organisation’s workers are volunteers and through their
of the World is designed to describe the life of refugees in the Bekaa Valley – I hope it does justice to the individuals,
and the Breakaway International
dedication Doctors of the World
the places they live in and the situations,
Media Award in 2013.
provides medical services to over 5.6
both physical and emotional, that they
million people, via 300 programmes in
now face.”
The current assignment in Lebanon was arranged by Doctors
more than 70 countries. During our eight-day visit the UN registered its millionth refugee in Lebanon,
Doctors of the World offers a broad range of services to the refugees, targeting respiratory infections, reproductive health issues, gastrointestinal problems
and Syrians currently
and general hygiene concerns. The
make up more than a
organisation has also established a
quarter of the country’s
mental health task force to help with the
Portfolio
Essentials Profile
When I ask Butler if he always feels
widespread occurrence of emotional and
order to give people a voice. “I weigh up
psychological problems. We travelled
the risk with the benefits of the story that
as safe as we did during this trip, he
extensively around the region and visited
I think it’s possible to tell,” he explains,
pauses for thought with a wry smile. “I
Doctors of the World medical centres,
adding, “It’s important to do some due
was nearly kidnapped in Algeria, mugged
mobile medical units that make regular
diligence on the place and the people
in Gabon and hit round the back of the
stops at various camps, and schools set up
beforehand, but I only really work with
head recently whilst drawing in Romania
to provide daily education for a displaced
people I trust and that understand exactly
– actually that was the most amusing
generation of children.
what I’m doing and my intentions.”
because the man went back to his house
Before Butler begins his paintings,
Despite unspeakable suffering, we were
to get a horse whip and chased me out
whether it’s a close-up portrait or a wider
greeted with immense dignity, warmth
of the village. Having said that, the most
scene, permission is sought from the
and hospitality by the Syrian refugees in
memorable bits for me are the acts of
refugees to be included in the image. There
Lebanon. And through being respectful
human kindness towards me – that is a
remains fear for personal safety amongst
and composed, with a natural ability
large part of the reason why I carry on
the refugee population and many decline
to put people at ease, Butler was able
doing this.” n
to be photographed, yet permission to
to produce a fascinating body of work
paint is granted on every occasion. They
during the visit that will help Doctors
See more about Doctors of the World at: www.doctorsoftheworld.org.uk
are suffering greatly from the loss of family,
of the World to shine a light on their
friends, and their home and there is a
extraordinary work.
And more of George Butler’s work at: www.georgebutler.org
palpable sense that the refugees want the world to hear their voice. Although the regions of El Qaa, Kamed El Loz and El Ain that we visit are considered unsafe, Butler is committed to his work and he accepts the danger in
July 2014
87
Essentials
Other Business
Fabergé sues Faberge “We haven’t copied anything
Luxury jeweller Fabergé has filed a copyright lawsuit
from Fabergé. We don't sell
against a New York City
jewellery,” he said. “We are
restaurant for what it called a
totally different. Our business
“shameless” appropriation of
is food sale. French and
Fabergé's name and distinctive
steaks.” Unlike the jeweller,
storefront facade of repeated
the restaurant spells its name
gold and purple diamonds.
without an accent, and has
Reached by phone, Vladislav Yusufov, the owner
replaced the letter ‘A’ with the Eiffel Tower in its logo.
of the Faberge restaurant,
The restaurant Faberge
said he had no intention of
does not sell priceless jewel-
stealing anything from the
encrusted eggs, but it values its
iconic jeweller.
porterhouse at $49.90.
REUTERS
88
McDonald’s ‘McSary’ mascot McDonald’s restaurant chain says its new “Happy” mascot will bring “fun and excitement” to its children’s meals, but social media contend the toothy, red box-shaped character will have the opposite effect.
Egypt Needs Cyclists Egypt’s new president, Abdel Fatah al-Sisi,
Sisi’s move was met with bemusement in
Twitter responses to McDonald’s mascot announcement complain that the animated red Happy Meal box, with its cavernous dark mouth and rows of large white teeth, is scary and will bring children nightmares instead of joy.
wants more Egyptians to cycle – and to show
Egypt, where Cairo is seen as dangerous for
he meant business he took hundreds of
those on bicycles and temperatures can
“It’s the meal that eats you,” said one
cyclists, including public figures, through
reach 46°C. But he was welcomed by a
comment. Another said, “I didn’t want to
Cairo at 5.30am on 13 June.
small but growing band of cyclists.
sleep tonight anyways, it’s cool.”
“This is the only way to build Egypt,”
Others were less convinced: in Egypt
In response to the criticism on social
he said before the rally, claiming that
driving a car is often dangerous enough.
media, McDonald’s spokeswoman Lisa
cyclists would save Egypt money. Egypt
According to the World Health Organisation
McComb noted that since 2009, the
spent £14 billion, or about a fifth of its
there are 42 annual road deaths per
character has been “loved and well-
budget, on energy subsidies – a bill it can
100,000 Egyptians – compared with just
received by children and families in Latin
no longer afford.
2.75 in Britain.
America and Europe.” Portfolio