Portfolio | July 2014

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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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

Mayfair

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The City

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Harrods/Knightsbridge

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Westfield London Shopping Centre

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Canary Wharf

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City Airport

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Heathrow Airport

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Stansted Airport

*All distances stated are estimates from Google Maps and are to be used as a guide only.

Prices from £1.75m million subject to contract.

Computer generated images of One Highgate for guidance purposes only.

Sole Selling Agent glentree.com/newhomes newhomes@glentree.com

One Highgate, 50 Cholmeley Park London N6 5EW

onehighgate.com sales@onehighgate.com

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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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.

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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.

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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.

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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.

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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.

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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.

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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.

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70

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.

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82

A tailor works on a blazer at Kiton’s handwork factory in Arzano, a suburb of Naples.

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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

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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

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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.”

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