Portfolio
Issue 78 ■ June 2012
Exclusive to Emirates First Class and Business Class
SNACK ATTACK Kellogg’s New Approach A BRILLIANT PLAN Carats As Commodities BANGLADESH The Next Asian Tiger?
Elon Musk Tesla’s Motoring Gambit
emirates.com
DRIVE IT TO BELIEVE. • 18-way powered front seat. • World’s first 12.3-inch screen. • Semi-Aniline leather seats and Mark Levinson audio system.
tel: 800 LEXUS (53987)
lexus.ae
fb.com/lexusae
THE ALL-NEW GS. BE MOVED TO A NEW DIMENSION IN Luxury. Starting from AED 180,000.
THE RALPH LAUREN CERAMIC CHRONOGRAPH BLACK MATTE CERAMIC 45MM MODEL SMOKY SAPPHIRE CRYSTAL CASE BACK MANUFACTURE MOVEMENT SELF-WINDING CHRONOGRAPH 261 COMPONENTS 48-HOUR POWER RESERVE SWISS MADE RALPHLAURENWATCHES.COM
This issue June 2012
Portfolio
Exclusive to Emirates First Class and Business Class
Cover Story 30 Testing the Limits Elon Musk isn’t short of ambition. The co-founder of PayPal is developing a private successor to the Space Shuttle through his company SpaceX, while his other venture, Tesla Motors, launched the world’s first electric sports car. But Tesla Motors isn’t just an electric car company – it’s perhaps the greatest test of Silicon Valley’s innovation model. And now is do-or-die time, with everything riding on a new $50,000 sedan.
Features 36 Turning Diamonds Into a Commodity
48 A Powerful Mix of Women and Oil
A small number of investment professionals are competing
The oil industry is male dominated, but key appointments in
behind the scenes to turn diamonds into a commodity that
Brazil have put women in charge of energy giant Petrobras
would be available to investors in the same way that gold
and the National Petroleum Agency.
trades through funds on exchanges.
52 21st-Century Office Design
40 Kellogg’s Snack Solution
Seattle, thanks to its affluence and young workforce, has become a test tube for modern office design.
With the acquisition of Pringles, Kellogg is trying to get a foothold in the snack market. But whether that will work
56 Pondering a Reinvention
remains to be seen.
Japan fears that its heavily industrialised economy is in a
44 A Steady Transformation
steady decline. Some economists are lobbying for change, while others believe the problem is overblown.
Bangladesh is starting to emulate its Asian neighbours with steady growth and a rising middle class. But there are still challenges ahead.
40
44
11
Portfolio
12
Exclusive to Emirates First Class and Business Class
62 Four Cities In One Barcelona has something for everyone, and the city can be divided into four parts to make sure you experience the best it has to offer.
68 Visions of Life in Africa Life can be hard for artists in West Africa. Despite this cities like Abidjan, Dakar and Bamako are saturated in art.
74 Seeking Clues to the Universe 62
The Atacama Large Millimetre/Submillimetre Array, known as ALMA, is situated in the world’s driest desert. It is these very conditions that are perfect for astronomy.
78 Defending Your Cellphone As mobile phones have gotten smarter, they’ve also become more vulnerable to hackers. But there are ways you can protect yourself.
82 Premium Bond
68
As 007 prepares for his 23rd film adventure and celebrates his cinematic 50th birthday, Bond continues to be box office gold in the world’s auction houses.
86 Monte Carlo Dreaming The new Rolls-Royces Phantom Series II and the Côte d’Azur are perfect automotive bedfellows.
88 Other Business Portfolio takes a light-hearted look at the latest business news.
74
Departments 15 Notebook World business in a nutshell.
21 Observer Spotting and analysing business trends.
28 Column: Gaia Pianigiani
82
Italy’s High-speed Challenger
Published for Emirates by
PO Box 2331, Dubai, UAE. Telephone: (+971 4) 2824060, fax:(+971 4) 2824436, e-mail: emirates@motivate.ae
Editor-in-Chief Obaid Humaid Al Tayer Group Editor & Managing Partner Ian Fairservice Group Senior Editor Gina Johnson Group Editor Guido Duken Picture Researcher Hilda D’Souza Art Director Tarak Parekh Designer Charlie Banalo Senior Production Manager S Sunil Kumar Production Manager C Sudhakar Group Sales Manager Jaya Balakrishnan Email: jaya@motivate.ae General Manager – Group Sales Anthony Milne Email: anthony@motivate.ae Advertisement Manager Rameshwar Nepali Email: rameshwar@motivate.ae
INTERNATIONAL MEDIA REPRESENTATIVES AUSTRALIA/NEW ZEALAND Okeeffe Media; Tel + 61 89 447 2734, okeeffekev@bigpond.com.au BENELUX M.P.S. Benelux; Tel +322 720 9799, francesco.sutton@ mps-adv.com chINA Publicitas Advertising; Tel +86 10 5879 5885 FRANcE Intermedia Europe Ltd; Tel +33 15 534 9550, administration@intermedia.europe.com gERMANy IMV Internationale Medien Vermarktung GmbH; Tel +49 8151 550 8959, w.jaeger@imv-media.com hONg KONg/MALAySIA/ThAILAND Sonney Media Networks; Tel +852 27 230 373, hemant@sonneymedia.com INDIA Media Star; Tel +91 22 4220 2103, ravi@mediastar.co.in ITALy IMM Italia; Tel +39 023 653 4433, lucia.colucci@fastwebnet.it JAPAN Tandem Inc.; Tel + 81 3 3541 4166, all@tandem-inc.com NEThERLANDS GIO Media; Tel +31 6 2223 8420, giovanni@giomedia.nl SOUTh AFRIcA Ndure; Tel: +27 84 701 2479, dale@ndure.co.za SPAIN IMM International; Tel +331 40 1300 30, n.devos@imm-international.com TURKEy Media Ltd.; Tel +90 212 275 51 52, mediamarketingtr@medialtd.com.tr UK Spafax Inflight Media; Tel +44 207 906 2001, nhopkins@spafax.com USA Totem Brand Stories; Tel +212 896 3846, brigitte.baron@totembrandstories.com
Emirates takes care to ensure that all facts published herein are correct. In the event of any inaccuracy, please contact The Editor. Any opinion expressed is the honest belief of the author based on all available facts. Comments and facts should not be relied upon by the reader in taking commercial, legal, financial or other decisions. Articles are by their nature general, and specialist advice should always be consulted before any actions are taken.
Printed by Emirates Printing Press, Dubai, UAE
Portfolio
ExpEriEncE World-class shopping, dining and pErforming arts,
Southern caliFornia Style.
aPPle Store | balenciaga | bottega veneta | brunello cucinelli | burberry | cartier chanel | chloé | choParD | chriStian louboutin | emilio Pucci | ermenegilDo Zegna FenDi | gucci | harry winSton | henri benDel | hermèS | Jimmy choo | longchamP omega | oScar De la renta | PraDa | ralPh lauren | roger vivier | roleX Salvatore Ferragamo | tiFFany & co. | toD’S | valentino | yveS Saint laurent Partial liSting
San Diego Fwy (405) at briStol St., coSta meSa, ca 800.782.8888 southcoastplaza.com/traveler
Notebook
15
BUSINESS NEWS IN BRIEF
Brazil’s All-In Bet On Amazon Dams THE BRAZILIAN GOVERNMENT
well as building stadiums for the 2014
says Mauricio Tolmasquim, president of
believes that building dams to generate
World Cup and the August 2016 Summer
Brazil’s Energy Research Agency.
electricity is essential for the nation’s future
Olympics in Rio de Janeiro.
growth. Some economists believe the high
At stake is the health of Brazil’s economy
Scores of economists, engineers and biologists in Brazil disagree with that view.
– one that investors worldwide have
Dams such as Belo Monte, which will cost
increased bets on since the start of Lula’s
25.8 billion reais ($12.5 billion), divert
per cent from 2002 to 2011. According to
first term in 2003. The government is
funds from improving crumbling roads and
the government’s Energy Research Agency,
borrowing to finance all of the work, and
overcrowded railways and ports that slow
Brazil needs to increase generation by 55
federal debt soared 29 per cent to 2.24
the movement of Brazil’s people and goods.
per cent by 2020 to keep up with demand.
trillion reais ($1.9 trillion) from the end of
costs could have the opposite effect. Brazil’s gross domestic product grew 51
When Belo Monte is completed in 2019,
2008 to the end of 2011. The annual deficit
it will be capable of generating 11,233
working on a massive buildup of power
jumped 89 per cent from 2008 to 2011, to
megawatts of energy, enough to light 18
plants since her predecessor, Luiz Inacio
108 billion reais ($53 billion).
million homes.
President Dilma Rousseff began
Lula da Silva, named her energy minister
Until now, Brazil could afford the
Brazil could slash demand for electricity
in 2003. Now, Brazil is spending 167.4
spending. But Brazil’s economic surge is
by overhauling existing power plants
billion reais ($93 billion) to build 20
abating; the government reported in March
and distribution grids and building solar,
hydroelectric plants in the Amazon, with
that GDP grew 2.7 per cent in 2011 – the
sugar cane and wind plants, according to
power lines to distant cities.
second-lowest rate since 2003. With the
Pedro Bara, an energy specialist for the
economy starting to slow as mega-spending
World Wildlife Fund’s office in Sao Paulo.
forest 107 times the size of Manhattan,
on dams accelerates, Brazil’s decade-long
Sugar cane-based power plants alone
and Brazil has plans to build around 20
boom could slow significantly.
would generate as much electricity as
The projects would flood swaths of rain
more dams in the Amazon. Brazil is financing 1.6 trillion reais for
Brazil is pouring money into big dams because they can generate electricity
three Belo Montes, he says. Brazilian taxpayers can only wait to see
constructing dams and improving roads,
more cheaply and pollute less than
if Rousseff ’s all-in bet on Amazon dams
railways, ports, oil rigs and refineries, as
plants fuelled by natural gas or coal,
helps or hurts the nation. n
June 2012
16
Notebook Numbers Game
1,000
One
-metres is the planned height of Jeddah’s Kingdom Tower, which will make it the world’s tallest building. The Kingdom Tower will be completed in 63 months according to Kingdom Holding Company (KHC) Chairman Prince Alwaleed bin Talal. This ambitious project is contracted to the Saudi Binladin Group for $1.2 billion. The Kingdom Tower will be the centrepiece and the first construction phase of Kingdom City Jeddah, estimated to costs a colossal $20 billion.
in five Britons with more
than £250,000 in savings is considering migrating abroad because they are tired of crime, poor weather and the high cost of living, according to research by the wealth management arm of Lloyds Banking Group.
the international rich while increasing taxes and slashing public spending.
4.5
The German economy grew more than economists forecast in the first quarter of 2012 as exports to emerging markets offset waning euro-area demand. Gross domestic product in Europe’s largest economy rose 0.5 per cent from the fourth quarter, when it fell 0.2 per cent.
Britain is grappling to preserve its image as a safe haven for
GERMAN ECONOMY GROWS
The World In Figures
New York in May. The bidding
With the euro region’s debt
lasted just 12 minutes and
crisis ravaging economies
the fetching price beat the
from Greece to Spain, German
£66.4 million that Picasso’s
companies have shifted
Nude, Green Leaves and Bust
focus. Carmakers and their
billion spam text
of its sales from the fast-
fetched at Christie’s in New
suppliers are benefitting from
messages are
growing emerging markets. The
York in May 2010.
demand in faster-growing
clogging the handsets of US
acquisition will increase Nestle’s
consumers according to Richi
annual sales of infant formula to
Jennings, an industry analyst.
$7 billion from $5 billion.
markets such as China, while
¥50
billion ($617 million)
falling unemployment and
was spent by UCC
rising wages are stimulating
Spam phone calls are also
Holding, Japan’s biggest coffee
spending at home. Business
thriving and the surge is costing
company, to buy Switzerland-
confidence rose for a sixth
carriers money and frustrating
based United Coffee. The
month in April after company
users, who must pay for
purchase will boost the
earnings outpaced expectations
the messages and deal with
Japanese firm’s overseas sales
in the first quarter.
potentially fraudulent texts.
ratio from current lows of three per cent to 20 per cent.
The debt crisis has already pushed eight euro-region countries into recession,
22%
increase in its
commonly defined as two
net loss has
consecutive quarters of
sounded alarm bells at Euro Disney. Europe’s biggest
$11.9
£74
Germany’s economy will
amusement park, which
grow 0.7 per cent in 2012
million for Edvard
celebrated its 20th anniversary,
and 1.7 per cent in 2013,
Munch’s iconic artwork
billion deal earns Nestle
contraction.
reported a net loss of €100.8
the European Commission
company, ownership of Pfizer’s
The Scream makes it the most
million, an increase of €21
forecast. By contrast, the euro
baby food unit. Nestle edged
expensive painting sold at an
million. The company is hoping
region’s and those of seven
out competitor Danone for
auction. It was snapped up by
its 20th anniversary events will
member countries will contract
a business that gets most
a private bidder at Sotheby’s in
help boost revenue.
this year, it said.
SA, the world’s biggest food
Portfolio
Notebook COMPANIES CUT EMISSIONS Other members include HP, IBM,
According to an independent review conducted by the international energy
Johnson & Johnson, Lafarge, National
consulting firm Ecofys, companies that are
Geographic, Natura, Nokia Siemens
part of the World Wildlife Fund’s Climate
Networks, Novo Nordisk, Sprint, Tetra Pak,
Savers programme cut 27 million metric
Sony, Supervalu, and Volvo. The companies could reduce a total of
tons of emissions in 2011 alone.
350 million metric tons of carbon dioxide
The companies, which include Coca-
by 2020 if they continue to keep their
cut carbon dioxide emissions by more
commitments, according to the report. If all
than 100 million metric tons since 1999.
industry peers in the 16 business sectors
That’s twice as much as the current annual
covered by the coalition participated, they
emissions of Switzerland.
could cut between 500 million and 1,000
REUTERS
Cola, Nike and more than 30 others, have
The companies that form part of the World
million metric tons of carbon dioxide in 2020. The reductions could reduce the
Wildlife Fund’s Climate Savers programme
should place companies ahead of their
partner with the WWF and set targets to
competitors in reducing emissions. WWF
‘emissions gap,’ or the difference between
reduce their greenhouse gas emissions.
provides guidance to partner companies on
rising emissions and what is needed
The targets must be more ambitious than
ways to reduce their carbon footprint and
to limit global warming to two degrees
previous goals set by the company and
address climate change.
Celsius, by up to nine per cent.
Manchester City Scores $97.6 Million
PREMIER LEAGUE TOTAL BROADCASTING PAYMENTS SEASON 2011/12
GRAPHEAST
CLUB
VALUE (£m)
Arsenal
56.2
Aston Villa
42.1
Blackburn Rovers
40.3
Bolton Wanderers
40.6
Chelsea
54.4
Everton
48.9
Fulham
47.4
Liverpool
54.4
Manchester City
60.6
Manchester United
60.3
Newcastle United
54.2
Norwich City
45.6
Premier League football champion
equally split 50 per cent of UK broadcast
QPR
43.2
Manchester City got a record £60.6
revenue, with 25 per cent paid in merit
Stoke City
43.6
million ($97.6 million) in broadcast
payments depending on a team’s finishing
Sunderland
44.4
payments for the 2011-12 season.
position and the final 25 per cent paid
Swansea City
45.9
in facility fees, which are paid each time
Tottenham Hotspur
57.3
highest received by any winner in the
a club’s matches are televised in the UK,
West Bromwich Albion
46.6
competition’s 20 editions, the Premier
according to the league.
Wigan Athletic
42.8
Wolverhampton Wanderers
39.1
City’s total payment was the
League said. The 20 clubs in England’s elite division June 2012
Clubs also got £18.7 million each from overseas broadcasting payments.
17
Notebook
18
DUBAI EVENT: DUBAI SUMMER SURPRISES WEBSITE: dubaievents.ae DATE: 4 JUNE - 14 JULY VENUE: ACROSS DUBAI Dubai Summer Surprises – the region’s mega summer entertainment and shopping extravaganza – is back for its 15th edition, unlocking business potential for the city’s retail, hotel and entertainment industry. The festival offers a lucrative opportunity for regional shopping malls to showcase bargains, contests and raffle draws as part of the festival promotions. Last year saw more than 500,000 visitors flocking to Dubai to make the most of the bargains offered in more than 6,000 participating stores.
EVENT NAME: CLICK 6.0 – THE DIGITAL MARKETING EVENT FOR THE MIDDLE EAST WEBSITE: clickmarketingsummit.com DATE: 10-13 JUNE VENUE: GRAND MILLENNIUM DUBAI This digital marketing event is a great learning opportunity on how to implement social media within an organisation to maximise return on investment. With business organisations setting bigger digital budgets, Click 6.0 has become a must-attend event for people seeking strategies on enhancing their website rankings and generating effective content for emails, mobile and video marketing campaigns.
DUBAI
United Arab Emirates
EVENT NAME: 9TH CSR SUMMIT 2012 WEBSITE: thecsrsummit.com DATE: 10-13 JUNE VENUE: JBR MÖVENPICK The Corporate Social Responsibility (CSR) summit promotes the process in which companies actively manage and measure their sustainability practices throughout the Arab World. The ninth edition of the summit will highlight innovative ways that companies can minimise their impact on the environment, including conserving energy and water usage, reducing packaging volume and investing in the local communities in which they operate.
EVENT NAME: INDIAN PROPERTY SHOW WEBSITE: indianpropertyshow.com DATE: 21-23 JUNE VENUE: DUBAI WORLD TRADE CENTRE Everything you need to know about the booming Indian property market – from buying and selling properties to detailed understanding on investment opportunities, finance and tax exemptions – is available under one roof. It’s an excellent chance to scour thousands of properties ranging from affordable to the ultra-luxurious, presented by more than 70 exhibitors.
TEXT: HILDA D’SOUZA
EVENT NAME: DUBAI SPORTS WORLD WEBSITE: dubaisportsworld.ae DATE: 8 JUNE - 31 AUGUST VENUE: DUBAI WORLD TRADE CENTRE The UAE’s largest annual indoors sports event will be held over two months at the modern air-conditioned arena located at the Dubai World Trade Centre. Drawing sport lovers from across the GCC, the event hosts a range of sport and leisure activities. Dubai Sports World has collaborated with the city’s top sports academies, clubs, and renowned athletic trainers to provide this world-class experience. Portfolio
Dr. Maroun Khoury
Consultant Hematology/Oncology
Dr. Shah Numani
Dr. Nidal Mahgoub
Consultant Nuclear Medicine
Consultant Pediatrician Hematology/Oncology
In your battle
Dr. Salim Chaib-Rassou Consultant Radiation Oncology
against cancer.
Think of us as
your army.
The Regional Center for Cancer Care at American Hospital Dubai Cancer not only affects your health, but also your family and lifestyle. Understanding this, the American Hospital Cancer Care Facility offers a range of current Medical Oncology and Hematology services for adults and children. Our specialists are American Board Certified (or equivalent) and are supported by a team of expert staff trained in advanced cancer treatment techniques in the region. We are here to ensure that you are never alone in your fight against cancer. Because when you are treated at American Hospital, you are with family.
MOH 397/2/4/30/6/12
Clinical Offerings • Medical Hematology Oncology • Pediatric Hematology Oncology • Radiation Oncology • Surgery • Palliative Care • Multidisciplinary Approach
For more information, please call +971-4-377-6369
w w w. a h d u b a i . c o m The first hospital in the Middle East to be awarded Joint Commission International Accreditation (JCIA) The first private laboratory to be certified by the College of American Pathologists (CAP)
Observer
21 Montblanc employs Mandarin and Cantonese speaking sales staff at its US stores and prints brochures in Chinese.
BUSINESS NEWS IN BRIEF
Targeting Wealthy Chinese Tourists Chinese visitors are already the biggest spenders in Paris. High-end retailers in the US are now stepping up their game to get a share of this lucrative market, reports Stephanie Clifford.
across so much of Asia that you’re starting to see it much more in the profile of the tourist on Madison Avenue.” A record number of Chinese visited the United States last year – nearly 1.1 million – and the country accounts for one of the top-growing tourist groups in the US, according to the Commerce Department.
OVER FIVE DAYS, A GROUP OF
firm Frost & Sullivan. Price is the major
The number of visitors is expected to almost
visitors to New York were treated to a
reason: Because of China’s taxes, luxury
double by 2014, according to the United
private concert with the pianist Lang
products are about a third cheaper in the
States Travel Association. Chinese visitors
Lang at the Montblanc store, cocktails
United States and elsewhere.
spend about $6,000 each on every visit,
and a fashion show attended by the
versus the $4,000 that visitors from other
designers Oscar de la Renta and Diane
catering to Chinese tourists for years. Now
countries spend on average, the association
Von Furstenberg, and a tour of Estee
high-end retailers in the United States are
says, and their top activity is shopping.
Lauder’s original office.
pulling out their Mandarin phrase books
They were not celebrities. They were © 2011 NEW YORK TIMES NEWS SERVICE
European luxury stores have been
not government officials. They were Chinese tourists with a lot of money.
Although some tourists spend money
and trying to convince Chinese visitors
on Disney trinkets and at the outlet
that Americans can also do luxury.
malls they have traditionally frequented,
“What started as a trickle has now
luxury brand purchases are surging in
become a flow,” said the vice president of
part because United States stores carry
stores in Beijing and Shanghai years
the antiques store Macklowe Gallery, Ben
a broader range of products than their
ago, Chinese shoppers still spend more
Macklowe, who recently sold a Tiffany
counterparts in China, said Julia Zhu,
on luxury products abroad than they
lamp that cost in the low six figures to a
consulting director for Frost & Sullivan.
do at home, according to the consulting
Shanghai visitor. “There’s been prosperity
Though luxury brands started opening
June 2012
Tiffany, which made almost a quarter
Observer of its United States revenue last year from
Tiffany makes almost a quarter of its revenue from foreign tourists.
foreign tourists, has added Mandarinspeaking sales staff to its major stores, as has Burberry, where more than half of sales at its flagship stores are to tourists. Representatives from the Manhattan office of the watch retailer Tourneau recently accompanied New York City officials on a visit to China to encourage more tourism in the city. At its United States stores, Montblanc sells Year of the Dragon pens and has staff members who speak Mandarin and Cantonese. It is also printing Chineselanguage brochures about its products and selling wallets sized for Chinese currency. Despite having more than 100 stores in China, Montblanc is going after Chinese
REUTERS
shoppers on vacation abroad. “Yes, we
already very well-known in China, but
are in the major cities, but when you
Bergdorf ’s strongest footprint is in New
travel, you’re in the mood to enjoy and
York, so getting them to know that brand
experience the moment,” said Jan-Patrick
when they come here is a very important
Schmitz, chief executive of Montblanc
goal for us,” said Chris Noble, president
North America. “We certainly will do
of Affinity China, a luxury travel operator
more and more marketing toward them.”
that organised the event. Affinity China also arranged a meeting
Retailers in the United States lag behind other countries. Part of that is
with Aerin Lauder, a granddaughter of Estee,
because of visa issues; it is easier for
and a tour of J. Mendel, the fur brand, with a
Chinese residents to get visas to Europe.
designer and one of the Mendels. “They took them backstage, and showed
High-end American retailers like Saks GRAPHEAST
22
Fifth Avenue and Bloomingdale’s are urging the government to speed up the process. President Barack Obama said in January that he planned to increase visa-processing capacity from emerging markets like China and Brazil by 40 per cent this year. The American stores also have to
The number of Chinese visitors to the US is expected to double by 2014. Chinese visitors spend about $6,000 on each visit.
American retailers are racing to prove Wong wrong. Bergdorf Goodman in January held
overcome an idea that luxury can come
a private runway show at its New York
only from the old world.
Fifth Avenue store for a group of Chinese
how materials are selected and how the pieces come together, and showed them the craft,” Noble said. “We’ve got a lot of interest in the craftsmanship behind the luxury pieces. People like to be able to say, ‘I saw how this was made, I met the designer.”’ Macklowe, the gallery executive, recently held a seminar for Chinese tour operators. “You have to tailor your message for the
tourists, followed by a meet-and-mingle
crowd, and for this crowd it was, ‘These
history, heritage,” said Sunny Wong, group
with designers like De la Renta, Peter
are very exclusive things, these are very
managing director of Trinity, a company
Som and Zac Posen. Then, with Bergdorf ’s
authentic things, these are very high-end
that owns and operates high-end European
fashion director looking on, Mandarin-
things that you can recommend to your
retail brands in China. United States brands,
speaking assistants helped the Chinese
clients without reservation,”’ he said. “We
by contrast, are seen as “contemporary,
customers shop throughout the store.
tried to give them a sense that what we do
“The European brands, they see prestige,
lifestyle” rather than pure luxury, he said.
“There are lots of brands that are
only exists in one place on earth.” n Portfolio
24
Observer O N E 2 W AT C H TEXT: HILDA D’SOUZA
James Hughes First Solar, a leading US solar giant that manufactures and sells solar modules, promoted newcomer James Alton Hughes as its new chief executive, effective 3 May. Hughes succeeds interim chief and company founder, Mike Ahearn. Ahearn will continue in his role as chairman. Hughes joined the company in March as chief commercial officer and takes the helm at a crucial time as the company grapples with a $450 million loss suffered in its last quarter. The board has expressed strong confidence in Hughes saying, “Jim is the ideal leader to execute Frist Solar’s five-year plan to transition from serving subsidised markets to becoming a global leader in providing utility-scale solar power solutions.” Having been an integral part in developing the company’s fiveyear plan, Hughes plans to tap into new sustainable markets and transition fully into a non-subsidised market by 2016. Hughes, a law student from the University of Texas with nearly 20 years of experience in the global energy industry, also plans to capitalise on First Solar’s advantage over its competitors as a builder and developer of solar power plants. The solar market is fraught with challenges and uncertainties from regulatory, financial and political pressures that have recently seen many solar industry players, including the notable US company Solyndra, file for bankruptcy. First Solar, which was also caught in this downward trend, has grappled with a massive restructuring that involved laying off 30 per cent of its workforce, shutting its German manufacturing plant that supplied much of the European market and cutting back four of its 24 production lines in Malaysia. The downsizing has led analysts to question whether the solar panel maker is preparing for a possible closure and if it will be able to complete some of the world’s biggest solar panel farms it’s building in California, Arizona and Nevada. The new chief’s aim to reinvent the renewable energy maker from its present cloudy outlook is one stockholders and renewable energy supporters are keen on seeing. Prior to joining First Solar, Hughes served as CEO of AEI, which owned and operated power businesses in 19 countries. Before that, he was president and chief operating officer for Prisma Energy.
Underwater Hotel Resurfaces Dubai-based construction company Drydocks World and Swiss consulting, engineering, and brokerage firm BIG InvestConsult have announced they will build the Water Discus Hotel, a luxury underwater hotel in Dubai. Water Discus Hotel is not the first underwater hotel to be announced, but it could be the first to succeed. In 2006, plans were made for Hydropolis, a 250- to 300-suite resort off the coast of Jumeira Beach in Dubai, though the estimated $300 million project never began construction. US Submarine Structures also announced the Poseidon Undersea Resort in Fiji, but construction has been delayed and the opening is at least 20 months away. Another underwater hotel was planned in Istanbul. Poland’s Deep Ocean Technology designed the Water Discus Hotel to have 21 two-person rooms with huge windows and an underwater diving centre. Rooms will be as deep as 10 metres below the surface. The hotel can also rotate. A large disc-shaped structure above the water will have a spa, garden, and upperterrace swimming pool. The project will cost from $50 million to $120 million, depending on the design, the chairman of Drydocks World told reporters. BIG Invest will fund the project and represent Deep Ocean Technology, which owns the technology and concept for the hotel. Portfolio
OAK Industria Arredamenti SpA - Via Marmolada 3/5 - 22063 Cascina Amata - Cant첫 COMO Italy - Ph. +39.031.73711
Observer CHINA EYES JAPAN China may enjoy a healthy trade surplus
boost ties? For all its problems, Japan’s
with the US and Western Europe, but
roughly $5.9 trillion economy is Asia’s
when it comes to Japan, the Chinese are
second-largest after China. So there’s
always in the red. Last year China had a
money to be made. A foundation in Japan could also help
$19 billion trade deficit with Japan, thanks in part to Chinese imports of made-in-
Chinese companies establish their brands
Japan machinery and components.
worldwide. Meeting the quality levels GETTY IMAGES
Some Chinese companies are pushing harder to convince Japanese consumers to give Chinese products a try. In April,
and technology standards Japanese companies and consumers expect should enable the Chinese to become stronger in other, faster-growing markets.
white-goods maker Haier opened a
sell computers in Japan. Shenzhen-based
research and development centre in
telecom equipment and handset maker
Kyoto, its second in the country, and
ZTE is boosting sales of smartphones and
Japanese-made machinery and
in February announced it would put its
4G equipment to Japanese customers.
components, which will keep up the
Asian headquarters in Osaka. Chinese PC
Given Japan’s contracting economy,
Mainland companies still rely on
pressure on the trade numbers. However,
vendor Lenovo last year invested $175
chronic deflation, and shrinking population,
last year’s deficit with Japan was about
million in a new joint venture with NEC to
why are the Chinese working so hard to
half the size of 2010.
BHP Billiton Slows Spending BHP Billiton, the world’s biggest mining company, won’t meet its $80 billion spending target for building mines and expanding assets over the next five years as it sees commodity prices declining. “We should pause, take a deep breath and wait and see where the pieces fall around the world,” Jac Nasser, chairman of the Melbourne-based company, told reporters in Sydney. He declined to say how much spending would be cut. BHP joins Rio Tinto Group, the thirdbiggest mining company, in slowing spending as costs rise and prices fall in
GETTY IMAGES
26
a weaker global economy. The industry
earner, has declined 29 per cent since
Nasser said. The mine may cost $27.4
has more projects than cash flows and
February 2011.
billion, according to an October estimate
companies will have to prioritise spending, Nasser said. Commodity prices have declined 12 per
BHP’s board is due to decide on the development of three major projects by the
by Deutsche Bank. “The tailwind of high commodity prices
end of this year, including a port expansion
has contributed to record growth in the
cent from this year’s high in February,
at Port Hedland in Western Australia that
sector,” Nasser said in his speech. “Now we
according to the Standard & Poor’s GSCI
may cost $22 billion. It will also decide by
have a period where those tailwinds are
Spot Index of 24 raw materials. The
the end of the year on an expansion of the
moderating and we expect further easing
price for iron ore, BHP’s biggest revenue
Olympic Dam copper mine in Australia,
over time.” Portfolio
REUTERS
Nigerian Shoppers Boost Britain
Nigerian shoppers were the fourth-biggest contributor to overseas tax-free shopping in the UK last year, behind only China, Russia, and the Middle East, according to Global Blue U.K., a company that helps foreign shoppers claim a refund of Britain’s 20 per cent value-added tax. A growing Nigerian population in the UK and more frequent direct flights between the countries has led to an influx of visitors who have more to spend because of the booming oil-driven economy. Foreigners account for a third of spending in London’s highend shopping district of Bond Street, Oxford Street, and Regent Street and will spend more than £2 billion ($3.2 billion) this year, according to the New West End, an organisation of 600 retailers in the area. Spending by Nigerians in British shops rose 32 per cent last year, according to Global Blue. Russian and Middle Eastern tourists mostly seek luxury goods in Britain, like those sold at merchants such as Harrods or Burberry. Nigerian visitors also spend heavily at mass-market chains such as Marks & Spencer and Debenhams that have more selection, higherquality products, and better prices than stores back home. Nigerian visitors spend an average of about £450 per individual transaction, compared with more than £1,000 by Middle Eastern customers, Global Blue says. June 2012
Commentary
28
GAIA PIANIGIANI
Italy’s High-speed Challenger end services, pricing and food. The Italo
a roughly $1.3 billion investment and a
trains provide their 450 passengers with
neck-and-neck race with Italy’s national
free Wi-Fi, satellite television, a 39-seat
passengers used them in Italy, compared
rail lines to get Europe’s first private
cinema carriage, leather seats made by
with nearly 27 per cent in Germany and
operator of high-speed, domestic trains
the luxury furniture maker Poltrona Frau,
60 per cent in France. However, since
on track.
and assistance and welcome points in
then, high-speed trains started darting
the main stations designed by the Italian
between Rome and Milan in only three
finally started speeding at around
architect Stefano Boeri. A third of the
hours, and Trenitalia’s market share
300 km/h in late April, opening a new
tickets for each of the three service classes
increased to 55 per cent from 32 per
chapter in European rail travel and seeking
will be available at a low cost, if booked
cent on this route, while airline travel
to compete against the state-run service
early and for off-peak times.
decreased to 32 per cent from 52 per cent
But the locomotives – dubbed Italo –
with an emphasis on style and luxury.
The trains do not rely on locomotives
As of 2009, only 22 per cent of
on the route. Italy is being seen as a test case for
The train company, Nuovo Trasporto Viaggiatori (NTV), is the first to compete
Europe. Since 2004, European legislation
with the state-run Trenitalia on high-
has liberalised international and domestic
speed service. As passengers boarded
rail travel for freight and passengers, but
in Rome on its first run to Milan from
there is still no obligation under European
Naples, they were met by smiling
Union law to open domestic services to
hostesses and stewards in dark-red livery
market competition like Italy did. And it
and boarded sleek, modern trains with
might go further, as the Italian government
blue leather seats and white interiors.
has recently passed a law requiring local
The company’s president is Luca
authorities to hold bids for train services. NTV will have to pay the state about $159
Cordero di Montezemolo, the chairman
million a year for track usage.
of Ferrari. Other developers include the luxury fashion businessman Diego Della Valle, the French railway company, Italy’s largest retail bank and the country’s largest insurer. “We have brought an end to one of
Employees of Italo, Europe’s first private operator of high-speed domestic trains, welcome passengers in Rome. Nuovo Trasporto Viaggiatori is competing against the state-run service with an emphasis on style and luxury.
the longest monopolies in the history
but have engines underneath each of the
of our country,” said Cordero di
11 carriages that are intended to increase
Montezemolo during a press trip to
capacity and safety.
Naples from Rome. “Finally, Italian
“The risk NTV is taking is certainly very
Trenitalia has also sought to compete in the high-end market, recently revamping some of its high-speed trains with leather interiors, a business carriage and firstclass dining menus by the Umbrian chef Gianfranco Vissani. “There is little to complain now about the service on Trenitalia,” said Elisa Rossetti, 34. “I just hope that market
high, amplified by Italy’s current economic
principles apply and competition cuts
By the end of the year, the company
crisis and the improvement of the Italian
tickets prices.”
plans to have 25 trains connecting nine
infrastructure that is still lagging behind,”
Italian cities, and its goal is a 20 to 25
said Oliviero Baccelli, vice director at
per cent market share by 2014, with eight
the Centre for Research on Regional
to nine million passengers a year, which
Economics, Transport and Tourism at
airline,” said Antonio Squillace, 56. “And
would allow the company to break even.
the Milan-based Bocconi University.
the very fact of having an alternative feels
“But high-speed in Italy has very, very
almost miraculous.” n
travellers and tourists can choose.” © 2012 NEW YORK TIMES NEWS SERVICE
significant development margins.”
IT TOOK MORE THAN FIVE YEARS,
The battleground will be over high-
Some share Rossetti’s fears, but many on the Italo were impressed. “You feel like you are travelling on an
Portfolio
M ESURE ET D ÉMESURE *
TONDA 1950
Rose gold Ultra-thin automatic movement Hermès alligator strap Made in Switzerland
* EXACT AND EXULTANT
www.parmigiani.ch
LES ATELIERS PARMIGIANI ISTANBUL, MOSCOW, BEIJING, SHANGHAI LES STUDIOS PARMIGIANI PORTO CERVO, DUBAI, MUNICH HONG KONG EMPEROR WATCH & JEWELLERY | DUBAI DAMAS LES EXCLUSIVES LONDON HARRODS FINE WATCH & JEWELLERY ROOM | NEW YORK CELLINI | PARIS ARIJE ROMA HAUSMANN CONDOTTI | SINGAPORE THE HOUR GLASS | ZÜRICH GÜBELIN
Profile
30
testing the limits Elon Musk isn’t short of ambition. The co-founder of PayPal is developing a private successor to the Space Shuttle through his company SpaceX, while his other venture, Tesla Motors, launched the world’s first electric sports car. But Tesla Motors isn’t just an electric car company – it’s perhaps the greatest test of Silicon Valley’s innovation model. And now is do-or-die time, with everything riding on a new $50,000 sedan, reports Jon Gertner.
Portfolio
31
June 2012
Profile
32
When Tesla Motors moved into its new Palo Alto headquarters in 2010, CEO Elon Musk toasted his cheering staff. In a light, elegant accent – a remnant of
on the Nasdaq,” Musk tells me, looking
said to the crowd: “Here’s to creating the
somewhat incredulous. Then he laughs.
greatest car company of the 21st century,
“All I can say is if you’re shorting Tesla at
and to making a real difference in the world,
the end of this year, it’s going to sting,”
and to moving us off oil as fast as possible.”
Musk says. “It’s going to sting a lot.”
A Tesla Model S and a Roadster do a demonstration drive. Tesla hopes to sell 20,000 S variants annually.
This is the kind of thing Musk has been
Whether this turns out to be true or
saying about his firm even before people
not, Tesla Motors is now poised to build
began paying attention. Back in 2006, for
its first semi-affordable car, which puts
inevitably, glide forth on exhaust-free
instance, two years before Tesla started
it between steps one and two of Musk’s
electricity. To Musk, the most significant
deliveries of the sporty $109,000 Tesla
master plan. By July, the company says
problem with this transition is that we
Roadster, its first (and so far only) model,
it will begin delivering its new Model S
don’t know how fast it can or will happen.
Musk happened to write on his blog that
sedan, a fully electric vehicle that’s being
And this leads to other questions. How
the master plan for his company was fairly
manufactured at Tesla’s new factory
quickly will Musk be able to scale up his
simple:
in Fremont, California. The Model S
business to have an actual impact on the
1. Build sports car
will start at about half the price of the
world? And when will his competitors
2. Use that money to build an
Roadster – $49,900. Another Tesla
– some of whom, Toyota and Daimler
model, an SUV known as the Model
included, have paid Tesla hundreds of
X, was unveiled in early February and
millions of dollars to build motors and
will likely hit the market sometime at
battery packs for their own electric cars –
4. While doing above, also provide
the beginning of 2014, at prices close to
get on board in a big way?
zero-emission electric-power
the Model S. Yet further down the road,
generation options
should Tesla survive and thrive, things
is doing something hard. The difficulty of
What rankles Musk is how often his
get more interesting. Later that year, a
the endeavour – making machines that
master plan gets ignored. Sitting at his
third-generation Tesla Motors car will be
are big, heavy, and incredibly complicated
desk in Palo Alto, Musk tells me he has
unveiled. This is step three on the Musk
– explains why most entrepreneurs
been repeatedly criticised for being an
master plan. The vehicle – it’s not yet
would rather start a business moving
elitist – “one who thinks there’s a shortage
named – will be an affordable $30,000
electrons around the internet than within
of sports cars for rich people.” He seems
car. It truly may be a Tesla for the masses.
a car motor. If launching a major new
affordable car 3. Use that money to build an even more affordable car
resigned to the fact that the proof that
© FAST COMPANY 2012
“We’re the third-most-shorted stock
17 years growing up in South Africa – Musk
You might think Tesla exists to sell
Another problem is that Tesla Motors
automobile company is close to nuts –
he is not a snob will only arrive in good
electric cars. Yet after spending time
“probably the hardest thing in the world,”
time. Soon enough, Tesla will demonstrate
with Musk, you begin to see that Tesla
as one auto analyst told me recently
to the world that its products are not for
is a company that exists to overturn the
– then launching a major new electric
millionaires but for everyone. And the
entire global automotive infrastructure –
automobile company is certifiable.
same kind of proof will likewise burn the
which presently functions on petroleum
stock-market speculators who are betting
and internal combustion engines – but
represents the most extreme test of the
big money that Tesla’s failure is imminent.
in Musk’s belief will eventually, and
limits and capabilities of the Silicon Valley
Tesla Motors almost certainly
Portfolio
33
model of innovation. Musk’s startup is
it gets difficult to see how Tesla could
better than all the other cars. Not just
built on a defiant and scrappy ethos, and
endure. Even with its alliances with
okay. Or else we’ve failed.’
it intends to demonstrate that a product
other automakers, the company could
that has long been the exclusive bailiwick
be hundreds of millions of dollars in
the second floor of Tesla’s headquarters.
of Detroit engineers can be made smarter,
the hole. And Musk’s public assurance
Musk, who goes to the office two days a
faster, cheaper, and more attractive by
of company profitability in 2013 would
week (he spends a significant part of the
a bunch of guys in California. The most
likewise be jeopardised. “It’s a make-or-
week at his other big startup, SpaceX), sits
common refrain he’s heard is that Tesla
break product for us,” J.B. Straubel, Tesla’s
a few feet away from Straubel, at a polished
can’t possibly succeed because nobody has
chief technical officer, tells me. The big
wood desk. “These days, I work probably
succeeded in nearly a century.
car companies have a lot of models, he
85 hours a week, maybe 90,” he tells me.
remarks, and success for them can be a
While he’s now at the office part-time, he
DID HE know how difficult this would
game of statistics. Tesla has no room for
says he still manages the company 24/7
turn out to be from the start, I ask? “Yes.”
error. “We’re very cognisant of that fact,”
and that no nuance of engineering and
Straubel says. “The Model S has to be
design is beneath his scrutiny.
Was he surprised by how hard it
Straubel and Musk both work out of
actually was? “No.” After a pause, he adds, “When we got Tesla going at the very beginning, if you asked me what I thought the odds of success were, I would have said less than 50 per cent. I would have said that failure is the most likely outcome.” But he would not say that anymore. To put it starkly, the future of Musk’s company now hinges on the success GETTY IMAGES
of the Model S. His company has even suspended production of the Tesla Roadster for several years to focus on the new model. If the car has issues of performance, safety or durability, June 2012
Tesla Roadster at the Geneva Motor Show. Tesla has sold 2,400 Roadsters so far, priced at $100,000.
Profile
34
pack is used by the car’s motor. Musk and others at Tesla contend that the Model S may be the first massproduced car ever designed, from the ground up, with the specific purpose of being an EV. The company has more than 300 patents on its technology, and also has a fair amount of proprietary engineering. In the most general terms, the company’s expertise resides in how it has designed the circuitry in its large battery pack, how it cools those batteries, and how its sophisticated software regulates the power flow between the battery pack and the motor. The software especially, which can translate into large efficiency gains for a car, may be Tesla’s biggest advantage. Elon Musk, the chairman and CEO of Tesla Motors, looks at a robot for assembling cars. The company bought the former Toyota plant operated by New United Motoring Manufacturing in 2010.
To Musk, the conventional thinking about the EV market is one reason why so many people fail to grasp Tesla Motors’ potential. Currently, fewer than 13 million cars and small trucks are sold in the US annually. About two per cent of those are pure electrics or hybrids. The accepted wisdom, Musk argues, is that “there’s a market for electric cars and all electric cars compete against each other for that market. But that’s just the wrong paradigm.” Musk does not believe the Model S or X will compete with other EVs for a tiny slice of the consumer market. Models S and X will instead compete with petrol-burning BMWs and Lexuses. And because Musk is assured his EV technology will prove superior in performance (and emissions), it will thus succeed.
The Model X, an electric SUV, is set to be launched next year.
OVER THE course of several years, Tesla sold about 2,400 Roadster sports cars.
innovative as well as risky, a quick primer
The company is planning to produce
Room 24M, a cavernous, high-ceiling
is useful. Electric cars are in certain aspects
about 6,000 Model S cars this year, but
garage where the company’s new cars get
much simpler than petrol cars. There are
next year it intends to scale up to 20,000.
evaluated. During my January visit, most
fewer moving parts, and there’s no engine.
These numbers are not large for a big
of the spots here are taken up by what’s
Electric cars have a motor, which in the
carmaker – Toyota sells more Camrys
known as the Model S “beta” fleet – several
Model S is about the size of a watermelon.
in a month than Tesla plans to sell in
dozen early-production, not-for-sale Model
The motor runs on electricity stored in
a year. Still, for an automotive startup,
S cars. Each beta is for a different type of
thousands of lithium-ion cells. The software
they seem heroic. But most of the auto
testing and data collection – on brakes,
of the car is also an essential component;
analysts I spoke with think Tesla’s sales
suspension, crashworthiness, and so forth.
through something called a drive inverter, it
projections are still far too high, a belief
regulates how stored energy in the battery
reinforced by modest sales figures for the
PHOTOS ON THIS PAGE: GETTY IMAGES
Downstairs from Musk’s office is
To understand why the Model S is
Portfolio
35
Nissan Leaf and Chevy Volt. “Is 20,000 in sales optimistic? That’s the billion-dollar question,” says Brett Smith, a codirector at the Centre for Automotive Research in Detroit. “I think there is a market for Tesla’s product, but I don’t know how large that segment is. And frankly I’m not sure it’s as large as they hope.” The EV market remains enigmatic. And future sales may depend less on performance – or environmentalism – than on economics. At the moment, what’s actually driving EV sales is government policy. Car companies, with their sights set on meeting high-mileage and lowemissions requirements for their fleets, view electric and hybrid vehicles as crucial to their vehicle portfolio. At the same time, customer rebates of up to $7,500 from the federal government and up to $2,500 from the state of California bring these cars into the realm of affordability. Yet two other factors shift the equation: The price of fuel, though climbing, has remained fairly low over the past year, and the price of lithium-ion batteries is fairly
Musk believes the world must be weaned off gasoline-powered cars as soon as possible. For him, Tesla is not in the business of selling electric cars but changing the world.
high. By the calculations of Menahem Anderman, arguably the country’s leading
EVs like Tesla’s seem to be evolving at an
When I ask Musk if it’s possible that Tesla
lithium-ion battery analyst, fuel would
astonishing rate. Straubel, Tesla’s CTO,
could fail to sell 20,000 Model S cars
have to be about $10 a gallon to recoup
has little doubt that EVs will soon become
annually, he says that it already has more
the lifetime cost of an EV like the Leaf.
competitive, even without incentives,
than 8,000 preorders. And Tesla does not
Anderman believes the economics look
with petrol cars. “There’s no fundamental
advertise, does not give discounts, and
far better for the new plug-in Toyota Prius
law in physics that says you can’t make
has never given any test-drives. Word has
– $6 fuel makes it a sensible economic
batteries with much higher energy density
spread virally.
proposition. In sum, his firm projects that
and much lower costs,” he tells me. By
the global EV market in 2015 will be quite
Straubel’s calculations, if batteries get 50
frame,” Musk adds. “We’re sold out until
modest in size (250,000 in sales) and will
per cent better, it will put EVs on an even
February of next year. I haven’t checked
be dominated by Japanese and German
playing field with petrol cars. “Between
the latest numbers. We might be sold out
automakers. Tesla, in his estimation,
the time we did Roadster and Model S,
until March. So clearly we do not yet have
would be lucky to sell 15,000 cars.
the batteries have improved by about
any kind of demand problem. In fact,
40 per cent,” he says. “That’s a pretty big
our problem is one of supply. Therefore
HE MIGHT be wrong, of course. A
number. That’s about four years.” Such
our focus needs to be – and it is – on
number of car analysts have far rosier
leaps are unheard of in car technology, he
producing the Model S, bringing it to
projections for Tesla. And in any event,
adds. “Engines don’t drop in size by half in
market as soon as we can.” But does that
Tesla’s Model S presents a confusing test
a few years. It doesn’t happen.”
guarantee the demand will continue?
case. It’s a stylish, high-performance car,
This line of sight gives Straubel and
“So we’re in the wrong sort of reference
“Our Model S reservations have been
with a battery pack that gives it greater
Musk faith in their business model.
accelerating,” Musk counters. “If you
range (between 250 and 500 kilometres
But they’re also buoyed by customer
want a Model S, don’t think you can just
before recharging, depending on the
enthusiasm, which may be telling sceptics
wait and pick one up. The time is getting
model) than any other electric car. And
something the economic models can’t.
longer, not shorter, to buy one.” n
June 2012
36
TURNING DIAMONDS INTO A COMMODITY A small number of investment professionals around the world are competing behind the scenes to turn diamonds into a commodity that would be available to investors in the same way that gold trades through funds on exchanges, reports Nathaniel Popper.
Portfolio
COULD DIAMONDS BE THE NEW gold?
© 2012 NEW YORK TIMES NEWS SERVICE
Trading in diamonds is limited in the
The United States Securities and Exchange Commission is reviewing a proposal to create the first diamond-
something like this,” said Matt Zeman, a commodity trader at Kingsview Financial. The diamond industry can only
United States to the retail market for
backed exchange-traded fund, which
dream of replicating the success of gold
engagement rings and other jewellery
would be available to anyone with an
companies. Gold investments, rather than
and the backroom bargaining among
online trading account. It would buy one-
jewellery, have become the primary driver
merchants in places like Manhattan’s
carat diamonds and store them in a vault
of growth in the industry, according to
diamond district. But financial industry
in Antwerp, Belgium, providing daily
the World Gold Council, pushing annual
players in New York, London and
values with an as-yet-unnamed index. The
production to around $100 billion,
Switzerland say there is an opening to
fund is backed by a New York company,
Citigroup analysts say. By comparison, the
provide reliable public access for the
IndexIQ, that has brought 14 other
annual production of polished diamonds
growing universe of investors who have
exchange-traded funds to market in the
is about $18 billion, Citi said.
been willing to sink money into funds
last five years.
backed by exotic assets like palladium and
In addition, Martin Rapaport, who
The allure of diamonds is that, like gold, they are easily authenticated and long
silver. Those players have turned a gold-
founded a popular gauge of diamond
lasting. But unlike gold, and oil, diamonds
backed fund, the SPDR Gold Shares, into
pricing, said in a recent interview that he
have not had much price volatility, in part
one of the world’s largest exchange-traded
was preparing to release a “few” products
because they have not been touched by
funds, with a market capitalisation of
this year that would be available to retail
large flows of speculative money, though
about $70 billion.
investors. He declined to describe them.
that could change if the new efforts
In perhaps the most developed plan,
succeed. “It makes sense that investors
the largest publicly traded diamond
would have interest in diamond-backed
company, Harry Winston, is working with
funds,” said Joung Park, a commodities
a Swiss asset manager to create a $250
analyst at Morningstar.
million fund that is set to begin buying half-carat to six-carat diamonds this year
THIS IS not the first rush to bring
with money from institutional investors
diamonds to Wall Street. When inflation
like hedge funds and pensions. The fund
was soaring in the late 1970s, the
would own diamonds bought and sold in
search for stable stores of value led to a
Harry Winston stores and sell shares to
few legitimate, and many illegitimate,
private investors.
operations that lured retail investors into
“Diamond is the last uncommoditised
company Thomson McKinnon, sold
organisations,” said Edahn Golan, the
shares privately and was wound down
editor-in-chief of IDEX Online, a provider
when interest rates plummeted, taking the
of diamond industry data. “I assume that
value of diamonds with them.
by the end of this year there will be a bunch of them out.” Investment professionals say that retail
The market long repelled many investment professionals because of the 80 to 90 per cent market share of
investors should be very careful, given the
production held by De Beers, the global
difficulty of establishing consistent prices
diamond giant. That began to ebb when
for diamonds of widely different cuts
De Beers relaxed its grip on the supply
and quality, and the traditional secrecy
channels in 2000, and subsequently sold
of the industry. The diamond market has
some of its mines and inventory, reducing
also been tarnished by accounts of stones
its market share to 40 per cent today,
mined in war-torn parts of Africa, though
according to Citi.
both the IndexIQ fund and the Harry
“Before De Beers gave up its monopoly,
Winston fund have committed to avoiding
the investment case was pretty difficult,”
such ‘blood diamonds.’
said Peter Laib, chairman of the Swiss
“There would be a huge learning curve for me to be comfortable trading June 2012
diamonds. One, started by the financial
commodity, and so it’s drawing in many
firm Diamond Asset Advisors, working with Harry Winston on a diamond fund.
Commodities
37
Commodities
38
“Unlike gold, which is sold for essentially the same price in financial markets around the world, diamonds have been sold mostly through bazaarlike areas like the Manhattan District and the Antwerp Diamond Bourse, which advertises that a ‘binding handclasp fixes price, delivery and conditions’.” The US-based fund from IndexIQ advisers did not list its planned fee in the Charles Wyndham is the London-based founder of Polished Prices, a diamond pricing index. The index uses the selling prices from 20 wholesalers.
application it filed to the SEC in March. Its other exchange-traded funds have fees around one per cent annually and
“Why would I start a fund where the price
prices from its online database, weighted
trade on the New York Stock Exchange’s
is controlled by one company?”
with the 15 most popular varieties.
Arca exchange. Its biggest fund replicates
The end of the monopoly still left
The IDEX index is not the best gauge,
hedge fund strategies and has attracted
perhaps the biggest barrier to investment:
Wyndham argues, because it relies on
$200 million in assets. The SEC does not
the lack of uniform standards for diamond
asking prices rather than actual transaction
comment on pending applications.
pricing. Unlike gold, which is sold for
prices, as stock exchanges do. He has
essentially the same price in financial
built the Polished Prices index, which is
argument for what makes diamonds
markets around the world, diamonds
available on Bloomberg terminals, and uses
attractive to investors: While the supply
have been sold mostly through bazaarlike
selling prices the company receives from 20
of new diamonds is not expected to rise,
areas like the Manhattan District and
wholesalers. He said he was working with a
the demand from India and China is
the Antwerp Diamond Bourse, which
“major European financial institution” that
expected to increase steadily. Brian Chen,
advertises that a “binding handclasp fixes
is seeking to win regulatory approval in
a mining analyst at Citigroup, said: “the
price, delivery and conditions.”
Europe for yet another diamond fund that
fundamentals look so good in terms of
could be available to the public.
supply and demand.”
“The diamond industry suffers from an image which sadly is rather well
The fund working with Harry Winston
All the new sponsors make the same
The Polished Prices index has fallen 2.2
deserved, which is hiding behind smoke
has devised a novel way of dealing with
per cent this year, but risen 5.6 per cent
and mirrors,” said Charles Wyndham, the
the problem of pricing. The manager in
over the last year, and 56 per cent since
London-based founder of Polished Prices,
Switzerland will pay for the inventory
its inception in 2003. But Ron Rowland,
a diamond pricing company.
in Harry Winston stores. The value of
a mutual fund and exchange-traded fund
the diamonds will be determined after
advisor, and the founder of Capital Cities
MANY MARKET participants argue
a customer buys a piece of jewellery
Asset Management, said that even if funds
that diamonds are not a commodity but
containing the stones and a replacement
did get up and running, retail investors
unique items that need to be evaluated
stone is purchased through Harry
should approach with extreme caution.
individually. But Wyndham, Rapaport and
Winston’s supply chain. The fees for the
IDEX are competing to prove that wrong
fund will be similar to those of a hedge
it works, and can be sure it’s acting like
by creating standardised pricing. IDEX
fund, with a 1.5 per cent management fee
you think it will,” Rowland said. “It’s going
has an hourly updated index of asking
and 20 per cent of any increase in value.
to be a difficult market to create.” n
“Stay away until you know exactly how
Portfolio
DRINK RESPONSIBLY
DRINKiQ.com
The JOHNNIE WALKER and PLATINUM LABEL words, the STRIDING FIGURE Device and associated logos are trade marks. © John Walker & Sons 2012
40
KELLOGG’S SNACK SOLUTION With the acquisition of Pringles, Kellogg is trying to get a foothold in the snack market. But whether that will work remains to be seen, reports David Segal.
you WAnT A TRIP To KeLLoGG In Battle Creek, Michigan – the birthplace of Honey Smacks, Apple Jacks and countless other sugar-slathered classics – to feel like a visit to Willy Wonka’s chocolate factory. But the company’s Institute for Food and Nutrition Research just won’t play along. You’re not greeted at the door by a grinning man in a purple velvet jacket, but by food scientists in lab coats. And instead of presenting a golden ticket from a candy bar, you hand over a consent form on which you promise to surrender any recording devices and to stick with your chaperones. This is actually the second sign that the tour will lack both whimsy and spontaneous musical numbers. The first is the building itself, nearly 37,000 square metres of sleek and mirthless red brick and tinted windows, an office that could have been plucked from any industrial park in the country. “Nothing to see here,” the exterior says. “Keep moving,
© 2012 NeW yORK times NeWs seRViCe
thank you.” Were you to miss the two-metre-high replica of Tony the Tiger that stands around the corner, at the employees’ entrance, you would never guess that the institute, and the corporate headquarters a few blocks away, are hallowed ground, at least for fans of the children’s nirvana that Portfolio
Manufacturing
41
is the high-fructose section of the cereal aisle. Toucan Sam lives here, the Froot Loops bird with the Technicolor beak. So do Snap, Crackle and Pop, those grinning scamps on the Rice Krispies box. Soon, these and other ageless spokescharacters will get a new neighbour: Pringles, which Kellogg is buying from Procter & Gamble in a $2.7 billion deal expected to close this summer. What’s Pringles, the world’s bestknown stackable-chips franchise, doing in Kellogg’s bulging portfolio of cereals, cookies, crackers and such? The answer sheds some light on the way Americans are eating these days, and on what ails Kellogg, whose shares have lagged the market in the period since March 2009, getty images
when the Standard & Poor’s 500-stock index bottomed out. The S&P is up 115 per cent over that time, while Kellogg is up 59 per cent. And the company’s operating profit is basically flat – at $1.95 billion in
Kellogg is buying Pringles to get a foothold in the snack market, but analysts point out that Pringles’ growth has stayed flat at $1.5 billion annually.
2008, and $1.97 billion in 2011.
and Bryant will candidly acknowledge that
about to start heavily promoting its own
when it comes to overseas snacks, Kellogg
tube-chip offering, Stax. But the company’s
the last couple of years,” says John Bryant,
lacks chops. What the company is buying
most ardent detractors are nutritionists
who became the company’s chief executive
with Pringles is not just a line of products
aghast at how many sugar- and salt-
in January 2011. Bryant, 46, whose looks
that is already huge internationally, but a
infused products Kellogg has positioned
would be described as all-American were
group of Procter & Gamble merchandisers
as good-for-you food. To them, Kellogg
he not from Australia, was sitting in his
with what Bryant calls “the snack mindset.”
is a company with a history of dubious
office one March afternoon, discussing
Their job will be to bolster the company’s
health claims and a track record for talking
some unhappy trends for a few of the
foreign snack divisions, and to step on it.
up “essential nutrients” while pushing
“We’re not happy with our performance
company’s biggest products. Products like
Some analysts are doubtful, noting
products like Smorz, a breakfast version of
Corn Flakes and Rice Krispies, whose
that Pringles’ sales have been stagnant
the campfire treat – and a “good source of
sales dropped in the last year. Those
in recent years and that rival PepsiCo is
vitamin D,” it says on the box.
“Kellogg and its 400 food scientists, engineers and technicians are cooking up new products at a frenetic pace.”
Robert Dickerson, an analyst at Consumer
brands, not coincidentally, are also the easiest for makers of private-label cereals, breakfast’s version of generics, to knock off. So Kellogg and its 400 food scientists, engineers and technicians are cooking up new products at a frenetic pace – new cereals as well as new categories of food and flavours for what everyone here calls “snacking occasions.” Selling cereal and selling snacks are two entirely different skills, it turns out, June 2012
This might displease the experts, but as Edge Research, notes, the sweet stuff is what sells. “Look at what’s growing in volume,” he says. “It’s Apple Jacks and Froot Loops.” Touring the institute, it seems ironic that the company needs to enhance its snack mindset, because everyone here is either making snacks or eating snacks they have just made. Kellogg aspires to earn 15 per
Manufacturing
42
The cracker test production line at Kellogg’s research centre in Battle Creek, Michigan. As Americans have less time for traditional breakfast cereals, the Kellogg team is moving into snack categories with global reach.
cent of its annual revenue from products
website. In a section devoted to cereal,
introduced in the last three years.
there is Krave, which reportedly wowed
“We wanted to show you the 2012
children in France and comes in varieties of
first-half launches,” says Margaret Bath,
“chocolate” and, in case you like to garnish
senior vice president for research, quality
your chocolate with more chocolate,
and technology, entering a first-floor
“double chocolate.”
conference room with tables covered with
Talk turns to what consumers prize more
boxes and wrappers. It’s quite a spread,
– nutrition or flavour. “They want both,”
and Bath introduces each product with
Bath says. “But they’re always going to – it
parental pride. Here are Eggo Wafflers,
has to taste good. We’ve got to make food
in flavours of brown sugar cinnamon
that tastes great. That is the price of entry.”
roll and strawberry strudel, for “families
In recent years, Kellogg health claims
seeking an on-the-go breakfast with no
have prompted government investigations
syrup required,” as it says on the company’s
on two occasions. One was in 2009, when the company boasted that Frosted Mini-
“In recent years, Kellogg health claims have prompted government investigations on two occasions.”
Wheats could improve the attentiveness of children; the other was a year later, when Rice Krispies were promoted as a way to “support your child’s immunity.” In both cases, the company dropped the claim and signed a settlement order agreeing to stick with the facts in the future. A Kellogg spokesman, Kris Charles, said in an email: “Kellogg has a long history
John Bryant, chief executive of Kellogg, is not happy with the company’s performance that has shown little growth. Portfolio
of responsibly providing information to
Manufacturing
43
But Kellogg faces deeper problems than
help consumers make informed choices.
a few recalls, says Dickerson of Consumer
Our agreement with the FTC is that our
Edge. To him, a big issue is that cereal is
statements will be truthful, not misleading,
losing ground to other breakfast options,
and supported by competent and reliable
like frozen food, cereal bars and yoghurt.
scientific evidence.”
The reason, he speculates, is that fewer Americans are inclined to sit down with
When you understand the work
a bowl, milk and a spoon when they start
involved in creating a new snack, you
their mornings. The ultimate convenience
grasp the appeal of buying an established
food – which is how cereal was once billed
brand. But because they are so valuable,
– is just not convenient enough any more.
very few are for sale. Proctor & Gamble
And the Pringles deal? Dickerson
was looking to unload Pringles because it
notes that almost 70 per cent of Pringles
is getting out of the food business and this
sales are in North America and Western
was its last property. Bryant, the Kellogg
Europe. Instead of gaining entry for
chief executive, will correctly note that
Kellogg to a wide array of emerging
some consumers “don’t want a chemistry
markets, the deal gives Kellogg substantial
set” when they look at the ingredients
overlap in markets.
panel on a package, but Pringles fans are surely not among them. Looking back on the last few lacklustre
He also notes that sales of Pringles were $1.5 billion in 2008, according to a document filed last year with the
years, Bryant cites a couple of supply-
Securities and Exchange Commission by
chain issues that resulted in major
Diamond Foods, which was scheduled to
embarrassments. One occurred in June
buy the brand before its deal fell apart.
2010, when 28 million cereal boxes were
Pringles sales last year? Also $1.5 billion,
voluntarily recalled after reports of a “stale
which makes Dickerson wonder about the
odour” wafting out of boxes of Apple
quality of the snack expertise that Kellogg
Jacks, Corn Pops and other cereals.
is importing.
Kellogg was founded in 1906. Today, Kellogg products are manufactured in 18 countries and marketed in more than 180 countries around the world.
“What Kellogg is saying is we’re buying a snacking mentality with a good brand with global exposure,” Dickerson says. “But what I’m seeing is a brand with high overlap with pre-existing markets that hasn’t grown sales over the past three years.” Kellogg, by contrast, sees opportunity. Bath will not talk about new flavours the company will cook up for Pringles at the institute. It’s too early for that, given that the deal has yet to close. But assume that the company is thinking big. More than ever, Kellogg views its target demographic as everyone on the planet and, as Bath points out, that group keeps growing. “We’re going to have seven billion to nine billion – whatever facts and figures you subscribe to – people in the world by 2050,” she says. “That’ll be a lot of mouths to feed.
ReUteRs
We have people that are undernourished and we have people that are overnourished. Kellogg has failed to make major inroads into desirable markets such as India and China, where consumers are sticking to traditional breakfasts. June 2012
It’s the job of a food scientist to serve that whole spectrum.” n
Bangladesh exported nearly $18 billion worth of garments in the past year.
A SteAdy trAnSformAtion
© 2012 New york times News service
Bangladesh is starting to emulate its Asian neighbours with steady growth and a rising middle class. But there are still challenges ahead, reports Bettina Wassener.
B
angladesh is probably one of the
and their watchful parents among orange
remote backwater to a beach El Dorado
last places in Asia people would
beach umbrellas.
encapsulates the changes that have taken
expect to see a thriving beachside
About five years ago, only a few luxury
place in this country of 160 million
resort with luxury hotels. And yet, Cox’s
hotels were in this small city on the Bay
people, and many other developing Asian
Bazar is exactly that – a place where
of Bengal. Now there are a dozen, and
countries, over the last couple of decades.
affluent Bangladeshis go for a weekend of
counting. Smaller hotels and guesthouses
“A middle class is gradually forming,” said
seaside fun. During the high season, when
are proliferating, and property prices have
Zahid Hossain, principal economist at the
the monsoon rains are not pounding the
risen sharply.
Asian Development Bank in Dhaka, the
country, the beach is filled with children
The transformation of Cox’s Bazar from
capital of Bangladesh. The growth in the Portfolio
getty images
Growth
44
country mirrors the developments in other emerging economies, he said. “Domestic
investment climate. Yet despite this, the Bangladeshi
HSBC included Bangladesh in a group of 26 economies – along with China, India
demand is growing and becoming an
economy has managed to grow more than
and several Latin American and African
important driver of economic activity.”
six per cent a year for much of the past
countries – where it expects particularly
decade. Economists at Standard Chartered
strong growth. The United States and
As in other Asian countries, the gap
Bank believe that Bangladesh could join
much of Europe, by contrast, are likely
between rich and poor has widened in
what have been called the “seven per cent
to remain merely stable, according to
Bangladesh, giving rise to social tensions
club” of economies that expand at least
HSBC’s projections.
and sometimes protests. Criticism has
seven per cent annually for an extended
been levelled at the low wages and working
period – allowing their economies to
to low-cost countries, from developed
conditions that prevail in burgeoning
double every decade. Current members of
economies in Europe and North America,
sectors like the garment industry.
the “club” include China, Cambodia, India,
is driving much of that growth. The trend,
Mozambique and Uganda.
which began turning parts of Asia –
The progress, though, has been uneven.
In Bangladesh’s countryside, home to more than 70 per cent of the population, subsistence farming remains the norm, and weather-related disasters regularly wreak havoc in the flat lowlands. Foreign direct investment in Bangladesh has languished at about $1 billion a year – less than what Albania or Belarus each receive, and about one-tenth of foreign investments in Thailand or Malaysia. Inadequate power and transportation infrastructures, political infighting, bureaucracy and a shortage of skilled labourers contribute to a challenging
“The progress, though, has been uneven. As in other Asian countries, the gap between rich and poor has widened in Bangladesh, giving rise to social tensions and sometimes protests.”
The gradual shift in global production
notably China – into manufacturing hubs in the 1980s and 1990s, has started to take root in Bangladesh. For now, Bangladesh’s manufacturing prowess is primarily focused on the garment sector, which has grown into a multibillion-dollar industry that employs 3.6 million people and accounts for 78 per cent of the country’s exports. Bangladesh has seen particularly strong growth in the last few years, partly because of rising labour costs in China, where manufacturing is moving into higher-
The transformation of Cox’s Bazar to a beach El Dorado mirrors the changes taking place in Bangladesh. June 2012
Growth
45
Growth
46
industry would grow by as much as nine per cent a year over the next decade. Li & Fung, a giant Hong Kong trading company that supplies retailers including Wal-Mart with clothing mostly purchased from Asia, is a case in point. Last year, the company bought $1 billion worth of apparel from manufacturers in Bangladesh, 41 per cent more than in 2010. Bangladesh overtook Vietnam and Indonesia in 2011 to become the secondlargest source of such products for Li &
margin activities like product design. “For many years, China was almost
getty images
“For now, Bangladesh’s manufacturing prowess is primarily focused on the garment sector, which has grown into a multibillion-dollar industry that employs 3.6 million people and accounts for 78 per cent of the country’s exports.”
The population of Dhaka has swelled to 15 million, however the countryside is still home to 70 per cent of the population.
Bangladesh exported nearly $18 billion worth of garments in the 12
always the hands-down answer to all
months through June 2011, $10.5 billion
buyers’ needs,” the consulting firm
of that to the European Union and $4.6
McKinsey noted in a recent report. Now,
billion to the United States, according to
Western wholesale buyers of garments
the Bangladesh Garment Manufacturers
are looking for the “next China,” and
and Exporters Association. The total
Bangladesh “is clearly the preferred next
nearly doubled from four years earlier,
stop for the sourcing caravan.”
and McKinsey forecast that the garment
Bangladesh’s shipbuilding sector is just starting to emerge.
getty images
getty images
Fung, after China.
Portfolio
Growth
47
But infrastructure bottlenecks and power cuts are substantial “negatives,” Bruce Rockowitz, chief executive of Li & Fung, said at a recent news conference in Hong Kong. Still, the company intends to increase the business it does in Bangladesh. “The prognosis,” Rockowitz said, “is good.” Another driver of economic growth has been the inflow of remittances – money sent home by Bangladeshis who have sought employment abroad. More than $11 billion worth of remittances flowed into Bangladesh last year, more than 10 times the amount from foreign investment, getty images
and the annual inflow is expected to rise to $20 billion in five years’ time, the government estimates. Of course, the fact that tens of thousands of Bangladeshis go abroad each year
Investors monitor financial information at the Dhaka Stock Exchange. Bangladesh’s central bank has raised interest rates to curb rising inflation.
highlights a weakness in the country’s
who covers Bangladesh for the ratings
economy: well-paid jobs are hard to come
agency Standard & Poor’s.
by. Manufacturing is mostly confined to
Still, the expansion of the past few years
low-level, fairly unskilled assembly work,
and improvements in the agriculture sector
rather than to high-end production or
mean that domestic demand is growing.
design. Moreover, “other sectors, such as
Dhaka, whose population has
shipbuilding and pharmaceuticals, are only
ballooned to about 15 million, now has
just starting to emerge,” said Agost Benard,
car showrooms and a small but growing number of high-end international hotels. Monthly office rents in the most soughtafter neighbourhoods of the capital can be as high as 250 taka (about $3) per square
“Properties are popping up like daisies, and the development is moving further and further down along the beach. The speed and scale of it is unprecedented for Bangladesh.”
foot, or one-tenth a square meter – levels that would not look out of place in some
and rickety stalls on the beach sell
Western cities, according to the real estate
souvenirs crafted from seashells.
services firm Jones Lang LaSalle. In Cox’s Bazar, construction sites pockmark the once laid-back beachfront.
travel guide to Bangladesh. “You’re not
A Best Western hotel is in the making.
talking international-style resorts.”
Green Delta Housing, a Bangladeshi
But Cox’s Bazar has changed a great
construction company, is working on
deal over the past five years, Leung said.
several developments. Carlson Rezidor
“Properties are popping up like daisies,
Hotel Group, which already operates a
and the development is moving further and
Radisson in Dhaka, is planning to open
further down along the beach. The speed
two hotels in Cox’s Bazar in 2015.
and scale of it is unprecedented
The town is a long way from turning into Cancun, Mexico, or the Cote d’Azur A growing middle class is driving up domestic demand, but the gap between rich and poor is widening. June 2012
“This is not Baywatch or Hawaii,” said Mikey Leung, a co-author of the Bradt
for Bangladesh.” Moniruzzaman, a marketing executive
in France. Rickshaws trundle along the
at the Cox’s Bazar office of Green Delta
potholed road between the small airport
Housing, concurred. “Many, many things
and the hotel zone further south, where
are happening,” he said. “Land is like
shopkeepers sell dried fish and sunglasses,
gold now.” n
Industry
48
A Powerful Mix of woMen And
Oil
T
The oil industry is male dominated, but a number of key appointments in Brazil have put women in charge of energy giant Petrobras and the National Petroleum Agency, reports Simon Romero. he Rousseff is a former
global oil
energy minister
industry has
who headed Petrobras’
long been a male-dominated
board for seven years during the
bastion, represented in the popular
administration of her predecessor, Luiz
© 2012 New York Times News service
imagination by real Gulf sheiks and
Inacio Lula da Silva.
fictional swaggerers like J.R. Ewing in
engineer, rose to the top job at Petrobras,
Dallas. But an exception to this rule has
Brazil’s state-controlled oil company, and
emerged in Brazil, Latin America’s rising
Magda Chambriard was nominated to lead
can be extremely demanding,” Foster
oil power, where women now occupy the
the National Petroleum Agency, which
said in an interview in Rio de Janeiro
most powerful positions in the nation’s
regulates Brazil’s oil sector.
of Rousseff, an economist about whom
booming energy industry.
Placing women in such commanding
“She knows the industry very well and
tales of browbeating of subordinates are
In a matter of weeks this year, Maria
positions is a priority of President Dilma
legend, giving Brazilian comedians ample
das Gracas Foster, a longtime chemical
Rousseff, the first woman to lead Brazil.
material for skits. “When she calls, I Portfolio
Industry
49
need to have the answer on the tip of my tongue,” Foster said. There aren’t many examples of women rising high in the energy industry. Within the Organisation of the Petroleum Exporting Countries, Diezani AlisonMadueke, the oil minister of Nigeria, is a woman. In the United States, Lynn Elsenhans was Sunoco’s chief executive for four years before stepping down this year. The chief executive of Pertamina, Malaysia’s oil company, and the head of Schlumberger Asia, a branch of the oil-field services company, are also women. But running Petrobras, charged with exploiting vast new oil discoveries deep offshore, is another matter. The company, created 58 years ago and led in its early years by Walter Link, an American oilman, is investing by some estimates more in inflation-adjusted terms than NASA did in the 1960s to put a man on the moon, to produce oil from reserves found under kilometres of water, rock, sand and salt.
Maria das Gracas Foster, the chief executive of Petrobras, Brazil’s state-controlled oil company, with a nearby portrait of Dilma Rousseff, Brazil’s first woman president.
anomaly in the oil patch, not just as the
Complexo do Alemao, a collection of favelas
launching is both critical for Brazil and
mother of two adult children but because
occupied by Brazilian security forces.
the global market,” said Daniel Yergin,
she chooses not even to own a car. Taxi
author of The Quest, a new book about the
drivers in Copacabana often call out to her
her family’s meagre income by working as
international energy industry. “She sees
with a cheer, “the lady with the fuel,” trying
a trash recycler, collecting discarded cans
the big picture and, at the same time, pays
to get her business.
and paper. She said she had also earned
“The programme that Petrobras is
As an eight-year-old, she contributed to
close attention to the details,” he said of its
She was born 58 years ago, about the
new head. “She will quickly become known
time Petrobras was conceived to reduce
her neighbours, a family of immigrants
as one of the most important people in the
Brazil’s dependence on foreign oil. In the
from Portugal.
world oil industry, and certainly the most
1950s, her parents moved from the interior
important and influential woman in the
of the neighbouring state of Minas Gerais
became an intern at Petrobras while
business worldwide.”
to Rio, where they lived in Morro do Adeus,
studying chemical engineering at the
a poor hillside area that now is part of
Federal Fluminense University. Then she
If Petrobras is able to meet its own ambitious production goals by the 2020s, Brazil could catapult past Latin America’s oil powerhouses, Mexico and Venezuela, into the top ranks of global producers. Ventures with Petrobras are already making Rio’s economy sizzle, with droves of foreign oilmen driving up rents in exclusive seaside districts like Ipanema and Leblon. Foster, on the other hand, still lives in an apartment in Copacabana, a less lustrous area hemmed in by big apartment blocks and hillside favelas. She stands out as an June 2012
“She will quickly become known as one of the most important people in the world oil industry, and certainly the most important and influential woman in the business worldwide.”
money by writing and reading letters for
After attending public schools, she
was lured away into postgraduate studies in nuclear engineering, at a time when Brazil was developing its nuclear energy capacity. But she balked at the prospect of spending five years in Germany to delve further into the field, so she returned to Petrobras. Once back at the company, she never left, rising through a series of management posts and obtaining an MBA at Fundacao Getulio Vargas, an elite Brazilian university. In 1998, while working for a Petrobras unit involved in a pipeline to import
geTTY images
Industry
50
A tanker is launched at the Manau Shipyard in Niteroi, Brazil. Petrobras is experiencing delays in procuring the ships it needs for its offshore operations.
natural gas from Bolivia, she met Rousseff,
When the former president, da Silva,
of dollars to supply Petrobras with electronic equipment.
then an obscure energy official in Rio
appointed Rousseff to his cabinet as
Grande do Sul, a southern Brazilian state.
Brazil’s energy minister, she named Foster
Foster, a supporter of the leftist Workers
as one of her top aides in Brasilia, the
contending that none of the acquisitions
Party, which has been in power in Brazil
capital. After serving in that position for
was carried out by the unit, gas and energy,
since 2002, saw eye-to-eye ideologically
two years, she chose to return to more
under Maria das Gracas Foster’s command.
with Rousseff, a Marxist guerrilla in her
hands-on responsibilities at Petrobras. “My
In addition, a company spokeswoman said
youth; they both are now committed to
business,” she said, “is oil and gas.”
in a written reply to questions about these
welcoming foreign investment in Brazil’s
Shares in Petrobras jumped nearly
Petrobras has denied any wrongdoing,
contracts that Petrobras had made only
oil industry and exposing Petrobras to
four per cent on the day in January she
“small purchases” from 2005 to 2010 from
market forces.
was named as chief executive, replacing
Colin Foster’s company.
“Shares in Petrobras jumped nearly four per cent on the day in January she was named as chief executive, replacing the economist Jose Sergio Gabrielli.”
the economist Jose Sergio Gabrielli. But important challenges await her. Already, she is facing the scrutiny
The company’s shares have slumped more than 30 per cent over the last year
of Brazil’s media, arguably Latin America’s
as concerns persist about a range of issues,
most aggressive in questioning the
from delays in procuring ships from
power structures at large companies like
Brazilian shipyards for Petrobras’ offshore
Petrobras. The newspaper Folha de Sao
operations to the costs associated with
Paulo reported in 2010 that a company
selling gasoline domestically at relatively
controlled by Foster’s husband, Colin
low prices and importing refined products
Foster, a Briton who has long lived in
from abroad.
Brazil, had won numerous contracts since 2007 worth hundreds of thousands
The most pressing challenge of all at Petrobras, perhaps, may be in meeting Portfolio
expectations of raising output to an
at offshore fields. “We’re working to get
year. Her 38-member cabinet includes 10
estimated 4.5 million barrels a day, from
there,” Foster said about meeting Petrobras’
women in ministerial posts, including her
2.3 million. Doing so will require guiding
output goals.
chief of staff, Gleisi Hoffmann, and Ideli
Petrobras, Latin America’s largest
Naming Maria das Gracas Foster to lead
Salvatti, who manages the administration’s
company, past equipment bottlenecks,
Petrobras is just one example of Rousseff ’s
delicate relations with a Congress of
the development of complex new drilling
push to place women in the highest levels
uncertain loyalties.
technologies and concerns over spills
of government since taking office last
While Rousseff maintains a high approval rating of more than 70 per cent, reactions to her nominations have been mixed. Evangelical Christian leaders recently lashed out at Eleonora Menicucci, the minister for women’s affairs, over her support of abortion in cases of rape or in which a woman’s health is at risk. And in 2011, the defence minister, Nelson Jobim, questioned Salvatti, the minister of institutional relations, calling her “very weak” in published remarks. Rousseff responded by quickly removing Jobim from his post, replacing him with Celso Amorim, a former minister of foreign affairs. Foster said she was well aware of the
graPHeasT
challenges awaiting her as a woman leading an oil company with 82,100 Brazil’s former president Luiz Inacio Lula da Silva (R) talks with current President Dilma Rousseff as he is awarded with an honorary degree. Da Silva appointed Rousseff to head Petrobras’ board during his term.
“If I’m speaking loudly, speak louder. When you discuss, you have an environment that’s more intense, that’s actually warmer, where you arrive at the best solutions for the company” employees in a male-dominated industry. She said she welcomed a certain degree of confrontation, even if it took place in the executive suite. “The best people to work with me are
graPHeasT
those who interrupt me, even question me,” she said. “If I’m speaking loudly, speak louder. When you discuss, you have an President Rousseff (sixth from left, second row, without helmet) poses for pictures during the inauguration of Petrobras’ P-56 platform. The P-56 is able to produce 100,000 barrels of oil per day. Brazil hopes to raise oil output from the current 2.3 million to 4.5 million barrels a day. June 2012
environment that’s more intense, that’s actually warmer, where you arrive at the best solutions for the company.” n
Industry
51
52
The Bill & Melinda Gates Foundation headquarters in Seattle cost $500 million. Sixty per cent of the space is open and informal.
21ST-CENTURY OFFICE DESIGN Seattle, thanks to its affluence and young workforce, has become a test tube for modern office design, reports Lawrence Cheek.
MARTHA CHOE’S IDEAL WORKING space is not her private office, nice though it is, but rather a long, narrow table in the vast atrium of the Bill & Melinda Gates Foundation headquarters in Seattle. The table, situated in a 10-metre-high open mezzanine, enjoys great swaths of daylight through the atrium’s glass, and has a stunning view of the Space Needle three blocks away. It’s not private, or quiet, but Choe has everything she needs stuffed into her laptop, and she finds the space inspirational. She points out one further attraction: “That’s Nelson Mandela’s shirt on the wall behind the table.” Choe, a former member of the Seattle City Council, is the foundation’s chief Portfolio
Design
53
The main lobby of Russell Investments, whose offices were designed by NBBJ, a Seattlebased architecture firm.
These are the main concepts: Buzz –
considerable input in the building’s
conversational noise and commotion – is
of several converging factors: There’s a
design. One objective from the start was
good. Private offices and expressions of
lot of money here to experiment with
to give the 1,000 employees a variety of
hierarchy are of debatable value. Less
projects. The workforce is relatively young
spaces to accommodate different kinds of
space per worker may be inevitable for
and open to innovation. And the local
work. “There’s a recognition that we work
cost-effectiveness, but it can enhance
culture places a high value on informality,
in different modes, and we’ve designed
the working environment, not degrade
autonomy and egalitarianism. People will
spaces to accommodate them,” she says. “I
it. Daylight, lots of it, is indispensable.
put in long hours under high pressure if
think one of the lessons is to understand
Chance encounters yield creative energy.
they feel respected, but they won’t tolerate
your business, and understand what your
And mobility is essential.
being treated like Dilberts.
people need to do their best work.” © 2012 NEW YORK TIMES NEWS SERVICE
Seattle serves as a test tube because
administrative officer, and she had
This isn’t a suddenly exploding trend.
Most office workers in Seattle and
The building was designed by NBBJ,
NBBJ’s research has found that two-
elsewhere labour in environments much less
a 700-employee architecture firm whose
thirds of United States office space is
inspiring than Choe’s. And most employers
largest operation is in Seattle. The
now configured in some sort of open
have much less to spend to make things
structure is a culmination of ideas about
arrangement. But even as these designs
pleasant. (Bill and Melinda Gates personally
the 21st-century workplace that NBBJ has
save employers space and money, they
contributed $350 million of the campus’
been exploring in corporate office designs
can make office workers feel like so many
$500 million cost.) But staying competitive
worldwide, including its own offices here.
cattle. So how to humanise the setting?
requires coming up with the best ideas, and
June 2012
Design
54
The trading floor at Russell Investments. Less space per worker may be inevitable for costeffectiveness, but it can enhance the working environment.
the office environment can be the incubator
renovation of a 1,000-square-metre floor
environments – for introverts and extroverts
for them.
in an old downtown office building five
alike, though she says the first group suffers
years ago, it specified a perimeter of private
much more amid noise and bustle.
NBBJ occupies two 3,500-squaremetre floors of a midrise office building
offices. Collaborative spaces are provided
it designed in 2006. The architects often
for creative teamwork, but the traditional
toiling alone, she says, so they will cope by
walk clients through it to show how an
offices remain the executives’ home ports.
negotiating time to work at home, or by
open environment works. There’s not a
“Individually, a lot of our workday is
isolating themselves with noise-cancelling
private office or cubicle anywhere, and
taken up with tasks that are better served
headphones – “which is kind of an insane
there’s constant low-level hubbub: people
by working alone in private offices,” says
requirement for an office environment,
in motion, and gathering into small groups.
David Thyer, Hedreen’s president.
when you think about it,” she says.
The tour makes some clients nervous; they
Susan Cain, author of Quiet: The
Introverts are naturally more comfortable
Cain also says humans have a
wonder how their own workers would
Power of Introverts in a World That Can’t
fundamental need to claim and
concentrate in such an environment.
Stop Talking, is sceptical of open-office
personalise space. “It’s the room of one’s
People adapt, the architects tell them. “You have spaces where you go and seek refuge,” says Eric LeVine, an NBBJ architect. “Or you hunker down at your desk, maybe you put your headphones on, and people will know to leave you alone.” Brent Rogers, another architect at the company, adds: “If someone’s wanting privacy, they’re sending out signals that tell you. You become more sensitive to body language in an open office environment.” NOT ALL of NBBJ’s corporate clients have boarded the informality-and-buzz bandwagon. When the R.C. Hedreen Company, a real estate development firm based in Seattle, commissioned a
The Bill & Melinda Gates Foundation headquarters has been designed to give employees different working spaces. Portfolio
Local online news articles have prompted reader comments that seem equally divided between admiration for the design and criticism that a nonprofit foundation would spend half a billion dollars on itself. But the foundation’s employees “are working on some really tough, overwhelming problems,” says Kelly Griffin, an NBBJ architect, so the objective was a building that made people more interactive and productive. Steve McConnell, managing partner at NBBJ, says the boomerangs’ transparency is their key quality. Gates employees often travel the world, and research shows that exposure to daylight cycles helps people recover faster from jet lag. People circulate Private offices and other expressions of hierarchy are of debatable value according to NBBJ architects. The CEO of Russell Investments sits at an open desk.
along perimeter halls with glass curtain walls facing the courtyard; the constant movement animates the entire complex. Stairwells are positioned to land at hubs with coffee stations, copy machines and informal furniture groupings, so that employees from disparate departments can enjoy random meetings. All can move freely around the campus, working wherever they want. Everyone’s laptop is equipped with a Microsoft platform that enables instantmessaging, phone and videoconferencing, and people-finding tools. In good weather, hundreds of workers migrate outside to varied landscapes in the courtyard – designed by the landscape architects Gustafson Guthrie Nichol of Seattle. Other favourite locales are the noisy atrium and the contrastingly quiet
An employee uses a privacy room, left, and others use a meeting room at Russell Investments.
“diving boards” – the ends of hallways that cantilever into space surrounded on three sides by floor-to-ceiling glass and
own,” she says. “Your photographs are
and closed “retreat” spaces that enable
furnished with just a couple of chairs.
on the wall. It’s the same reason we have
different personalities to find the work
A sampling of employee opinion
houses. These are emotional safety zones.”
environments they need.
shows that people use and appreciate the options. “Maybe just moving from
The campus of the Gates Foundation addresses some of these concerns.
THE CAMPUS occupies roughly five
your usual space into another place
Foundation executives started with a
hectares of prime real estate next to the
that’s really interesting, maybe that
model that proposed that 70 per cent
site of the 1962 Seattle World’s Fair. It
has glass all around, changes your
of all offices be of the closed variety. In
includes two boomerang-shaped buildings
perspectives of what’s possible,” says Alan
collaboration with NBBJ, the model
dressed in glass and European limestone,
White, deputy director of operations
evolved to a mix of 60 per cent open and
and a vast private courtyard with
management in the foundation’s United
40 per cent closed, with a variety of open
sculptures and water gardens.
States programme. n
June 2012
Design
55
Manufacturing
56
Pondering a reinvention Japan fears that its heavily industrialised economy is in a steady decline, compounded by the shutting of its nuclear reactors. Some economists are lobbying for change, while others believe the problem is overblown, reports Martin Fackler.
A few yeArs Ago, the densely
that this trend has accelerated since last
built-up coastal region around the port of
year’s nuclear accident in Fukushima,
Amagasaki was called Panel Bay because
which has raised the prospect of higher
of its concentration of factories making
energy prices and even power failures.
the sophisticated flat-panel screens that
“We already had a sense of crisis
were symbols of Japan’s manufacturing
about the loss of manufacturing and
prowess. But now the area has become a
manufacturing jobs,” said Tetsuya Tanaka,
grim symbol of its industrial decline.
a director of manufacturing promotion
In recent months, many of those
at the Ministry of Economy, Trade and
plants have been closed or partially sold
Industry, or METI. “Now we are afraid
off, as the once seemingly invincible
the concerns about electricity could give
electronics industry has lost out to
manufacturers the excuse they need to
Chinese and South Korean challengers.
move offshore.”
Panasonic alone shut down two of its
wounded many of Japan’s corporate
desperate to cover losses from its $10
giants. In April, Sony – the Apple-like
billion flat-panel plant in nearby Sakai,
innovator of the 1980s – forecast a $6.4
accepted a bailout from a Taiwanese
billion loss amid reports it may cut
technology company – a stunning reversal
10,000 workers, a drastic step in a nation
in a nation that once prided itself on being
where layoffs are still seen as socially
Asia’s economic leader.
unacceptable. Even Japanese carmakers
over how much the nation will actually
like Toyota, which last year handed back
deindustrialise – and whether a shift
latest sign of what many Japanese fear
the title of world’s largest auto company
away from factories is really such a bad
is the hollowing out of their heavily
to General Motors after the supply
thing. Most economists agree that Japan,
industrialised economy, which has been in
disruptions from the tsunami, fear that
which rose to economic superpower
a gradual but relentless decline since the
they are becoming vulnerable to game-
status in the 1980s by building compact
bursting of its twin real estate and stock
changing competition in electric cars or
sedans and colour televisions, has
bubbles in the early 1990s. The decline
just lower-cost producers in South Korea
outgrown the “Asian Miracle” template
is largely a result of growing competition
and elsewhere.
and needs a new economic strategy. What
The demise of Panel Bay is the
© 2012 new York TiMes news service
The increased price pressures have
three factories here in March while Sharp,
Japan’s electronics industry has lost out to cheaper Chinese and South Korean competitors.
The reversals have gripped Japan
that approach should be, though, is the
and merciless gains by the yen. But many
with a sense of national angst over its
subject of intense and growing debate.
officials and business leaders now fear
future, though economists are divided
“It is time for Japan to find a new
from Asian rivals, an aging workforce
Portfolio
GrapheasT
Manufacturing
57
model for its economy,” said Masatomo
or “making things.” The debate is being
Onishi, a professor of business at Kansai
watched closely by other Asian nations,
University. “We can follow the United
which have pursued the same strategy of
States into a more post-industrial
industrial catch-up that Japan pioneered.
economy, or we can follow Germany
One of the biggest questions,
into high-end manufacturing, but we
economists say, is whether Japan, and by
shouldn’t be trying to compete with
extension Asia’s newer export-oriented
China in mass production.”
economies, will learn how to foster
These are questions that go to the
innovation, nurturing the Apples, Googles,
core of the identity of a nation that has
Facebooks and other technology startups
long prided itself on its tradition of
that sustain growth in the United States.
craftsmanship known as “monozukuri,” June 2012
Yukio Noguchi, an economist at Waseda
“We can follow the United States into a more post-industrial economy, or we can follow Germany into high-end manufacturing, but we shouldn’t be trying to compete with China in mass production.”
Manufacturing
58
Kazuo Hirai, president and CEO of Sony, announced the elimination of 10,000 jobs in an attempt to return Japan’s biggest consumer-electronics exporter to profit. Manufacturing is still the backbone of Japan’s economy, but critics say the model is outdated and the country should move to a more service-oriented economy.
University in Tokyo, has called last year’s
corporations a steady supply of high-
of manufacturing companies in Japan
disaster a chance for Japan to shift to a
quality parts, and were a major source
dropped by a third, to 540,000, in
more supple, service-oriented economy
of jobs in postwar Japan.
the 10 years up to 2006. The share of
like that in the United States. He says
One is Toko-Seiki, a plastic parts-maker
manufacturing in Japan’s overall economy
clinging to an outdated manufacturing
in the blue-collar city of Higashiosaka that
has also shrunk to 18 per cent in 2009
model also hurt Japan by forcing it to cut
used to make casings for Nintendo. When
from about 35 per cent in the 1970s,
wages and prices to compete with lower-
Nintendo started buying cheaper Chinese
according to the Cabinet Office.
cost Asian competitors, contributing to
products about 10 years ago, Toko-Seiki
the crushing deflation that has burdened
cut prices by giving its 27 workers pay
is still the world’s largest manufacturing
Japan’s domestic economy for nearly two
cuts, reducing their once comfortably
country, such industry accounts for just
decades. “Manufacturing is destroying the
middle-class wages of about $7,000 per
nine per cent of its overall economy.
Japanese economy,” Noguchi said.
month in the mid-1990s to less than
This deflation has hurt not just the giants but the legions of small factories bound to their “keiretsu” business groups, which ensured Japan’s top
“We see lots of bankruptcies, but no new startups. Japan’s manufacturing just seems to keep shrinking and shrinking.”
By comparison, while the United States
half that. In 2009, it finally laid them off
some economists, however, call the
altogether and closed the factory.
fears of hollowing out overblown. Takao
Today, the company’s second-generation
Nakazawa, a professor of economics at
owner, Hiroshi Ogaki, 40, works alone in
Fukui Prefectural University, says that
a quiet, one-room apartment, designing
the decline in factory jobs is actually due
plastic parts on a computer for other
to the introduction of new labour-saving
makers in Japan and China. “We see lots
technologies, pointing out that the value
of bankruptcies, but no new startups,” he
of all manufactured goods made in Japan
said. “Japan’s manufacturing just seems to
has remained almost unchanged from the
keep shrinking and shrinking.”
early 1990s.
It is a similarly bleak story for many
“Hollowing out is a myth,” Nakazawa
of the small factories that were the loyal
said. Instead, he and others say that what
foot soldiers of Japan’s postwar export
is happening is actually a shift away from
machine. According to METI, the number
televisions and other commodity products Portfolio
GrapheasT
GeTTY iMaGes
Manufacturing
59
Japan’s electronics companies are slowly moving away from consumer products to more specialised products.
that can be churned out more cheaply by mass assembly lines elsewhere in Asia. He said the surviving Japanese companies are moving toward more quality-sensitive products, like industrial robots and highend bicycle gears, where Japan still enjoys a formidable lead. This is the new strategy of Panasonic, which is trying to recover from its largest-ever loss last year by closing two of its three plasma display factories in Amagasaki, a port city next to the much GrapheasT
larger city of Osaka. Now, Panasonic says it will outsource a large chunk of its flatpanel production to lower-cost companies elsewhere in Asia, while focusing its own production lines on more profitable
Workers at a Honda assembly line in Thailand. Japan’s car makers have had to move offshore to stay competitive with other Asian manufacturers.
products like factory equipment and
industrial base is inevitable, Japan would
batteries for electric cars.
be foolish to relinquish manufacturing
“Manufacturing is the foundation on
to the extent the United States already
which finance and other service industries
not try to make every kind of product
has. A focus on exports has allowed this
stand,” said Keiichi Konaga, who
ourselves,” said Atushi Hinoki, a
resource-poor nation to enjoy the huge
formulated Japanese industrial policy in
spokesman for Panasonic. “But there are
trade surpluses, at least until last year,
the mid-1980s as the top bureaucrat in
still many things we make well.”
that pay for its imports of energy and
METI’s precursor. “Even the United States
food. They say that Japan’s surpluses have
is now waking up to this. That’s why it
also given it the luxury of financing its
bailed out General Motors.” n
“One lesson we learned is we should
Indeed, many economists and officials say that while a continued shrinking of its June 2012
own huge budget deficits.
Essentials
Essentials
62
Travel
GETTY IMAGES
THE BEST OF LEISURE AND LIFESTYLE
Barceloneta
El G贸tico
FOUR CITIES IN ONE
Barcelona has something for everyone. The city can be divided into four parts to make sure you sample the best it has to offer, reports Scott Adams. Eixample
El Raval
Portfolio
B 64
ARCELONA, SPAIN’S MOST INTRIGUING METROPOLIS, IS NOT JUST ONE CITY, BUT FOUR.
It’s a winding maze of medieval alleys
of Roman houses, complete with wall paintings and floor mosaics, the city’s laundries and numerous shops. The narrow streets of the medieval area open-up at regular intervals into charming open spaces. Stand in the square in front of the Gothic cathedral and take in the atmosphere. Providing a taste of Catalan culture, most days you’ll see groups of locals dancing, their arms held high, in a
EL GÓTICO
traditional folk dance called ‘las sardanas’.
branching out from the central square;
Barcelona’s historic centre
it’s a former fishing village that’s home
This is where it all began, and here you’ll
fine squares. Plaza Reial is a haven of cool
to one of Europe’s liveliest beaches; it’s a
find Barcelona’s fascinating historic
in the summer heat with towering palm
city of culture where you can get arty in a
roots. Move through the tangle of ancient
trees providing shade. Walk under the
museum or thrill to the sounds of opera;
streets but make sure you visit Barcelona’s
arched walkways and pause for a tapa in
it’s an elegant city of wide boulevards and
City Museum in Plaza del Rei. Upstairs
one of the small restaurants. The ornate
playful, decorative buildings.
there are interesting displays covering
lamp posts dotted around the perimeter
the city’s rich and colourful history, but
were designed by Barcelona’s most famous
Each district, the Barrio Gotico in the
take the lift to the lower levels and you’ll
architect, Antonio Gaudí. Cross over Via
centre, Barceloneta to the south, Eixample
step back 2,000 years in time to walk the
to the north and El Raval to the west, boasts
actual streets used when Barcelona was
its own character. Each one combines with
a thriving Roman colony. Covering over
the others to make a city that is much more
2,000 square metres, the archaeological
than the sum of its parts.
excavations allow you to see the remains
Take time to discover its multiple charms.
El Gotico is home to another of Spain’s
Plaza Reial, in the El Gotico district, is one of Spain’s finest squares. The ornate lamp posts (inset) were designed by Antonio Gaudi. Portfolio
Essentials Travel
El Gotico is the historic heart of Barcelona. Many of the buildings date from medieval times, but some go as far back as the original Roman settlement.
Rebecca Horn’s sculpture pays homage to the Barceloneta borough, originally the sailors’ quarters. The sculpture consists of four steel cubes stacked one above the other.
is where Barcelona meets the sea. It’s the perfect spot to relax on the sand and enjoy a day at the beach. It’s extremely popular with locals and visitors alike due to its close proximity to the city centre. Jump in a taxi and in just 15 minutes you’re there. Apart from taking a dip in the Mediterranean Barcelona’s golden fish sculpture, known as Peix, is one of many pieces of public art found in and around the city. Architect Frank Gehry was commissioned to build the piece for the 1992 Summer Olympics.
Sea, basking in the sun and relaxing while watching the waves, there is more to Barceloneta than meets the eye. For a start,
Laietana into the area known as El Born
Grand Hotel Central, which provides
right on the boardwalk, there’s Rebecca
to discover a more Bohemian side to the
some of the best accommodation in the
Horn’s quirky steel sculpture ‘Homenatge
area. This is where you spend time in the
historic quarter. Take the lift up seven
a la Barceloneta’ to check out, while
Picasso Museum or just browsing through
floors to the rooftop terrace and relax on
further towards the Olympic Port there’s
the many small gift and clothes shops.
the sofas and lounges by the infinity pool.
Frank Gehry’s spectacular, glittering, gold
This is the place to be with a cool drink in
fish. On the beach itself you’ll find people
and providing gourmet casual dining is
the late afternoon. The views of the city
engaging in a host of activities such as
Ávalon by Michelin-starred chef Ramón
skyline across to the Mediterranean Sea
volleyball, sumo wrestling – complete
Freixa. Try the meatballs served with
are inspirational.
with fat suits, kite flying, having a sing
Embracing the artistic feel of the area
along while playing the bongos, all whilst
grilled cuttlefish or the succulent veal cheek that comes with creamy mashed
BARCELONETA
hawkers patrol the sands selling everything
potatoes. The restaurant is housed within
Europe’s coolest beach
from seafood empanadas, fruit, beach
the chic, contemporary surrounds of
Jutting out from a long finger of land, this
towels and massages.
June 2012
65
CORBIS/ ARABIAN EYE
66
La Rambla functions as a tree-lined pedestrian mall that stretches for 1.2 kilometres between Barri Gòtic and El Raval.
and slide into one of the sofas at Eclipse
hard with an urban renewal programme
lunch, along with spectacular beach views
Lounge. Order one of the excellent freshly
aimed to bring people into the area and
at Bravo within the über funky W hotel,
squeezed fruit juices and a couple of tapas
enjoy its multiple offerings and unique
which rises up from the sand like a shiny
before you settle down to watch the night
character. Right on the famed, tree-lined
silver sail. Located on the lower level of the
sky turn from pink to purple.
Rambla, which has been described as
After working up an appetite, enjoy
hotel, Bravo has outdoor tables to catch the
the most beautiful street in the world, is
breeze and admire the long curve of the
EL RAVAL
a 19th century marvel of ornamentation
beach. The menu, prepared by Michelin-
Young and trendy
and one of El Raval’s greatest attractions.
starred chef Carlos Abellán, focuses on
On the opposite side of La Rambla
Barcelona’s opera house, El Liceu, hosts
fresh Catalan cuisine with a creative twist.
to El Gótico you’ll find the El Raval
outstanding opera productions throughout
Most of the vegetables come from his own
neighbourhood. It’s Barcelona’s most
the year. June and July see performances
organic garden located just outside the
colourful area, which has always attracted
of Pelléas et Mélisande by Claude Debussy
city and are perfectly matched with fresh
arty types. Pablo Picasso, Joan Miró and
and Aida by Giuseppe Verdi.
seafood. As the sun sets, the W hotel is the
Ernest Hemingway all spent time here. The
place to be. Take the lift to the 26th floor
Barcelona City Council has been working
Right next door to this temple of music is Barcelona’s most famous fresh food market. Mercat St Josep houses hundreds of stalls
The Barcelona Museum of Contemporary Art opened in 1995 and has an excellent permanent collection by Spain’s biggest artists.
selling seafood, wild mushrooms, fruit, cheese and all manner of Spanish produce, which makes it a lively place and full of photo opportunities. Just a short walk away, through the narrow streets, you’ll find more cultural treasures. MACBA – the modern art museum which, apart from the excellent permanent collection with works by all the Spanish big names, hosts special exhibitions throughout the year. Outside the MACBA is another of Barcelona’s squares. Beloved by skateboarders during the day, summer nights see it become an open-air cinema Portfolio
Essentials Travel Casa Milà, another Antonio Gaudi design, was completed in 1912. It was a controversial design at the time for its bold, undulating stone façade.
EIXAMPLE A shopper’s paradise In contrast with much of Barcelona, where there is a tangle of narrow streets and getting lost is all part of the fun, this area is characterised by wide tree-lined boulevards set in a perfect grid pattern. It was here that Barcelona’s great modernist architects gave the city its unique beauty and built homes for the wealthy along the length of the city’s prestigious street, Passeig de Gracia. The most famous edifices are Gaudí’s Casa Batlló and Casa Milà. Both can be visited, but the sculptured rooftop chimneys on Casa Milà are one of Barcelona’s most wonderful spectacles and should not be missed. Take the lift to the top floor and spend some time allowing your imagination to run wild as you view these strange stone and tile structures. Eixample is definitely the place to be if you are interested in Modernist
complete with hundreds of deckchairs and
Guell. Its Modernist façade is adorned
architecture – the Catalan version of Art
popcorn sellers.
with ceramic mosaics and fanciful cast
Nouveau. Dotted around the streets are
iron sculptures.
stunningly beautiful, and often whimsical
Slicing the area in two is the beautiful avenue, La Rambla del Raval, complete
Feeling hungry in El Raval? The world’s
buildings, by legendary architects from
with palm trees, potted flowers, benches
most famous chef Ferran Adriá may have
the end of the 19th century, such as
and Fernando Botero’s playful statue,
closed his restaurant El Bulli, but he
Lluis Doménech i Montaner and Josep
The Cat. Although Gaudí’s architectural
has now opened, along with his brother
Puig i Cadafalch. While strolling along
treasures are dotted around the city, just
Albert, a new dining experience called
the Passeig de Gracia make time for
off La Rambla del Raval you’ll find one
Tickets. The quirky circus like atmosphere
lunch at Moments, the Michelin-starred
of his finest. Palau Guell, on Nou de la
is where to enjoy some of Barcelona’s most
restaurant within the Mandarin Oriental
Rambla, is an amazing private mansion
creative and exciting tapas, some of which
Hotel. The delicious Catalan dishes are
that was built for his patron Eusebi
were on the famed El Bulli menu.
the joint effort of mother and son chefs,
Gaudi oversaw every detail of Casa Milà. Even the ventilation towers bear his unique design touch.
Carme Ruscalleda and Raül Balam. Their love of contemporary Spanish art manifests itself through the dishes’ presentation which is often inspired by famous paintings. Finish the meal with a coffee or herbal tea in the adjacent Mimosa Garden, a verdant rooftop retreat where you can laze on sofas and armchairs under the flowering trees. Barcelona packs a serious punch as far as sights, sounds and original experiences go. Take your time to discover each of its areas and enjoy their special charms, from the museums, restaurants, history or just the great Mediterranean atmosphere. n
June 2012
67
Essentials
68
Art
Salif Diabagate, an artiSt in Abidjan – Ivory Coast’s financial capital – stands by a pile of sodden debris outside his bungalow studio. He reaches for a bit of sticking-out cloth, gives it a tug, then pulls until he frees some canvas painted with symbols and words. He spreads it out, creased and dirty, on the ground. “I made this to look like a traditional hunter’s shirt with amulets and talismans,” he says, pointing to small pouches sewn on the painting’s surface. “The soldiers must have thought it was dangerous. Bad magic.” The soldiers were government troops who, a year earlier, had broken into the studio and bivouacked there when violence gripped Abidjan during the climax of a decade of civil war. Diabagate, now in his early 40s, was in Berlin for a show when “the crisis,” as it is called, erupted. He couldn’t get back until it was over. By then the damage was done. The soldiers had burned his sculptures and dumped his paintings in the rain. Could this one be salvaged? Probably not. He’d have to focus on making new work, though no one was buying. “Art is what you give up,” he says, “if you’re trying to hold on to cash.” Even in stable times, life can be hard for artists in West Africa. But cities like Abidjan, Dakar in Senegal, and Bamako in Mali are nonetheless saturated in art. Murals cover public walls and the sides of buses. Portraits of jazzy beauties, saints and culture heroes (Che, Mandela, Obama, Madonna) are for sale everywhere. But the elements that in the West make a healthy contemporary scene – galleries,
© 2012 New York Times News service
museums, collectors, journals, critics and audience – are in short supply. And the degree of isolation of artists from others across the continent and from art developments worldwide is almost inconceivable to an urban Westerner. Both despite and because of such
Visions of Life in
AfricA Life can be hard for artists in West Africa. Despite this cities like Abidjan, Dakar and Bamako are saturated in art, reports Holland Cotter.
isolation, local artist networks coalesce Portfolio
69
A motorcyclist passes an ad for the African Photography Biennial, one of the continent’s oldest survey exhibitions, in Bamako, Mali.
occasionally into tight and efficient
backing, like Raw Material Company
library stocked with foreign catalogues and
collectives like Huit Facettes in Dakar,
in Dakar; Appartement 22 in Rabat,
magazines, and a cafĂŠ-bar.
more often as loose affinity groups of
Morocco; and Zoma Contemporary
fellow art students and friends. A few
Centre in Addis Ababa, Ethiopia. Raw
for artists in West Africa to show their
alternative spaces also exist, conceived
Material, run by Kuoho Koyo, a curator
work: the broad, typically biennial surveys
on a Western model, often with Western
from Cameroon, encompasses a gallery, a
of new art. Bankrolled by government
June 2012
And there is one large-scale mechanism
Essentials
Art
money – much of this comes from France, which still wields powerful cultural influence over its former colonies – these showcases are designed to grab global attention. Yet even in these ostensibly international forums Africa and its artists remain oddly set apart. The two oldest still-functioning events of this kind in Africa, Dak’Art in Senegal and the Photography Biennial in Bamako, are restricted to exhibiting primarily artists from this continent. Partly for that reason attendance stays small. From outside, these shows are seen as provincial; at home, they’re viewed as events for foreigners. And whether they’re strong or weak – the 2011 Bamako Biennial, in late autumn, was strong, visually ambitious and cosmopolitan in its thinking – they suggest some basic questions about contemporary art here and across the continent. What, for example, does the ‘African’ in African contemporary art mean, if anything? Is African, as a brand, an asset or a liability? Must art signal its Africanness – make reference, say, to traditional forms or African subjects – to succeed in an exotica-loving global market? Likewise, can updated versions of traditional African forms – like ceramics or performance –
grapheasT
70
be presented as contemporary, without forfeiting, to Western eyes, authenticity? And how can 21st-century Africa, on its own terms, join the larger world? In Senegal during the immediate
Romuald Hazoume, a well-kown artist from Benin, poses in front of his work ‘Dream’. Due to the relative isolation of the African art scene, few local artists manage an international breakthrough.
colonialist in its effect, a tool designed to
That vitality came through in the recent
postcolonial era, the arts were a cornerstone
aggrandise a leader and keep African
Bamako photography biennial, which took
of national developmental strategy.
art from integrating internationally.
place well before the recent military coup
Under the label Negritude, Leopold Sedar
Many younger artists are fed up with
and rebel separatist incursions. Subtitled
Senghor, the Paris-educated poet who
Negritude’s latter-day incarnation,
‘For a Sustainable World,’ it was an
became his country’s first president in 1960,
Afrocentricity, which they find constricting
intensely, topically African show.
promoted an aesthetic that blended African
and retrograde.
Many of the most vivid images were
culture, black racial consciousness and
Walk through the streets of Dakar,
of ecological nightmares in progress
European Modernism, and incorporated
Abidjan or Bamako and the first
throughout West Africa. A separate
semi-abstraction with tribal motifs.
impression is of wide-open vitality: of
North African section documented the
Senghor pushed for Negritude artists’
unrushed, everyday business, constant but
inebriating first days of the Arab Spring.
careers hard at home and abroad.
rarely chaotic. Ask a question, and you’re
The photographs made clear that no one
After he left office in 1980, however,
likely to find yourself in a fast-moving
is more alert to Africa’s problems and
state support ended. Resistant art trends
conversation, which will often touch,
promise than Africans themselves.
sprang up. Critics called Negritude neo-
volubly, on local and national politics.
And the 2011 biennial was nuanced, as Portfolio
72
Essentials
Art
it took you from cyber-revolutionaries in
of town was closed, ostensibly for inventory
(It was recently moved to the National
Tunis to e-waste dumps in Accra and on to
taking after it was looted of millions in art
Library.) Periodically Salif Diabagate will
fantasy Africas, future and past. The show
during the crisis. At one point recently its
bring interested visitors to see it.
would have looked striking anywhere.
main exhibition hall was completely bare
On one autumn visit he surveyed the
In Bamako – a huge, impoverished, low-
except for a few carved masks in storage
wreck, checking for termites and sweeping
rise village of a city on the Niger River
boxes and a jumble of Christian Lattier
away a pair of discarded trousers left
– it looked both on target and strikingly
sculptures on the floor.
draped over the framework. Lattier, a star
anomalous, spread over a half-dozen
Lattier was Ivory Coast’s greatest
of a high, half-forgotten cultural moment in
locations and out into the streets in the
20th-century artist. Born in 1925, he
Africa, is his hero. He remembered seeing
form of bannerlike enlargements.
studied in Paris, where he broke with the
‘The Three Ages of the Cote d’Ivoire’ at the
French academic practice of modelling in
airport as a child: “I was blown away by it.
the artiStS, flown in for the opening,
plaster and began weaving figures from
Someone told me that there was nobody
connected with at least a few curators and
copper wire, a technique used in traditional
left who could do that kind of thing. So I
collectors, and with African colleagues
African art.
decided I wanted to be an artist.”
they otherwise would never have met.
After independence he settled in Abidjan
The biennial itself wasn’t getting much
and taught here until his death in 1978.
traffic, though: early reports of violence
Unattached to any Western movement
in northern Mali were starting to keep
or style, and undervalued in his home
travellers away. But with a spinoff
country in his time, he was a man of
exhibition due to open in Paris, Africa’s
conflicts, cultural and personal. You sense
boundaries seem to be expanding. The
this in his sculptures, made from rice-sack
mood was upbeat. Abidjan has been
hemp hand-twisted into cords wrapped
upbeat too. In December its skyscraper
around armatures, of freakish animals and
skyline was ablaze with Christmas lights.
sardonic riffs on traditional African masks
Worrisome parliamentary elections went
– or rather on Picasso’s riffs on such masks.
smoothly. People speculated that the city
For years he has planned to restore the piece, though no one asked him to until
“People speculated that the city would soon again be the Frenchstyle metropolis, with galleries and boutiques, it was before the crisis.”
Lattier also turned out public sculptures,
would soon again be the French-style
the best known being a giant relief called
metropolis, with galleries and boutiques, it
‘The Three Ages of the Cote d’Ivoire’ for
the government started to show interest
was before the crisis.
Abidjan’s international airport. When the
some months ago. His Abidjian dealer tells
airport was renovated in 2000, the relief
him he’s crazy, tells him to make his own
out buildings and bullet-pocked walls. And
was taken down and carted away. For
art. But saving the Lattier is personal. It’s
there is evidence that African art’s worst
years it lay, a tangle of frayed cord and
about preserving African art history, which
enemy can be Africa itself. The Museum of
rusting metal, on a patch of grass outside a
is also his history, and assuring the future
Civilisations of Ivory Coast near the centre
government building, the Palace of Culture.
of both. n
But signs of damage lingered in burned-
Guests view a gallery at the African Photography Biennial. Although the displayed work was of the highest quality, attendance was low.
Salif Diabagate, an African artist, salvages work damaged by soldiers who occupied his home during Ivory Coast’s civil war. Despite the challenges, art remains vibrant in West Africa. Portfolio
Experience the essence of luxury at the new Summerland Village with its private beach, marina, exclusive spa, prestigious apartments, and all the first class amenities for a glamorous lifestyle. A JEWEL IN THE HEART OF BEIRUT
To own your apartment now
“A unique location for events and leisure…a haven of peace.”
“A private beach and marina to enjoy your favorite water sport in style.”
Marketing & Sales Dept. Tel +961 3 414 242/ 3 339 339 +961 1 834 438 sales@summerlandhotelresort.com www.thevillagesummerland.com
74
SEEKING CLUES TO THE UNIVERSE The Atacama Large Millimetre/Submillimetre Array, known as ALMA, is situated in the world’s driest and harshest desert. It is these very conditions that are perfect for astronomy, reports Simon Romero.
© 2012 NEW YORK TIMES NEWS SERVICE
T
closer to the heavens.
RUCKS STALL ON THE
astronomer studying galaxy formation. “You
road to the Llano de
feel shattered, as if you ran a marathon.”
Opened last October, the Atacama
Still, the same conditions that make
Large Millimetre/Submillimetre Array,
Chajnantor plateau 5,058
the Atacama, Earth’s driest desert,
known as ALMA, will have spread 66
Desert, where scientists are installing
so inhospitable make it beguiling for
radio antennas near the spine of the
one of the world’s largest ground-based
astronomy. Far from big cities, the
Andes by the time it is completed next
astronomical projects. Heads ache.
Atacama has a dearth of light pollution.
year. Drawing more than $1 billion in
Noses bleed. Dizziness overcomes the
Its arid climate prevents radio signals
funding mainly from the United States,
researchers toiling in the shadow of the
from being absorbed by water droplets.
European countries and Japan, ALMA
Licancabur volcano.
The altitude, as high as the Himalaya base
metres up in Chile’s Atacama
“Then there’s what we call ‘jelly legs,’” said Diego Garcia-Appadoo, a Spanish
camps for climbers preparing to scale Mount Everest, places astronomers
Opened last October, ALMA will have spread 66 radio antennas near the spine of the Andes by the time it is completed next year.
Portfolio
Essentials Science will help the oxygen-deprived scientists
With ALMA, astronomers hope to see
transformational leaps possible in the
flocking to this region to study the origins
where the first galaxies were formed,
understanding of the universe, enabling
of the universe.
and perhaps even detect solar systems
a hunt for so-called cold gas tracers, the
with the conditions to support life, like
ashes of exploded stars from a time about
position in the vanguard of astronomy.
water-bearing planets. But the scientists
a few hundred million years after the Big
Observatories are already scattered
here express caution about their chances
Bang that astronomers call “cosmic dawn.”
throughout the Atacama, including
of finding life elsewhere in the universe,
the Cerro Paranal Observatory, where
explaining that such definitive proof is
Mosterin, a prominent Spanish
scientists discovered in 2010 the largest
likely to remain elusive. “We won’t be able
philosopher who writes about the
star observed to date, and the Cerro
to see life, but perhaps signatures of life,”
frontier between science and philosophy,
Tololo Inter-American Observatory,
said Thijs de Graauw, a Dutch astronomer
and who visited the observatory last year,
which was founded in 1961 and endured
who is ALMA’s director.
is taking place at “the only time in history
The project also strengthens Chile’s
Chile’s tumult of revolution and
Still, scientists believe ALMA will make
ALMA’s construction, said Jesus
that windows into the universe are
counterrevolution in the 1970s. But ALMA opens a new stage for astronomy in Chile, which is favoured by international research organisations for the stability of its economy and legal system. Like other radio telescopes, ALMA does not detect optical light but radio waves, allowing researchers to study parts of the universe that are dark, like the clouds of cold gas from which stars are formed.
June 2012
“With ALMA, astronomers hope to see where the first galaxies were formed, and perhaps even detect solar systems with the conditions to support life, like waterbearing planets. But the scientists here express caution about their chances of finding life elsewhere in the universe, explaining that such definitive proof is likely to remain elusive. ”
75
76
being thrown wide open.” Chile is not the only country luring big investments in astronomical projects. South Africa and Australia are competing to host an even bigger radio telescope, the Square Kilometre Array, which would be fully operational by 2024. China has begun building its own large radio telescope in a craterlike setting in the southern province of Guizhou. AT THE same time, the financial crisis in rich industrialised countries has raised concerns that funding for some ambitious astronomy projects could face constraints. In the United States, a congressional panel last year proposed killing NASA’s James Webb Space Telescope before a compromise spending plan saved the project. “It would be very sad for humankind if we were so spiritually decadent to forgo the pleasures of consciousness and of A giant transporter, with 18 tyres and engines equivalent to two Formula 1 cars, moves an antenna into position.
knowledge,” said Mosterin, reflecting on the funding choices political leaders need to make. “These things make human beings a very interesting animal indeed.”
Workers assemble an antenna. The high altitude makes it extremely difficult to do physical work.
Portfolio
Essentials Science ALMA’s Operations Support Facility,
peering into screens displaying the array of
an outpost built for the scientists in the
antennas, some gallows humour prevails.
Atacama, offers a glimpse into the lengths
“We are well in the control room, the 17,”
to which people go for astronomical
reads one message scribbled on a piece of
discoveries. From Chajnantor, where
roofing and posted on the wall after fire
dust devils dance across the plain, and
alarms went off by accident at the facility in
unusually extreme weather in recent
2011, sealing those inside the control room
months has included rains and sand
until they broke a door to escape.
storms, a dirt road runs to the facility
The note riffs on the 2010 mine accident
past towering cactuses and herds of wild donkeys and vicunas. The facility, at an altitude of about 2,900 metres, houses about 500 researchers and other staff
“The facility, at an altitude of about 2,900 metres, houses about 500 researchers and other staff in shipping containers turned living quarters. In a system similar to that on offshore oil platforms, scientists have daily shifts lasting up to 12 hours for eight days straight.”
in shipping containers turned living quarters. In a system similar to that on
and subsequent rescue of 33 miners in the
offshore oil platforms, scientists have daily
Chilean desert, during which the trapped
shifts lasting up to 12 hours for eight days
men sent a note to the surface saying, “We
straight. Many toil through the night.
are well in the shelter, the 33.”
“Quiet Zone,” reads one sign in an
Developments elsewhere in Chile
area of containers for ALMA’s so-called
occasionally raise eyebrows here, like
day sleepers.
anti-government protests that have rocked remote regions of the country this
Supervisors enforce other rules, ensuring
year and spread in March to the nearby
a work environment almost as austere as the surrounding Mars-esque landscape. Alcohol is prohibited. In the control room, where astronomers spend hours
Juan Salmanaca uses a radio controlled vehicle to place an ALMA antenna 5,000 metres above sea level.
mining city of Calama. “The protests are not directly a concern,” said de Graauw, ALMA’s director. “They are part of a democratic process, not a revolution.” STILL, IT seems at times that the astronomers stationed here are as far removed from the world around them as the miners working beneath other parts of the Atacama. English predominates as the observatory’s language, tying together scientists from dozens of countries. A sense of awe still accompanies the installation of each new antenna. Two
Japanese scientists and engineers have lunch at ALMA’s housing complex. Japan, the US and European countries funded the $1 billion project.
giant German-manufactured transporters, each with 28 tires and engines equivalent to two Formula 1 racing vehicles, are used to transport the antennas. Called Otto and Lore, they look like massive mechanised centipedes making their way across the arid landscape. “There’s a quietness that comes to you at Chajnantor,” said Lutz Stenvers, a German engineer who came here in 2008 to lead a team from General Dynamics
Shipping containers serve as housing for ALMA’s staff. The scientists work 12 hour shifts in eight day stints. June 2012
building the antennas. “I can see why this place was chosen.” n
77
78
Essentials
Technology
DefenDing Your
Cellphone As mobile phones have gotten smarter, they’ve also become more vulnerable to hackers. But there are ways you can protect yourself, reports Kate Murphy.
Portfolio
79
ChuCk Bokath would Be terrifying if he were not such a nice guy. A jovial senior engineer at the Georgia Tech Research Institute in Atlanta, Bokath can hack into your cellphone just by dialling the number. He can remotely listen to your calls, read your text messages, snap pictures with your phone’s camera and track your movements around town – not to mention access the password to your online bank account. And while Bokath’s job is to expose security flaws in wireless devices, he said it was “trivial” to hack into a cellphone. Indeed, the instructions on how to do it are available online. “It’s actually quite GETTY IMAGES
frightening,” said Bokath. “Most people have no idea how vulnerable they are when they use their cellphones.” Technology experts expect breached, infiltrated or otherwise compromised cellphones to be the scourge of 2012. The
Actor Hugh Grant was one of the high-profile cellphone hacking victims in the News of the World scandal.
Cellphones can be hacked in several
As for prevention, a common ruse for
ways. A so-called man-in-the-middle
estimates that more than one million
attack, Bokath’s specialty, is when
making a man-in-the middle attack is to
phones worldwide have already been
someone hacks into a phone’s operating
send the target a text message that claims
affected. But there are ways to reduce the
system and reroutes data to make a pit
to be from his or her cell service provider
likelihood of getting hacked – whether by
stop at a snooping third party before
asking for permission to ‘reprovision’ or
a jealous ex or a crime syndicate – or at
sending it on to its destination. That
otherwise reconfigure the phone’s settings
least minimise the damage should you
means the hacker can listen to your calls,
due to a network outage or other problem.
fall prey.
read your text messages, follow your
Don’t click ‘OK’. Call your carrier to see if
internet browsing activity and keystrokes
the message is bogus.
As cellphones have gotten smarter, they
For added security, Bokath uses a
have become less like phones and more
and pinpoint your geographical location.
like computers, and thus susceptible to
A sophisticated perpetrator of a man-
prepaid subscriber identity module, or
hacking. But unlike desktop or even most
in-the-middle attack can even instruct
SIM, card, which he throws away after
laptop computers, cellphones are almost
your phone to transmit audio and
using up the line of credit. A SIM card
always on hand, and are often loaded with
video when your phone is turned off
digitally identifies the cellphone’s user, not
even more personal information. So an
so intimate encounters and sensitive
only to the cellphone provider but also to
undefended or carelessly operated phone
business negotiations essentially become
hackers. It can take several months for the
can result in a breathtaking invasion of
broadcast news.
cellphone registry to associate you with a new SIM. So regularly changing the
individual privacy as well as the potential for data corruption and outright theft.
how do you protect yourself? Yanking
SIM card, even if you have a contract, will
out your phone’s battery is about the
make you harder to target. They are not
impact in protecting themselves from
only way to interrupt the flow of
expensive (about $25 for 50 of them on
the kind of fraud and cybercrimes we’re
information if you suspect you are
eBay). This tactic works only if your phone
“Individuals can have a significant
© 2012 NEw York TIMES NEwS SErvIcE
already under surveillance.
smartphone security company Lookout
starting to see in the mobile space,” said Paul Smocer, the president of Bits, the technology policy division of the Financial Services Roundtable, an industry association of more than 100 financial institutions. June 2012
“A SIM card digitally identifies the cellphone’s user, not only to the cellphone provider but also to hackers.”
Essentials
Technology
is from AT&T or T-Mobile, which support
Appstore for Android on Amazon.com all
phone, which they use to reel in your
SIM cards. Verizon and Sprint do not.
disclose the permissions of apps they sell.
data,” said Martin Singer, chief executive
The Apple iTunes App Store does not,
of Pctel, a company in Bloomingdale,
your phone is by embedding malware,
because Apple says it vets all the apps in
Illinois, that provides wireless security
or malicious software, in an app. When
its store. Also avoid free unofficial versions
services to government and industry.
you download the app, the malware gets
of popular apps, say, Angry Birds or Fruit
If that creepy image tips you into the
to work corrupting your system and
Ninja. They often have malware hidden in
realm of paranoia, there are supersecure
stealing your data. Or the app might just
the code. Do, however, download an anti-
smartphones like the Sectera Edge
be poorly designed, allowing hackers to
virus app like Lookout, Norton and AVG.
by General Dynamics, which was
exploit a security deficiency and insert
Some are free.
commissioned by the US Defense
Another way hackers can take over
Department for use by soldiers and spies.
malware on your phone when you visit a dodgy website or perhaps click on
Just know that security apps screen
Today, the phone is available for $3,000
nefarious attachments or links in emails.
only for viruses, worms, Trojans and other
only to those working for government-
Again, treat your cellphone as you would
malware that are already in circulation.
sponsored entities, but it’s rumoured
a computer. If it is unlikely Aunt Beatrice
They are always playing catch-up to
that the company is working to provide
texted or emailed you a link to “Great
hackers who are continually developing
something similar to the public in the
deals on Viagra!” don’t click on it.
new kinds of malware. That’s why it’s
near future. General Dynamics did not
important to promptly download security
wish to comment.
Since apps are a likely vector for malware transmission on smartphones,
updates, not only from app developers but
Roman Schlegel, a computer scientist
also from your cellphone provider.
Georgia Tech Research Institute is taking a different tack by developing software add-on solutions to make
at City University of Hong Kong who
Clues that you might have already been
specialises in mobile security threats,
infected include delayed receipt of emails
commercially available phones as
and texts, sluggish performance while
locked-down as those used by
surfing the internet and shorter battery
government agents.
“Be especially wary of apps that want permission to make phone calls, connect to the internet or reveal your identity and location.”
life. Also look for unexplained charges on your cellphone bill. As a general rule it is safer to use a 3G
Michael Pearce, a mobile security consultant with Neohapsis in Chicago, said you probably did not need to go as
network than public Wi-Fi. Using Wi-Fi
far as buying a spy phone, but you should
in a Starbucks or airport, for example,
take precautions. “It’s like any arms race,”
leaves you open to hackers shooting the
he said. “No one wins, but you have to go
equivalent of “gossamer threads into your
ahead and fight anyway.” n
advised, “Only buy apps from a wellknown vendor like Google or Apple, not some lonely developer.” It’s also a good idea to read the ‘permissions’ that apps require before downloading them. “Be sure the permissions requested make sense,” Schlegel said. “Does it make sense for an alarm clock app to want permission to record audio? Probably not.” Be especially wary of apps that want permission to make phone calls, connect to the internet or reveal your identity and location. The Google Android Market, Microsoft
rEuTErS
80
Windows Phone Marketplace, Research in Motion BlackBerry App World and
Changing your SIM card regularly makes it harder for hackers to target you. Portfolio
www.moet.com
82
PREMIUM BOND As 007 prepares for his 23rd film adventure and celebrates his cinematic 50th birthday, Bond continues to be box office gold in the world’s auction houses, reports Andy Round.
G
OOD OLD JAMES BOND.
there is a new DVD box set of
He may be entering serious
all 22 films by MGM and 20th
middle age, but there’s plenty
Century Fox; a reissued autobiography by
The Walther used by Sean Connery in Diamonds Are Forever sold for a record $437,500 at auction.
of life in the old spy yet. Fifty years after
legendary Bond producer Chubby Broccoli;
the release of the first 007 film Dr No,
the commissioning of a new as yet untitled
super villains worldwide will be gnashing
Bond novel from author William Boyd and
their steel jaws in frustration that Bond’s
the reprinting of all 14 of Ian Fleming’s 007
as internationally recognisable as Monty
appeal is bigger than ever.
thrillers. There are more 50th anniversary
Norman’s theme tune and as effortlessly
Bond tributes than you can throw a razor-
cool as a silver Aston Martin DB5.
This year sees the release of the 23rd film in the Bond franchise, the highly anticipated Skyfall, starring Daniel Craig;
sharpened bowler hat at. Bond has always been big box office,
“What makes the Bond franchise so special is that it has stood the test of
but in auction houses
time and fans span the generations,” says
around the world demand
Christie’s director Nicholette Tomkinson.
for memorabilia associated
“Bond features in youthful memories
with Her Majesty’s most
and it is this nostalgia that often leads to
famous spy is now generating
the collection of memorabilia and allows
stratospheric interest. And
those memories to live on in tangible
the reason’s simple. The
objects. Bond was and continues to be the
world’s most famous spy is
classic ideal of a special agent at work and everyone has an opinion on their favourite.”
The 50th anniversary box set contains all 22 Bond films. The 23rd Bond movie is being released later this year.
In 2010 Christie’s sold the Walther air pistol held by Sean Connery for the Russia With Love poster for $437,500, a world record for a Bond gun. When the original artwork for Diamonds Are Forever sold for Portfolio
Ian Fleming wrote 14 Bond novels. Since his death various authors have been commissioned to write new books, among them Kingsley Amis and Jeffrey Deaver.
$129,500 it was another record, this time
Bond as much as we do. Now I’m going to
for a Bond poster.
get my money’s worth. We’re going to fire
“It will always be the case that props and associated memorabilia from the earliest films are the rarest that will attain the
it up and drive it around London tonight. We’re going to have fun with it.” Of course, Yeagy is not the only man
largest sums at auction,” says Tomkinson.
with the resources to buy iconic cars.
“The most important Bond memorabilia
Peter Nelson started collecting Bond “bits
auction took place at Christie’s South
and pieces, magazines, cards, that sort of
Kensington in 2001. Of the 300 lots, 94
thing” when he was a boy. By the time he
per cent were sold achieving a total of $900,000. The bikini worn by Ursula Andress in Dr No sold for $59,755.” FOR MOST of us our Bond dreams vanish with the final credits, but some people need to buy into the dream for real, like American Harry Yeaggy. In 2010 he took what he described as a “last minute decision” to fly into London to attend an auction by RM Auctions. He left in Bond’s Aston Martin DB5 after paying £2.92 million. The car was the only known remaining example of two that were used in Goldfinger and Thunderball. After the auction Yeagy admitted he had spent a little more than he had planned. “I thought a European would buy it, but I guess they don’t appreciate June 2012
Bond’s classic Aston Martin DB5 fetched a record £2.3 million.
© 2011 COLUMBIA TRISTAR MARKETING GROUP, INC. AND MGM STUDIOS. ALL RIGHTS RESERVED.
Essentials Investment
Skyfall, the 23rd Bond film, stars Daniel Craig and is directed by Sam Mendes.
83
84
Essentials
Investment
Peter Nelson in a Bond Jaguar. Nelson has a huge collection of Bond memorabilia.
“Buy the best you can afford, buy it because you love it, and you won’t go far wrong,” says Adrian Roose, director of Paul Fraser Collectibles. “Bond is one of our most requested areas, we’ve witnessed a noticeable upturn in interest this year and have helped source cars, costumes and props.” I found him in a little village and asked if he had any old Bond vehicles. There in his lean-to shed were all these Renaults and Tuk Tuks from Octopussy. I bought the lot.” IN 2009 Nelson started a museum in Cumbria, UK, to showcase his Bond collection. Two years later he had sold all the vehicles for “a contractually undisclosed sum” to Micheal Dezer, the multi-millionaire owner of Dezer
Parahawk from The World Is Not Enough, Jaguar XKR from Die Another Day and the Aston Martin V8 Volante from The Living Daylights. Below: Daniel Craig’s blood-stained shirt from Casino Royale.
Car Collection in Miami. However, not everything went west. Nelson kept the DB5 he had commissioned to be built by Aston Martin as well as “countless”
was 21 he had bought the iconic white Bond Lotus from the Spy Who Loved Me. “I had just qualified as a dentist in the UK, heard the car was for sale and rushed to Manchester to buy it. I must have paid $20,000 for it at the time,” he tells Portfolio. Almost 40 years later, Nelson has amassed one of the biggest
“I still remember seeing Dr No at the cinema as a little boy, the ultra violence
pieces of memorabilia. “My favourite items? Difficult to say. I
of it was quite shocking to me at the
became friends with Desmond Llewelyn,
time, but when Goldfinger came along…
the actor who played Q in 17 of the Bond
that just blew me away,” he says. “Then as an adult I would
films. I have his tweed suit; the trilby Bond first threw on the hat stand by
go around the world to
Moneypenny; a bug detector from Russia
Bond film locations.
With Love; original DB5 seats from studio
In the Bahamas I
close ups; the original Golden Gun… many
came across the
of my items are loaned to museums.” So what’s that all worth? “I’d hate to think.”
Bond collections in
Lotus submarine
the world featuring
just abandoned in a
What it is worth is what a room of
snowmobiles, boats,
scrap yard. It must
Bond enthusiasts in an auction room
helicopters, Aston
have been there for
are prepared to pay. And they have deep
Martins, a Microjet
20 years.
pockets. “Every time you see a new Bond
and a T-55 tank, plus
“In Paris I
film release you see the same enthusiasm
thousands of props,
decided to look up
in the saleroom,” says Katherine Williams,
paraphernalia and
Bond stuntman
senior specialist for entertainment
costumes.
Rémy Julienne.
memorabilia at Bonham’s London. “And Portfolio
85
Original Bond movie posters sell for around $5,000. The price for a signed photograph of Sean Connery as Bond has quadrupled since 2007.
there is nothing they like more than seeing
“Buy the best you can afford, buy it
changing hands for $5,000 plus.” The range of Bond material is endless
original Bond items, particularly from Dr
because you love it, and you won’t go
No, the crème de la crème of memorabilia.”
far wrong,” says Adrian Roose, director
and can appeal to all budgets. “Popular
of Paul Fraser Collectibles. “Bond is
culture is a diverse category that ranges
increasingly rare. “In the 1960s props
one of our most requested areas, we’ve
from autographs and awards to scripts,
and costumes were not as valued then
witnessed a noticeable upturn in interest
clothing, film props and posters,” says
as now. They were reused or destroyed.
this year and have helped source cars,
Christie’s Tomkinson. “The international
Also impacting on rarity is a change
costumes and props.”
collectors’ market for memorabilia is
But these items are becoming
in collector mentality, we are seeing collectors holding on to rare items longer.”
Roose believes “Warren Buffet-esque returns” are possible, but only if you buy the right items. “At the top end of the
driven by passion and it doesn’t take a millionaire to build a collection.” “The consistent release of new films
SO WHERE do you start if you want
market James Bond’s DB5 returned 15.61
keeps interest in Bond fresh,” says Ania
your own Bond collection? “Provenance is
per cent per annum after he bought the
Polyniak, manager of Fraser’s Autographs
everything,” says Bonham’s Williams. “It’s
car in 1969 and sold it in 2010. Even
in London. “But not all Bonds are equal.
important that you do your research first.
movie posters that were doing the rounds
The highest demand is for Sean Connery.
There are a lot of fakes out there.”
at $300 each 10 years ago are now
The price for a signed photo of Connery as 007 has quadrupled since 2007 and this reflects his place in cultural history.” Peter Nelson is still considering what he will do next with his thousands of items of memorabilia and no doubt auction houses are waiting with bated breath. “It’s a big responsibility to pass on. That’s always the challenge of any collection. I haven’t decided what to do yet. I’m quite impulsive. Ten years ago I sold my dental practice to be a painter. So I’ll probably do something equally impulsive with my collection.” Whether Nelson sells or not the memories will always endure. “I’ve never met Connery, but I have met Roger Moore and Pierce Brosnan. I went to see Pierce at his home once and he laid out all these rubber Bond guns and knives in the room and said, ‘Help
Peter Nelson’s Bond collection consists of thousands of items. June 2012
yourself.’ I was like a child.” n
86
Essentials
Test Drive
MONTE CARLO DREAMING
Nick Cooper discovers that the new Rolls-Royces Phantom Series II and the Côte d’Azur are perfect automotive bedfellows.
“T
AKE ANY CAR YOU LIKE,
of Rolls-Royce’s newest evolution of
light apertures frame the adaptive LED
just enjoy yourselves,” says
the Phantom, the Series II. Arranged
light clusters. The overall improvements
Richard Carter, Rolls-Royce’s
before us are the Saloon, the Coupé and
are subtle and are intended to be. Ian
urbane and charismatic director of global
the Extended Wheel Base, in a host of
Cameron, Rolls-Royce Motor Cars’
communications. This, admittedly, is
different colours and specs, and we have
director of design describes the Phantom
not an invitation you hear every day,
been told to take our pick.
as a piece of popular classical music:
especially not in the grand foyer of the
In the free-for-all mêlée that follows,
“Over time, this has the possibility of
magnificent Cap Estel hotel. Located on
my co-driver and I bag one of the saloons,
different interpretations without losing
its own promontory, slap bang between
finished in very elegant silver paintwork,
the essential melody we know so well”.
Nice and Monaco on the Côte d’Azur,
complemented by seashell leather trim.
The first ever Phantom appeared
the forecourt of this exclusive property
Walking around it, some changes are
in 1925, with new editions appearing
is full to bursting with a selection of the
obvious. The Pantheon grille is still
throughout the decades, until the
106–year-old carmaker’s newest model.
present, although the front end has been
Phantom in its present form was launched
We are in the impossibly glamorous
tweaked and looks even more imposing.
in 2003. Sitting in the driver’s seat of the
The re-styled bumpers with rectangular
Series II, it’s quickly obvious that Rolls-
South of France for the press launch
Portfolio
Essentials Test Drive
Traditional hand-crafted veneers and leather sit comfortably alongside 21st– Century technology.
to the mountains, via a good stretch of the A8 autoroute. The sky is impossibly blue and the forests are deep verdant green as we progress along the tight mountain roads that wind lazily onwards to Provence and wine country. This is where the Phantom Series II comes into its own, the hairpin bends and narrow straights offering a real challenge to such a big car. Its impeccable ride system is magnificent, allowing you to tuck in tight to the mountainside verges in the corners and slingshot out the other side – the 453 horsepower languidly and insolently slapping Isaac Newton and inertia squarely Royce is not guilty of hyperbole when it
Series II 10 per cent lower fuel consumption
in the face. No matter how tight the bend
says that the Phantom is the pinnacle of
and reduced CO2 emissions. As we waft
or how steep and narrow the road, it is
motoring. You are cosseted in a sea of
gently up the steep, curved driveway to
impeccably well behaved and unruffled –
sumptuous hand-stitched leather, fine
the main road, the ride is so quiet and
not something I expected at all, looking at
veneers and exquisite detailing. There
smooth it’s difficult to believe the engine is
its cruise liner proportions.
are design cues from earlier Phantoms as
actually running. But running it is, as we
So absorbing is the car that before
well, with bulls-eye air vents and organ
soon discover when we need to accelerate
we know it, two hours have flown by
stop plungers for the air-conditioning
quickly to join the Monaco-bound traffic.
and we are at our waypoint. It’s time for
– a nice old school touch among all the
The urgency of the 720 Nm of torque is
us motoring hacks to stretch our legs
21st-century technology.
immense and the 2.7-tonne beast surges
and relax in the Provencal countryside,
forward, but never jerkily or with anything
competing with one another for the best
less than effortless composure.
Series II anecdote or observation.
This is my first time in the Phantom, and having driven its smaller stablemate
Sir Henry Royce, one of the founders,
the Ghost, my first impression is how
The Rolls-Royce event team have
much larger it is. At 5.8 metres, it’s a
already pre-set the sat nav – improved
probably has the edge on anything we
leviathan and will take some careful
from previous editions to give 3-D views,
could say about Rolls-Royce. Right from
manoeuvring around the Côte d’Azur’s
composite route planner and guided tour
the maker’s inception in 1906, Royce
narrow mountain passes.
features – to our waypoint rendezvous
said he wanted his design teams to take
The V12 direct injection powerplant
and it’s a cinch to follow as everything is
the best that exists and make it better.
is now complemented by an eight-speed
crystal clear on the 8.8-inch display. We
Impossibly, for the Phantom Series II,
gearbox and rear differential, giving the
pass through Eze and then make our way
they seem to have done it. n
June 2012
87
Essentials
Other Business
Funeral Discount for Diehard Fans
Divorce Court Mirrors Society Traditionally, it has been men who have grumbled about alimony. However, tables have turned in US divorce courts with more women paying their former husbands alimony and child support, according to US lawyers. As women climb higher up the career ladder and outpace their exes in salary, when marriages break up they are being compelled to contribute to the livelihood GRAPHEAST
of their former spouses.
Portugal’s Premier League football
Fifty-six per cent of divorce lawyers across the US have seen an increase in mothers paying child support in the last three years and 47 per cent have noted a hike
“Given the massive passion
club Benfica has signed a deal with
that Benfica instils, it made sense
in the number of women paying alimony, according to
the country’s largest undertakers
to go and talk to them to bring
the American Academy of Matrimonial Lawyers.
agency that will let fans rest in
the club into funeral ceremonies
peace knowing that they can be
in a professional way,” Paulo
financially and that in many instances they are the
buried at a discount.
Carreira, assistant director general
major bread winners in a lot of families,” said Alton
at Servilusa funeral home, told
Abramowitz, the president-elect of the academy.
In addition to a 12.5 per cent
“It shows that women have really moved up
rebate, the ultimate advantages
Reuters. He added that Servilusa
Data from the Digest of Education Statistics show
for card-carrying Benfica fans also
does not rule out broadening the
that the number of men and women receiving medical
include having the club’s anthem
offer to other clubs in the future.
degrees in the US is almost equal, unlike 1980 when
The Guinness Book of Records
only about a third of medical degrees were awarded
performed during the funeral ceremony, having the club’s official
considered Benfica the most
to women. The number of women getting law degrees
logo chiselled on coffins or urns, as
widely supported football club in
has nearly doubled.
well as having the Benfica flag laid
the world in 2006, with 160,398
over the receptacle.
paid-up members.
“We see women who are every bit as angry as their male counterparts, maybe more so, when they are confronted with the concept of paying spousal support to a man,” said Abramowitz.
Merkel’s Golf Second Time Lucky German Chancellor Angela
The seller, an anonymous
Merkel’s old Volkswagen Golf
Berlin resident, had advertised
sold at a second auction for
the vehicle on eBay with 190,000
¤10,165. A previous attempt to
kilometres on the clock as “Angela
sell Merkel’s car failed after online
Merkel’s first Western car: unique
auction platform eBay noticed the
collector’s item”.
offers came from fake bidders.
Merkel bought the Golf, a white 1990 model worth a few hundred euros today, about a month before German reunification on 3 October, 1990. In a similar auction in 2005, a US bidder paid nearly $250,000 for a 21-year-old grey 1990 Volkswagen Golf that once belonged to Cardinal Joseph Ratzinger, who later became Pope Benedict.
GETTY IMAGES
88
Portfolio