Portfolio | June 2012

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

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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

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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.

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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

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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

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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. ”

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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

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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

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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

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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.

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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

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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

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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

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