WesTrac

"‘Shock and awe’ is how one commentator described the announcement made by the Seven Network in February 2010.16 In theory the board of the company had, ever since the Kohlberg Kravis Roberts deal, been searching the world for good investments. Instead, much of the money had been used to buy back shares in the company itself, which had increased Stokes’ control. More had been spent on Consolidated Media Holdings and West Australian Newspapers. Now, the company announced, it had decided that the best way to spend its cash was to buy WesTrac from Stokes’ private company, ACE. Under the deal the Seven Network would pay $1 billion in shares for WesTrac, and take on the company’s $1 billion in debt, using $600 million of the remaining cash in the company to pay it down. The new merged company, Seven Group Holdings, would own the Seven Media Group with Kohlberg Kravis Roberts. It would be a conglomerate, bearing the Seven name but with little to do with the original business. Stokes would own 68 per cent of it. Once again, the equity moved closer to Stokes, and the debt – accrued by WesTrac during its fast expansion in New South Wales and China – further away. One investment adviser service described the situation pithily. ‘So after three years of searching high and low, the directors [of the Seven Network] have come to the conclusion that the very best investment opportunity is the acquisition of WesTrac.’ Under the heading ‘Sarcastic Remark Warning’, the service’s newsletter said, ‘The new combined media investment and heavy earthmoving company will be renamed Seven Group Holdings Limited, presumably a reference to the seven seas sailed by independent directors in their search for investment opportunities before stumbling onto the perfect one in their boss’s backyard.’"

"Stokes had managed to ingratiate himself with Caterpillar management in Illinois, convincing them that he was the kind of ethical, principled businessman their company required. The relationship has only deepened over the years, making WesTrac, the Stokes company that owns the Caterpillar franchises, the most reliable contributor to his wealth."

"consent. The value of WesTrac rested on its keeping the Caterpillar dealerships,"

"STOKES WAS NEARLY sixty and rich beyond most people’s dreams when he started doing business in China, a vastly different proposition from his early forays with the Hong Kong and Shanghai Bank. He didn’t need to do it and could have chosen to chase health and the sort of happiness most people associate with rest and recreation. He was hovering over Seven and WesTrac and his pastoral and property interests, managing the managers he’d hand-picked to run each outpost of his empire."

"As Stokes spoke, he looked above the row of ‘suits’ sitting at the front to the bunch of apprentices in orange overalls standing self-consciously at the back. He told his audience that when he’d taken over the Perth dealership in 1990 he had relied a lot on the general manager Frank Johnson, who was an ex-tradesman and believed fiercely in the people on the workshop floor. Johnson had been right, he said: ‘The guys on the floor always know better than management!’ The apprentices relaxed visibly and sneaked glances at each other. He had them in the palm of his hand. ‘We strongly believe the trades should be an entry to management,’ Stokes went on. ‘The tradesmen and women love what we do because they know it better than anyone else.’ He said other companies stole tradies from WesTrac, ‘because not one of them trains their people like we do’. He had appointed three executives at WesTrac who’d ‘come off the tools’. At this, the apprentices were starting to look pleased with themselves and the other guests began to look at them. The boss had made them the centre of attention. Stokes rolled off a few more sentences, then paused and lowered his voice for the punchline: ‘Every one of you will be better qualified than I ever was.’ That was when the audience clapped, like players applauding their coach after a win. They were on Stokesy’s team. Senator Chris Evans spoke next. As the Federal Minister for Tertiary Education and Training, he represented the government, which had put big money towards the joint training venture. But he couldn’t top the previous speaker; Stokes had stolen the show. After Evans unveiled a plaque, Stokes slipped behind the microphone for an encore. ‘You all have to go back to work now,’ he rasped. Everyone laughed."

"He and Gammell and their advisors started planning a series of interlocking moves. The first was to form a joint venture with another private equity outfit, the Carlyle Group, then use their company National Hire to swallow the market leader, Coates Hire, in a $2.2 billion takeover that would put all the machinery businesses under the WesTrac banner."

"‘This is a showpiece for WesTrac,’ David Aspinall said a few weeks before the formal opening in late winter of 2012. ‘We wanted somebody who could build a building that wasn’t just a shed with finish.’"

"Tamworth made a good test case. WesTrac built a gleaming new dealership there and brought in new uniforms for the staff. They responded to the faith shown in them and Tamworth became a model dealership. But the next job was much bigger: to replace the hotchpotch of workshops, depots and warehouses throughout New South Wales with one central location that reflected the new reality that most earthmoving equipment in the state was used north and west of Sydney, especially in the Hunter Valley coalfields. Stokes tossed Aspinall the keys and said he would be watching with interest."

"In 2010 Stokes merged Seven Network Limited and WesTrac to form Seven Group Holdings, a transaction that made the previously private WesTrac Group public. The corporate union of television and bulldozers seemed as unlikely a mix as machine oil and Evian water but Stokes argued, successfully, that everyone would ultimately benefit. The deal set up an even more ambitious plot twist the following year."

"In Perth, WesTrac’s longtime general manager Jim Walker had to fix the problem at long range. Walker was an example of Stokes’s philosophy that everyone in the business deserved a chance to run the show: he had started as an apprentice diesel fitter and worked his way to being sales manager under Harold Morgan before taking the top job for Stokes. He was living proof of what Stokes would say in his Guildford speech years later. In desperation, Walker used his own experience as a guide. He sent two young ‘goers’ who had been apprentices of the year, Mark Hatfield and Peter Kosick, to work in the Tianjin workshop. It was a turning point. Hatfield and Kosick were young, polite and practical, and led by example ‘on the tools’. Their instinct was to work with the locals rather than order them around. They picked up basic Mandarin as their new workmates picked up advanced mechanical skills. The accidental psychology hit the spot. It gave the new Chinese workers alongside them an ideal role model — by showing, not telling. Within months, the difference was obvious. Over the next couple of years, the workshop would become the heart of an import–export business that reconditioned used machinery from all over the Pacific and resold it on the world market."