Australian Biography

Franco Belgiorno-Nettis - full interview transcript

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So you were here with a small group of Italians working very hard on building ...

... this first transmission line, still the transmission line in the country, when bushfires were raging all over and power was rationed, so that was the first adventure in Australia.

And what was Australia like at the time?

I should go back ... and my first visit, of course, was in the bush. The bush was all burnt out, as a matter of fact, when you go to the bush, you became all incinerated with ashes or whatever. That was the type of thing we were carrying ... practically the transmission line had to go through that kind of route, Sydney-Homebush-Tallawarra. I was certainly trying to find ... my accommodation initially was at the Metropole, so I was just going to the Metropole, which of course was one of a luxury hotel in Sydney, compared with the hotel that we have at present. It was August, to me it was very cold because I came from the corresponding August in Europe. I was freezing. There was not even powerpoint. So the only idea I had [was] to put a 500 watt bulb in the centre, kept on for a few hours, and that was the only heating I had in the room ... and the Metropole in that period, there must have been a lot of country people, and I was astonished to see these old people having that type of breakfast in the morning, that I could see what they are getting, steak and eggs or whatever, right in the morning and meeting some of the ladies in the lift, up and down. They were just like puppets, they all looked to me like they came to me from a very artificial world. But on the site, when we started getting all the equipment, we had this camp at Menai, very primitive area, tents for our people, very few equipment, I'm talking about motorcar, whatever, we had 40 firemen give us this line for the power, little bit of water under the road, we made a trench in the road, we just connected where the water [was] and we were living there. I would say, the first week or so, I was living in a Nissen hut, type of galvanised, well rusty galvanised, type of small army packs or hut, whatever, and in the beginning I was trying to get labour to help us, and the answer we got everywhere was that was the very reason you are here, we have no labour, so there was a scarcity of labour. The reason we were here, we were told, because we don't have labour. Remarkable.

That's how it was then, not now?

Remarkable.

What contact did you have with the locals and how did they treat you and what did you think of them?

Well, the contacts first were with the client, the commission [Electricity Commission of NSW]. And we had one of these stationary buildings, old and dilapidated office, and the commission was moving all over the place in Sydney. They don't have any posh, tall, multi-storey building at present, where they have practically built a tremendous amount of public servant. And some of the people I met there, I remember this Mr Ogle, he was one of the men, he invited me, he was injured, he had really one leg, he was injured in Tobruk and just jokingly we started getting on a friendly tone that we were opposite side of the fence then and now we are working together, Mr Ogle.

And were people warm ...

Yes, I found the people very friendly ...

... [interruption] ... We always have to wait for Frank ...

How were the people, how did they treat you? Were they friendly towards you?

Well, I found people very helpful, particularly [as] my English was very primitive, I must admit, and it has not improved dramatically in 40 years. The fact that we were surrounded by, in the office, with our agent, Dickson Primer, everywhere we went we were looking to help these people to assist us, so we certainly had a lot of friendly people around us, no doubt about that. We were trying to find a bit of a way of living and — to show you how we were completely out of tune — we were stranded one evening somewhere toward, from Homebush to Sydney, [it] was too late to find our accommodation for the night. If we went to one of these typical hotel, tried to get accommodation, there was no chance, I mean, the hotel, were only for drink, not for sleeping, so were surprised that the hotel was just not capable of even hospitality for the night. Typical of the period.

They're supposed to, aren't they, for their licences? They are supposed to have somewhere to put people up but they don't bother ...

Probably ... they should have been.

And what about the food, how did that strike you?

Well, even that. I mean, the question of not being used to local food, where [we] dramatically started getting this kind of breakfast in the morning, probably a sandwich at lunchtime, but we had always one of the typical, I would say, success of the group of people in the company — was just to have a cook with us and the Chaplain, I remember. So we didn't suffer for the question of cuisines, but the cuisine at the time in Australia, I would say, was still very primitive.

So you had your own Italian cook. How did he get on finding ingredients here?

Oh, I think ingredients are typical for everywhere, I mean, I didn't think he found any problem for ingredient, it was the way to cook it. And you could see, nobody got any problem today for ingredient, the cuisine in Australia become multi-national and I found here the ingredient practically, including Chinese, to cook according to their own way.

So the company that you'd come to work with was an Italian company making its way here and you renewed your contract with it twice, you had two periods working ...

The first period was just three years and I renewed it for another two years.

And so did you think then that you would like to stay with that company or were you beginning to have other ideas about your future in Australia?

Well, first of all, the company was a multi-national. let's put it that way, and I felt that now Australia could give to me some sort of scope to stay here, without having link with overseas, being controlled from overseas. I think one of the instinctive elements that I saw — that first of all, I didn't control, know I could control, the direction of the enterprise, no, I knew exactly the profit were going in or out of the company or the country. So the idea of developing something that was entirely local Australian starting creeping in my mind. And I must admit that in that period, came an accountant, giving instruction to me, where to sit, what to do, where to stay and I resent very much, particularly accountants. And that came in my mind that I start to do something different. Well it took a bit of time to ... I mean, the idea of starting a new enterprise if you have no money is sort of a big problem. Today, when I say, what's the capital? Then I didn't have any capital. And the first thing I did, I teamed with ... friendly person in Port Kembla. And that was the very beginning of what was a plan, just start to getting to the point of an organisation that could continue to do similar kind of project in Australia and the company that was made of me and him. But I eventually felt that there were two more people in the old company, that were worthwhile considering coming to stay to Australia, in Australia. So we have four people.

So these were four friends. Who was the one from Port Kembla?

The name was Mr William, he was the owner of a crane operation and he lent 3000 pounds to me, the 3000 pounds that look a small amount of money but was a tremendous amount of money, if you think, at the period, we were able to buy some huts and position a little living quarter in Port Kembla, myself painted the 'T' on the first barrack. I managed to write the corporate name of Transfield, that of course has changed gradually with the years, but he put the mortgage, in order to make sure that the 3000 pounds were not lost. He left eventually, is possibly one year later, because he didn't want to increase the capital and he made a tremendous amount of profit. I think that from the 3000 pounds he got at least four or five times more by his part of profit, of the first contract at Port Kembla. That was the first basic development that gave strength to the company.

I mean, you start making work, particularly the type of ... only, not fabrication, but just erection of steelwork, for this you don't need very much money. What you need is basically organisation and management system, hiring equipment that you can pay later, and more or less move on the progress payment of the customer. By then you should establish a very good relationship with what was then Australian Iron & Steel — and I consider that Australian Iron & Steel (now, of course, BHP) as really the altar of the beginning of Transfield, and that many times I tell them, particularly to some of the union at Port Kembla, that I needed to put an altar here right to just thank BHP for the support and we've been living for many, many years in the shadow of BHP, not only Port Kembla, but Newcastle, Kwinana, Whyalla and many other major operations of BHP, so BHP, the Great Australian, has been also very great support of Transfield.

Franco, this is a very important story, the story of the beginnings of Transfield, because it's really an amazing story and this is the acorn from which the oak or the huge tree grew, so I just want to get this really, really clear and I want you to — maybe we'll just go over it — to get that beginning really clear because you were working for this Italian company, you were unhappy with it, and you saw again an opportunity, and the opportunity arose not because you had capital, or because you had a lot of backing behind you but because you saw there was work that needed to be done, and you thought that an Australian-based company could do that work instead of a multi-national. Now I would just like us to go back because you summarised an awful lot there quickly ...

... a lot of details ...

I just have to ask you a question ... Franco, could you tell us about the beginnings of Transfield, how it started and what you needed to put it together to start it. Could you tell us the story of the beginning of Transfield?

Well, every beginning is set in a very complicated ... when you have to jump from one horse to another one, you must make sure the second one is faster than the previous one. And the idea, of course, it was also a risk because you lose what is called a secure position, altogether I was one of the chief executives, if not the chief executive, of course there was a boss that was controlled by the overseas interests, but I had to take a risk, in reality, we took a risk, a risk that was more or less a calculated risk. The fact that my wife's father, an engineer, had at that time a very important die casting complex there, and he had always been looking to me, as the only male in the family, since the three girls at that time were not even married, that could have taken charge of that shop. Therefore having a safety factor, you understand that, as an engineer, you have to say to yourself, if something went wrong ... I knew that I could go back to Italy and I could start or at least to continue that kind of activity, so the safety factor was already there.

The second one was the feeling that this country needed a type of activity, we were just starting to see the beginning, my instinct that [it] was a land of, a tremendous amount of land with, not enough people and we were here to do something, and there will be opportunities to do it, the big thing was to start. Every time you start you never know the end but you have to start unless you could prove that something could happen. [telephone ringing]

So you knew you had an alternative if anything went wrong with this new venture. What were the other things that you needed to move to start the company?

Well, certainly the knowledge of the market ...

I'll ask you a question?

The new question is here now.

Franco, what were the other ingredients that you needed to get your whole project started? What was the basis that you needed to pull together to form your company?

Well, certainly, I didn't have much experience, let's face it, so now looking back, there are so many elements, they look possibly trivial at present, but they were just as important. The fact that I didn't know even the existence of a Memorandum of Association, Articles, or whatever. At that time, I had a very dear friend called Keith Bogan, a tall, a charming Australian, he was just living close to us in Clontarf and I was taking with Mr Neil [sp?], together in the morning with my little Morris Minor in town, to give a lift to them, but for me it was a very good way of just practising English. At that time I asked them ... one of those was an accountant and he introduced to me, introduced me to solicitors in town — I mean, even the solicitors talk about ... they were Taylor, Ferguson, etc, in Pitt Street — and to see these kind of offices were just unconceivable today, [cough] excuse me, and so I finished up in the hands of an old man called Checchi [sp?]. He gave me some type of details, what to do, application, etc, etc. In particular I had to decide what was the name of the company. It might be relevant to know that already I had a list of about 20 to 30 names, I was an avid reader at the time and still I am now of Fortune magazine, one of the leading management periodicals published in the States, and of all these names one was Transfield, because I thought it was a transmission line in the field ... shortening to Transfield. When I listed all these companies, these names, I arrived at the name of Transfield ... it looks all right to me, it looks all right to me, Transfield, and that's why he gave me the type of support for the name Transfield that then becomes the trading name for the company in Australia. So that was one of the aspects.

If you had been reading Fortune magazine, was this because it was already in your mind, as you were working on contract as a engineer, that you might like to set up your company?

Well, as a manager, I think you should be acquainted with what happens in the world in management and Fortune was a magazine that gave us some insight into what happens in many companies in industry all over the world. And to me the idea of having a company, or at least to be part of a company, that was an independent company, of which I was really the boss, was really tempting and, as I mentioned, the story of the risk in a way, having already done so many things before, so the risk — was not really excessive, if you think about all my history and background of war, etc. So it was a small risk to try to build something completely your own in a new country. It was a great challenge.

So you had your name, and you had your legal entity. What else did you need?

Now what you need is a customer. We had a customer. Second ... Now what you need is a customer. We had a customer. Second ...

How did you have the customer?

Well, the customer is BHP, I was dealing with BHP (then called Australian Iron & Steel), therefore they knew me, so it was a also a question of talking to them, if I would be accepted, they said, a different company.

But you had to get the customer to be prepared to switch from the person that they had been dealing with?

Well, that was a new contract anyway, so that was not switching. There was a new contract for which we had to tender, therefore, if you tender for a job and if the type of price is acceptable, then that's it, that's what happened. These top people from AIS [Australian Iron & Steel], Mr Duncan [sp?], I still remember him, an historical man. I still remember when I went to see him at Port Kembla, with my friend, Mr William, having to discuss with them the possibility of this new company coming into the picture. He basically said, 'let them have a go.’ That was the beginning. So once our price was lower than the competitors, and I don't know how many competitors were there in the new contract, that was the direction of the steelwork for the slabbing mill in Port Kembla, one of the projects of the time, very important for the production of rolling products, Duncan gave us the okay.

So what was the contract for and how could you be certain that you could bring in the price at a level that you would get the contract, this key first contract?

Well, we knew already the kind of prices that were used at the time. As I said, the contract were pretty fat, I mean, the profit in these kinds of contracts was pretty good, because simply the lack of a competitor, or competition and lack of labour, was one of the ingredients. I mean we today, in the business we could do, it was even after 20 or 30 years, we are doing projects that the prices ... are unbelievable now, due to competition. Therefore they were very keen to see another element coming in to the picture and I think that that also was one of the reasons why BHP gave us a chance and we were successful.

So you had the company, you had the contract, you also needed some capital. What did you do about capital?

Well, capital, very little. I mean Mr William gave us the three thousand pounds for the huts, the essential ...

He gave you, he gave you it to you?

No, we borrowed it from him. So basically he didn't give it to me but we were buying, we were partners at that time, the second and third partner has not yet reached them. Zambelli was the second one that died a couple of years ago and Carlo Salteri joined, the third, joined about October or November, the same year. Mind you, the company started about June or July in 1956. Therefore the money was rolling in, I would say, even before we were doing the expenditure, because the question of the progress payment, we were able to get, generously I would say, from AIS, was such that we really didn't need capital. As a matter of fact, we were accumulating profit pretty rapidly. I would say that in one year we could make a profit of the order of, well, on the basic capital, of a company, we would be able to double the capital quite easily. Now you should realise that, in firms, to get five to six percent profit is already a great achievement but, at that time, my feeling and my experience [was] that we could easily reach profit in the order of 100 percent of the paid up capital.

So it was a time of extraordinary opportunity?

Extraordinary opportunity. I would say that the fact that eventually only this little company has mushroomed in Australia, unbelievable. The volume of capacity that was built, particularly through the immigration — most of these little companies were part of immigrants coming here and they started their own business. In a way, Transfield at the time was also a little immigrant complex — we've certainly developed in the years a very total ... national entity using a lot of ethnics, but basically at the very beginning, was just from little Italian community.

So you started with four partners and you ended up with one partner who stayed with you until this day. Could you tell me about him?

Well, Carlo Salteri, and I must give credit to him, I could probably be a sort of entrepreneurial mentality, but he is a much steadier character than myself. I would say that what has been done in 38 years ... is also greatly due to his presence. Very stabilising character, good worker, good engineer and we've been able to support each other, much better than we could in matrimony. He is younger than me, I don't know if he will survive me, or vice versa, but certainly it has been a pretty good relationship.

So there was this exponentially growing company, you got that first contract and got a wonderful base for the future out of that first contract. What then happened with the rest of your contracts — how did you go about building up the business?

Ah, it is a long story, how many contracts Transfield has made in 40 years, almost just unbelievable. But the one episode that I like to mention — with the money we made from the first contract, we were able to buy some land in Seven Hills. Seven Hills looks almost a sort of mythical name. Rome was built on seven hills. So Seven Hills, crystal-box town, we bought ... we bought 20 acres of land and the first experience I found with a friend, this was with a Jeanie [sp?] — I don't remember the exact name — this fellow was able to convince us that he could deal with the purchase much better than ourselves, simply because he didn't want to distract us with the kind of dealing and buying and selling houses or whatever, or land. He was able to buy double acreage with our money and take half for himself. So that was the first experience you deal with friends. Of course it was normal dealing, I mean, we couldn't even, type of, bring him in court. But in reality there were 40 acres of land that eventually we went to buy later on at a much dear price, for which half was given to us and half was taken by this fellow, and he was only sort of assisting us to buy the land.

So at the very beginning ...

At the very beginning, and that eventually went to build a workshop, what now is a very ... complicated complex of engineering set up in Seven Hills. But at that time we built a skeleton workshop and the customer, that was Comsteel, another subsidiary of BHP, we were supposed to get the contract for certain structures in Unanderra, very close to Port Kembla again. We didn't have much work done, not even the foundation, but that was a bit of a strategic ... strategic cheating, I would say, to Comsteel. They came there, they saw bulldozers roaming all over the place and noise and dust, actually we said we are building a workshop for them, that was sufficient, almost on the tradition of Rommel, we make sufficient noise and dust to confuse the enemy ...

General Rommel, yes he had that idea, if you didn't have what it took, you pretended to!

Yes, very great general, that I had the fortune and the chance to meet in North Africa, so they gave us a contract and that gave us the substance to build the first workshop in Seven Hills.

So you actually didn't have a workshop?

We didn't have a workshop.

You pretended that you ...

We pretended that we were building a workshop.

And that gave you the money to build it?

No, they gave the contract, that was close enough to get money. The same workshop where, about 30 years later, we had the special privilege and the honour to give hospitality to the Pope. In that workshop, eventually in '86, His Holiness the Pope came to Australia and Seven Hills was chosen as the place where the Pope could speak to 15,000 workers ... we assembled the families in [the] great hall. We cleared all the machines, everything, so the workshop became a sort of great assembly house and we heard His Holiness speaking with a very human tone about the sanctity of work — that was a very good message that he gave to everybody and to our people. That means if you don't work, he said, you are not entitled to eat.

Well, what an amazing coup to get the Pope to come to tell your workers to work hard. How did you organise that?

Well, people, they were convinced that the Vatican had some shares in Transfield ... [interruption] ...

... [question repeated] ... So that was an amazing thing to have achieved to get the Pope ...

Very, very touching experience, that I had with the Holiness. He didn't convert me. Still it was a great experience.

So, how did you organise that, that must have been quite a coup to get the Pope?

Well, I didn't organise it, things happen. There was a need of assembling people where the Pope could talk and the first message I received [was] from my good friend, Gerry Gleeson, that was then the Secretary to the Premier [Neville Wran]. He suggested that it could be a good idea if we could give hospitality to the Pope in some way. There you are, things just fall from the sky.

But sometimes things don't fall from the sky and you have to plan and manipulate for them, and you've already described how one strategy that you used in business, you actually learned from Rommel. Have there been any other strategies that came from your military background that you have been able to employ in building up the business?

Well, from my military background, I have a tremendous amount of gratitude. If you just read Machiavelli, that is one of my favourite handbooks of management ...

Better than Fortune magazine?

Much better. You find out that you have to maintain a certain kind of steady discipline and control and good behaviour. First with your example, you must be first in the line, the other people follow, so my experience in so many years is that people follow ... providing you treat them properly, humanly, if you look after their own behaviour, their own welfare, to their own benefit, and it is incredible what you can do with the soldiers in the field. I mean, you are their, you have responsibility for their, life, and still you can see the commander and that kind of management discipline that is taught in the military career, if it is done properly, is a tremendous amount of management structure that could be used independently, including the families.

So you don't see authority as a basis for telling people what to do, you see it as a basis for taking responsibility for them, so you are a manager who feels a great responsibility for your workers?

You have first of all, [to] be yourself, lead them with the example, with cheerful authority. You don't need to be harsh with them, you'd be surprised in fact that you get, you create, enthusiasm and how many times, how many times I have been around dozens and dozens of projects all over Australia and I could see the result, by far much bigger, much greater, than I had already anticipated and it leads you to the consensus and the initiative that you have spirited in the people around you.

What sort of methods have you used to create enthusiasm in people? What kinds of things do you say to them?

[end of tape]

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