Don't fence me in

ALISTAIR BONE
Last updated 14:18 15/02/2013
Waikato Times

The iconic Hamilton company, the Gallagher Group, turns 75 this year. It is one of New Zealand's most innovative operations and business success stories.

Sir William Gallagher
Bruce Mercer/Fairfax NZ
Top table: Sir William Gallagher.

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Alistair Bone visits the Gallagher Group on its 75th birthday at its Hamilton home.

There are three people having a meeting in the boardroom when Margaret Comer walks in. ''Get out,'' she says. They laugh, she laughs. They have a brief and good-natured chat. They're gone in 30 seconds.

Comer is the corporate services executive at Gallagher Group and works out of the World HQ on Kahikatea Drive. Down by the ... actually, down by the nothing. The five storey pile with the hectares of warehousing out the back and the lower rise sister block next to it defines the area. It's bounded by Gallagher Street and has a massive bow around its giant

Gallagher sign to celebrate 75 years of survival and growth. It's located in a city called Hamilton, but such is the company's presence, some, usually without too much malice, call it Gallagherville.

The company is an example of all things recommended. Be smart, be nimble, be niche, please stay in New Zealand. It expects to make sales of more than $200 million this year and has about a thousand employees around the world.

After a tough tour of duty working in paediatric oncology and psychiatrics in the health sector, Comer became chief Sir William Gallagher's PA 28 years ago. She rocketed through the ranks and now runs the building and the fleet, training and HR and policy and sponsorship. The Executive for Everything Else. In a photo of a board meeting, she is seated at Gallagher's right hand. In the foyer you can look up all five storeys and see the sky moving above the glass ceiling. Comer says it's the only one in the building.

''I'm sure in some areas there is still the old boy network. It's a fact: women have babies, they go out of the workforce and they miss some great learning opportunities.''
She had kids, too, but got on school boards and learnt about governance and financial management of big budgets.

When Gallagher bought Marton firm PEC in 1999, Comer was tasked with bringing the company up to speed on the Gallagher way of doing things. Workers say they used to fear Comer's arrival in the town because it meant the sack for some. Someone once left a witch's broom in her carpark.

She won't brook politics in the workplace.

''People who come here with that sort of inclination don't last. If you are going to start backstabbing and being political, it is very quickly exposed and it is fronted.''

 

Sometimes, quite often, she is the fronter. The atmosphere in the offices is, as a result, a thing both immediately palpable and hard to define. There's a relaxed swing to people's voices and body language and whole general state.

''Good'' is too easy. ''Casual'' is not quite it. ''Not poisonous'' is too negative. There is definitely no panicked PR machine - both times we turn up for scheduled appointments, Comer asks us what we are doing there, as if we have every right to wander in off the street and she is just genuinely interested in what we are about. This is not a typical welcome everywhere else. After hanging around and talking for a bit, maybe it correlates most closely to a university campus.

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There's purpose and competition but no fear of mistakes - it's part of the company's explicit ethos that those are part of the price of progress.

They do banter here. The boardroom scene was part of this.

''There is a great deal of respect for each other. [But] we know what buttons to push.''

She says it's a culture that comes from the top. Comer's office is next to Sir William's. The exec team deliberately put windows between their offices to make for better communication of the gesturing type. She sees him and waves and points to the journalists and we go in.

Sir William's reputation precedes him. He's tough, smart as a whip and not shy of a party. He's had a bypass, looks full of beans. What you can't get off the page is the way he is when he talks about the business. His face lights up. When he was recovering from the op, his daughter found him up in bed surrounded by suits the next day. He was in his element. It dawned on her that he needed the business as much as it needed him. Talking to him, it looks like the business is something more than another child - closer to an identity.

He had a good start. His dad, William senior, was super clever and ran a thriving engineering business in Norton Road.

William junior did an engineering degree and went diving and treasure hunting until William senior suggested he and brother John come on board in the 1970s. He was no Kiwi Battler from Struggle Street, but there are others with the same advantages who didn't feel the need to kick on to this degree.

What everyone always wants to know is how these people do these things. Sir William has some principles.

1. Treat people as you want to be treated. But don't expect it in return.

2. Respond to the actions and reactions of your competition. It's a case of finding a niche where you have an advantage. 1 Don't be frightened of making a
mistake. Don't make the same mistake twice. Life's too short to make your own mistakes, so learn from the mistakes of others instead.

3. Once you've got the product made and working right, you are not even a quarter of the way. Then it's the marketing and customer relations. Most of the money is spent getting it into the hands of the end user. And that's where the screw-ups are and where things go wrong. 4 Pay attention to detail. Do a deal on a handshake, but make sure it is written down so you understand what the deal is.

''You miss that out and it will all be down around your ears,'' says Sir William. Setting vague ''standard terms'' in some places means the keen Kiwi exporter is essentially agreeing never to be paid for his stuff.

Some things make success easier. Hamilton, for one. There is easy access to two ports and the Auckland airport is not that far. The company was built on agriculture and Hamilton - and New Zealand -  is where it got sharp, says Sir William.

 ''If you are going to be number one in the world, you need a market with the most demanding customer. And our New Zealand farmer is that.''

The other advantage is being a private company. Gallagher isn't publically listed on the stockmarket and subject to other people's priorities.

''We can work for the long term. We are not worried about this quarter's results. If we were public, I'd probably ease back on the research and development, because you are spending money on an area where you don't get an instant answer or instant benefit. The exchange rate makes it fairly hard going at the moment. But we are still getting a good result - because of our expenditure on R&D two or three years ago.''

There were enormous tax benefits and generous Government loans back when the company started, so even in a tough year, it booked a generous profit. He wouldn't want to see that come back, though.

''They were helpful. I guess that is one of the things that enabled us to stay private. It was glorious at the time. But whether it was fair for the rest of society, I'm not totally persuaded. Roger Douglas (radical reformist Finance Minister from 1984 to 1989 and now knighted himself) called it compensation for the other distortions in the system. After he finished, we paid a lot more tax but we also had a lower-cost community to live in.''

The company is really three divisions. There is a thriving petrol pump maker. Agriculture is still about half of the group. Security and access control is another 30 percent. But this has the biggest potential economically and the biggest problems politically. The security business grew out of the company's powerful electric stock fences mated to an electronic access company called Cardax that Gallagher bought in 1999. The newest version of the system integrates access, security, safety and some aspects of HR all on one touch screen. The firm secured an enormous casino in Macau, featuring 80 elevator shafts and 14 systems that had to be made to work with each other. It is a flagship project.

''Nobody else is up in that class,'' says Sir William.  

 Gallagher security is also used to keep people out of Buckingham Palace and inside American prisons and away from Indian car factories. But the systems are also used in Mynamar and China and Syria. These places are not human rights stars. ''They are definitely not, I totally agree. But it is pretty low-level security: banks, etc. In Syria, it was perimeter security around an installation. It is your general petty criminal-type stuff. You wouldn't call it national security.''

 In South Africa, it was required that Gallagher partner with a Government-connected firm. ''They have reverse apartheid in South Africa. And it really is distorting the economy. But if you are going to do business in there, you have to go with it.''

Prompted, Sir William will describe and predict. Free trade in agriculture looks like it's finally coming and we, the most efficient producer, are in the box seat.

''Our main competitor at the moment is the European taxpayer and the American taxpayer.''

 It's still the tail end of the crash and things are starting to pick up. New Zealand is ahead of the bunch emerging from it.

Europe's not out of the woods, but Gallagher's agricultural division had its best January ever in the US. China is calming down, but behind it is India.

''If it can ever get its act together. I was very excited about India in the '90s. There were all these reforms they were talking about. They are still talking about them. We pay 40 per cent duty going into India. China is duty free.''

He's a fan of asset sales.

 ''They should have done it long ago.''

The politically correct way of talking about your business is to say we and our - we're doing this, our thoughts on that. Sir William uses some, but slips in a lot of I'm doing, I've got. My vision. It is old-school cool that you only ever get from private companies that don't have to fret about a million shareholders or worry over anyone's feelings except their paying customers. There are no Government retirement funds or pretend-to-care investment banks looking over his shoulder and tutting at everything messy and divisive and real.

He says there are approaches from the big boys fairly regularly. They have money in their pockets, looking to buy. But he's dodged them. He's kept control. He is, in fact (just quietly) going after them. The company is often called ''Gallagher's'' incorrectly, but it's not really a mistake.   

- Waikato

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