The power play!

When some people get their share of what a group wanted, the first thing they do is seek a bigger share. Following on from the previous post, we won the right to purchase a durene-rich gasoline stream. Now what? Superficially, the answer should be obvious: design the plant, build it, float a company, etc. What actually happened was that I got a much deeper view of how the management of large companies operates. Basically, the egos of many of the managers get in the way. The first thing that actually happened was that ICINZ wished to take over completely the development, thus leaving the small company with nothing to do. They argued we had no experience and could contribute nothing; my concern was that they had equally no experience in a venture this size. I wanted the parent company ICI to do it, and had that happened, I would have been happy to walk away. The UK parent was clearly competent to do this, but it was far from clear that ICINZ could do it. I tried to get them to hire a project manager from the UK, but without luck. However, it was not all bad. We managed a concession: the right to purchase the eventual product at factory price, i.e. nobody could get it cheaper. While ICINZ was busy getting the project underway, we had to work out ways of using the product in further downstream ventures. One of the stranger outcomes of these maneuverings was that the joint venture company had to have its own Board, and it decided to call itself ICI Synchem. The small company put forward the founder with a legal background as its director.

What happened over the next two years could even make a small book. Basically the tension grew, and at one stage I was called into a Board meeting to act as a witness. Our lawyer then accused ICINZ of intending to supply durene to an American company to make pyromellitic acid there, which could compete with the proposed venture. ICINZ denied this vigorously, things got heated, but there was no evidence provided. To maintain the joint venture, that director had to resign, and I found myself a director of an ICI company. (Actually, I was already – that is another story – so that made two.)

Two years later, during which the venture spent $5 million developing the project, the New Zealand government killed the project by selling the synfuels plant and refusing to include the supply contract. Worse, they sold it to one company, without competitive tender or negotiation. They did not inform us, and recall, ICI at the time was one of the largest chemical companies in the world, and one of the largest methanol producers. Even apart from the durene, ICI at least could have been a bidder. ICI then walked away from the venture when it became apparent the new owners would not negotiate supply, with ICI Australia taking over and absorbing ICINZ. There was no legal action for breach of contract.

Why did they do that? Who knows? The Synfuels plant was not a success, but recall in a previous post I showed that it would have been reasonably straightforward to make it earn up to $500 million per year more, and simply selling most of the methanol it made would have made it much more profitable. This illustrates a major problem with a government owning a major productive facility: politicians tend to have fixed ideas, and they apply them wherever they can. This Synfuels plant was so outside their experience they simply had no understanding of what they had, and since it started with the opposition party, why not make it look as bad as possible? That illustrates one of the problems with democracy that will become more prominent in my future history novels: too many voters do not put in sufficient effort to understand what they are voting for.

Why no legal challenge? For ICI it was not necessarily a bad outcome. Their PEEK and PES factories were now no longer under pressure, and since essentially all the work that had been carried out could be called research and development, with the takeover it probably qualified for the Australian 150% tax write-offs. ICINZ had also collected the minor party’s share of the cash, and finally, after shifting staff into ICI Synchem, it could unload certain staff without some of the financial liabilities. Our financiers also did not sue because they had their eyes on the state-owned Bank of New Zealand, which was about to be privatized. The small company was effectively wiped out financially. (At that time, contingency law suits were banned in New Zealand, and when you take a financial hit like that, there is no possibility of paying hideously expensive lawyers, whose only incentive is to keep the suit going as long as possible.) Then, to make things worse, shortly after this, Wall Street decided to collapse. I was down to the financial survival mode! One thing I did have was plenty of spare time so I decided to try my hand at writing again. Rightly or wrongly I felt this unusual history might give me inspiration for novels that were a little different.

 

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