Foreward

Monday, 14 May 2012

Quota & Funding Problems


Our bank manager Tim Gray at Grindlays Bank had returned home to Canada and his replacement Alex Wilson took over. Alex was easy to get on with but he only stayed for a short period of time and just as we were getting to know him, he unexpectedly moved on to work in London as a “Special Personal Assistant” to the Chairman and so we inherited a new manager called Bob Wild.
We were called in to meet Bob and he was a totally different man than any of his two predecessors. His first action was to tell us our Letter of Credit facility was being reigned in as we had too large a facility, which he said, “Is totally unsecured”. I argued that was not true as the Bank had cash margins, ownership of the cars and 100% cover on some sales. He did not see it that way and told us he was withdrawing a large proportion of our facility unless we could provide additional security.
I approached Sheikh Rashid bin Khalifa and he placed a piece of land as security to the Bank, but this secured a much smaller facility then we previously had.
Also at this time things were becoming quite strained between Ed Peter, Porsche AG’s Export Manager and me due to a number of reasons, but I could never get to the bottom of why this was so?
Porsche AG had set-up their own operation in the USA and all available cars production slots were being channelled to the USA organisation where Porsche could take a share of the sales margin, effectively selling their own cars to themselves although they vehemently denied this.
I believe Ed Peter set Philip Kaes the task of setting up Porsche Cars North America, however within weeks; most of the existing dealers had filed multi-million dollar lawsuits against Porsche AG. The gossip at the time was Philip Kaes “carried the can” for this misjudgement, but I suspect it was Peter Schutz and Ed Peter behind this move and Philip was made the scapegoat, hence his rapid and unexpected move to South Africa.
Eventually this problem was sorted out and Porsche AG set-up in the USA themselves accommodating the US dealers.
Ed Peter was not happy at the amount of foreign sales we were making to expatriate professionals who would purchase cars for delivery to Bahrain or for Tourist Collection at the factory. It seemed to me that when Porsche wanted something from us, like asking us to take cars they had been left with such as the South African 924’s, we helped out. Now Ed Peter was telling me to concentrate on selling cars to the local Arab population, which in effect would put us out of business as the market would drop by more than 50% overnight!
I spoke with a lot of my colleagues in other Middle and Far East Importers and they were all complaining that Porsche AG was not allocating them the cars they were requesting, even Hamilton’s in Australia were telling the same story, so something was afoot!
I saw history repeating itself as Porsche did a similar thing just prior to the petrol crisis in the 1970’s when they were channelling so much production to the USA. On that occasion a small percentage change in the American market was a massive one for Porsche and they took a massive hit when the US market moved against them. Now they looked like doing the same thing, so I had no alternative but to fight our corner with Ed Peter, so I dug my heels in and insisted we keep out allocation of cars.
There had always been some mistrust between Ed Peter and myself and I could not explain or understand where this came from. I got on very well indeed with everyone at Porsche AG except him as he always seemed somewhat detached from me and criticising me fairly often for the slightest of issues. So now he latched on to our lack of banking facilities and he told me that unless we could come up with a revolving Letter of Credit, he would take a large proportion of our production slots away from us.
So in effect we had Ed Peter and our Bank fighting against us now. At this time we had a number of cars in production or awaiting shipment and we could not pay for them all at once. I called Ed Peter and tried to make our case to him but he was adamant Porsche wanted 100% guarantee of payment up front. Unbeknown to me at that time, Peter Schutz the CEO of Porsche AG was listening in on the other line to this conversation. I found out sometime later that Heinz Branitski the Financial Director of Porsche AG was supportive of our cause and wanted to assist us, but Ed Peter although a junior manager compared to Mr Branitski, obviously had another agenda and bought Peter Schultz in on his side. Porsche politics were going on but I knew nothing of this!
Years later, I found out from John Aldington and Peter Bulbeck that they were both fighting our corner behind the scenes at Porsche AG, with Heinz Branitski, Porsche’s own Finance Director supporting us, which must have infuriated Ed Peter. Ed Peter had told Peter Schutz his story and this won out!

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