Andrew Heathcote Rich Lists editor

Andrew is BRW's Rich lists editor and is responsible for the Rich 200 and Young Rich flagship issues. He also reports on matters relating to wealth and investment for BRW and The Australian Financial Review.

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Wagner dream takes flight

Published 24 July 2013 16:18, Updated 26 November 2013 18:35

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Wagner dream takes flight

Joe Wagner, left, with brother Denis. The Wagners are building a 3 kilometre airport in Toowoomba. Photo: Glenn Hunt

There are few better examples of the power of family wealth than the new airport being built by the Wagner brothers in their home town of Toowoomba.

Few operators, public or private, would ever dream of such an audacious plan.

Cashed-up after selling part of their concrete and materials business to Boral in 2011 for $163 million, the Wagners want to build a viable alternative to Brisbane Airport.

The construction of a major airport is the sort of infrastructure project that governments stew on for decades. Not the Wagners.

After a large parcel of land they own in Wellcamp, just outside of Toowoomba, was rezoned in 2011, they obtained council approval for its redevelopment in 2012. Construction started in April and the new airport is expected to be operational by September 2014.

There are still hurdles to overcome, but the Wagners aren’t perturbed.

“Toowoomba is a huge market that is essentially untapped,” says family member and managing director of Wagners, Denis Wagner.

The cost of the project has not been disclosed but it is unlikely to be built for less than $100 million. The airport will service cargo carriers as well as business and recreational travellers, although no major airline is yet to commit to it.

The airport’s runway will be almost three kilometres long and capable of accommodating all planes currently flying, according to Wagner. Much of the work is being done with family-owned heavy equipment and it is being funded with the Wagners’ own money.

Few projects of this scale get built with cash. While the construction will put a strain on the family’s wealth, it is part of a broader shift into the infrastructure sector.

“We see this as a good opportunity for the family and the provision of long-term multi-generational assets,” Wagner says.

The Wagners made their fortune in the tough but lucrative concrete industry. The family company was founded by brothers John, Denis, Neill and Joe with their father Henry in 1989 with a single concrete batching plant in Toowoomba.

Wagners has since grown into a diverse construction materials business. It has operations around the country and overseas but remains based in the Toowoomba region. Last year, the family’s holding company reported to ASIC a 16 per cent increase in sales to $278.6 million and a healthy $15.5 million net profit.

The estimate of their wealth on the BRW Rich Families list has grown after a strong performance by Wagners, which is owned by the four brothers. They entered the Rich Families list with $350 million in 2010. This year’s $540 million valuation remains a conservative estimate of their net wealth.

The depth of management skills within the family has allowed the brothers to continue to invest in their core business while pursuing the airport development.

Concerns over pace of change

The Wagners have deep roots in the fast growing Toowoomba area. They are the richest people in town, and are also major employers and key backers of local business groups.

About 1.5 hours’ drive from Brisbane, Toowoomba is one of the country’s fastest growing regional towns.

While the cooling of the resources boom has led to a slowdown in coal mining, Toowoomba and its 165,000 people are well placed to benefit from investment in nearby coal seam gas projects. Flying in and out workers for these projects will be an important revenue stream for the new airport.

The chief executive of business advocacy group the Toowoomba and Surat Basin Enterprise, Shane Charles, says the area is in dire need of major infrastructure to better connect it with the rest of the country. He says it is a boon for the region that the Wagners are willing to commit to the project.

“People have been very surprised as to how quickly the Wagners can move,” Charles says. “To have a private operator come in and be willing to spend their own money will be a game-changer for the region.”

Unfortunately, not everyone in the area wants the game to change.

Heather Brown moved to a property adjacent to the new airport 12 years ago, considering it the perfect place for a thoroughbred horse stud. BRW Rich 200 member and Harvey Norman executive chairman Gerry Harvey has horses at Brown’s farm.

Brown is concerned about the speed with which the project is proceeding and the impact of aircraft noise on nearby home and business owners.

“The very nature of our business is about standing horses in a very serene country environment.”

She says people affected will not be entitled to compensation because of the allowances made to the Wagners by the local council. “We are not anti-development, but we do believe in the Australian idiom of a fair go,” Brown says.

Brown won support from friend and prominent radio announcer Alan Jones, who has raised concerns about the project on his radio show.

Will it be viable?

The president of the Toowoomba Chamber of Commerce, Andrew Wielandt, says Brown is in the minority. He says 94 per cent of local businesses support the Wagners’ plans, according to a survey undertaken by his chamber.

“The business community overwhelmingly supports it,” Wielandt says. “It is another piece of the puzzle in getting Toowoomba adequate infrastructure.”

Wagner says his home town has lost a lot of commercial opportunities because it lacks a major airport but the big prize will be winning market share from Brisbane.

“We will be a genuine alternative [to Brisbane],” Wagner says. “We expect we’ll get to 600,000 passengers a year relatively quickly.”

All airports have problems with delayed flights, and Brisbane Airport is no exception, but the biggest airport in Queensland won’t give up market share without a fight.

The head of airport development for Brisbane Airport, Mark Willey, says his airport is more than capable of meeting the growing demand for air services. Work has already begun on a new $1.3 billion runway at Brisbane.

“We are quite determined to deliver the new runway by 2020, which will double the capacity of the airport,” Willey says. “We also have growth opportunities up until 2020.”

Rich 200 member and Toowoomba property developer Clive Berghofer understands the challenges of self-funding multi million-dollar developments and is cautiously supportive of the new airport.

“It will be an advantage to have it for sure,” Berghofer tells BRW. “[But] is it going to be viable?”

It is a legitimate question. The viability of Wellcamp Airport will be largely dependent on whether the Wagners can get a major airline to commit to landing its planes there.

Building an airport in the hope that airlines come is a risk but Wagner isn’t perturbed. He says more than one airline has had a close look at his project and initial discussions have been promising.

“There is a lot of interest from the aviation industry now that they can see construction happening,” Wagner says.

BRW approached the four big domestic airlines to gauge their interest in the airport.

According to a statement provided to BRW by Qantas, it regularly considers “new routes and infrastructure opportunities that could be commercially viable”.

“Wellcamp Airport is an impressive project,” the Qantas statement says.

Virgin suggested it has no “current” plans to operate from Toowoomba, Jetstar confirmed it had met with the Wagners but has no plans to fly into Toowoomba at this stage, while Tiger failed to refer to Wellcamp in a comment about ongoing talks with “a number of airports”.

Wagner expects to sign an exclusive right-to-operate deal with a single airline.

“It’s first in, best dressed,” he says.

Airport’s key headwinds

There are many factors that will determine whether the Wagner family’s bold plan to build a major airport in Toowoomba will ultimately be successful for the community and the family. Here are some of them:

• Access to cash The biggest thing the Wagner family has in its favour is a big stockpile of cash. The $163 million sale of assets to Boral and a big cash-generating family business have allowed the Wagners to move quickly and avoid reliance of banks or other investors.

• Mining boom While Queensland’s coal mines may be shedding staff and slowing production, coal seam gas projects are providing a fillip for the region. Major investment in new coal seam gas projects will be a boon for the Wagners, who will be well placed to accommodate for fly-in fly-out workers.

• Airlines Putting on a party and having no one turn up is bad but imagine building an airport that no one wants to fly to.

• Brisbane’s new runway The Wagners are confident their airport will be up and running next year. The sooner the better as their biggest rival, Brisbane Airport, is investing in a second runway that will allow it to double its own capacity by 2020.

• Defence One of the issues the Wagners face involves nearby army aviation bases and whether the new airport will encroach on the army’s air space.

 Lack of industry knowledge The Wagner family understands the concrete game better than most but they have not built an airport before. Few industries have more intricacies than aviation. To compensate, the Wagners have engaged consultants from around the world.

• Core business Building the new airport will take a lot of the Wagner brothers’ time and money. As a consequence they will have less time and money to spend on the business that underpins its success.

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