September 13, 2016 – Very few people are aware that it’s not always a state-owned mint which produces circulation coins. There exist plenty of organizational forms for mints. They all have advantages and disadvantages. This interview, which was first published in the Mint News Quarterly, will discuss which ones.
We have asked two Mint Directors this question – Ross MacDiarmid of the Royal Australian Mint and Grzegorz Zambrzycki of the Mint of Poland.
Ross MacDiarmid, CEO of the Royal Australian Mint
Ross MacDiarmid is the Chief Executive of the Royal Australian Mint. We have asked him the following questions:
Q: What makes the difference between a national and a private mint?
A: A national or a sovereign mint is generally responsible for the production of circulating coin for that country and has a direct or indirect reporting responsibility to the government of the day. It is generally owned by the government.
Q: What kind of obligation do you feel, knowing that you are owned by the government?
A: To avoid embarrassment to the government and thereby any risk of reputational damage while protecting the Intellectual Property of the country in the form of the national effigy and any other core cultural identifiers.
Q: If you had to prioritise the following tasks, how would you value them?
[Sequence by our interviewee]
1 Providing circulation coins for Australia?
A: This is the core business, but it must still be profitable.
2 Making a profit?
A: If you make a loss on the commercial business, the government may ask you to show the cause.
3. Operating in a sustainable manner?
A: This is about trying to ensure the business has a future and operates in an environmentally and socially acceptable way.
4. Increasing the clientele?
A: This is important to continue to grow the numismatic business.
5. Designing coins which sell well?
A: This is part of the success of the commercial business.
6. Making Australians proud of their history?
A: We can’t really guarantee this. Perhaps we are making them aware.
Q: Does it make a difference concerning coin design, the launch of new technologies, pricing or the way of marketing in not being private, but government-owned?
A: Yes it potentially does make a difference because a private mint is generally unconstrained in what it does and how it spends money without having bureaucratic oversight. Private mints also operate at a lower cost because they don’t have the cost burden of governmental reporting and regulatory compliance.
Q: In Germany or Switzerland for example, the government is not only fully responsible for the themes of commemorative coins, but also for the design. Does politics have an influence on the coin designs in Australia?
A: No – only very occasionally. The RAM develops program concepts, themes and event ideas that it puts forward to the government and, when it relates to the use of the Queen’s effigy, obtains approval to use.
Q: If yes, how does it work?
A: If on the rare occasions the government does have a particular requirement, it will seek advice first and /or the creation of a concept from RAM, and then based on the outcome it may direct a particular theme. In my time at the RAM there have been very few occasions where the mint has been asked / directed to produce a coin.
Q: You are running a lot of programs to improve the situation of your employees. I was deeply impressed by the health program you have accomplished. But isn’t it sometimes a financial burden to act as a flagship company of Australia which has to be very sensitive to the needs of its employees, to environmental issues or equality?
A: No, not really. I would describe much of what we do, within the resources available, as no different to what a private business would do. We are interested in achieving improved productivity and ensuring staff work in a safe, secure and engaging environment. The WellMint program we have previously described and the Leadership program we described at the Mint Directors Conference in Bangkok are our un-imposed initiatives to help create a more productive, motivated and effective workforce.
Q: If you had the choice, would you prefer working as a private mint or rather stay a national mint?
A: A national mint with the flexibility to operate with greater flexibility, ie. in our case a government owned corporation with a skills based Board reporting to the government. The RAM in all appearances operates like a private business and, while benefitting from having the integrity of governmental ownership and respecting the responsibility it has to the government to protect its interests, it could operate more effectively under a corporate structure.
Grzegorz Zambrzycki, President of the Board and General Director of the Mint of Poland
Grzegorz Zambrzycki, President of the Board and General Director of The Mint of Poland, represents the private mints. We have asked him nearly the same questions as Ross MacDiarmid:
Q: What makes the difference between a national and a private mint?
A: We use different wording. In our opinion National Mint is a mint which, irrespectively of its ownership structure, is the only production facility located in the country, providing coins to the National Bank of that particular country. In such a case we are in fact a National Mint. In Poland there is no other mint providing services to the National Bank. During international tenders we have found many countries coming with the same interpretation.
Quite another story is whether we are state-controlled or privately owned.
As a result of the decision of Ministry of Treasury the Mint of Poland was privatized in the process of IOP (Initial Public Offer), and was partially sold to non-state-controlled individuals and entities via Warsaw Stock Exchange.
State Treasury did not abandon the shareholding position at that point. Piece by piece, lot by lot, the Ministry was selling stake in the Mint of Poland, which made us 100% non-state-controlled entity. We are speaking of the period between 90s. and mid-2000.
Our Shareholders’ Meeting as well as the Supervisory Board consist of the representatives of private investment funds and individuals. Some of the funds are partially owned by the State, but the State’s influence over our activity is non-existent.
We are listed on Warsaw Stock Exchange, which imposes on us many restrictions and obligations, e.g. to maintain the highest level of transparency. State-own companies do not follow such a restrictive regime, and are rather run by the political decisions that are not always economical.
Q: What kind of obligation do you feel towards your shareholders?
We need to act like any other company listed on the Stock. We need to be transparent, deliver value to the shareholders by constant growth, proper management of risks, creation of strategy, development, paying dividends as well as delivering Market Cap of Mint.
We have Supervisory Meetings every month, during which we present and discuss such issues as results, major contracts, obligations, strategy, etc.
The Board of the Company is fully responsible for all operations, all aspects, and is always at the disposal of the Supervisory Board. Nominations and dismissals are under the Supervisory Board’s jurisdiction.
Q: If you had to prioritize the following tasks, how would you value them?
[Sequence by our interviewee]
1 Making a profit?
A: I can really easily answer this question. All of them are equally important to us.
Obviously, we are economically-driven company, so delivering profit would be important and our top priority. I would therefore rank this task as no. 1.
2 Providing circulation coins for Poland, operating in a sustainable manner and Increasing the clientele?
A: Working in a sustainable manner and diversifying our markets as well as maintaining our most important client – the National Bank of Poland – are an important part of our strategy.
3. Making Polish people proud of their history?
A: We are one of the oldest entity in the country, with 250 years of history. We were established by the last Polish king. History and legacy, which we are carefully preserving and celebrating, are extremely important to us. We are, therefore, very active in the fields where we can highlight our history of which we are proud. However, being realistic we are a niche operation. Not every citizen of Poland is aware of the historical facts and our centuries long experience.
4. Designing coins which sell well?
A: That’s important, but only if it is relevant. We are a Mint of 7 continents. We sell our products to many countries. What sells in Far East does not find market appreciation in Europe. What we make for Europe does not exactly meet the expectations of the west side of our globe.
We are carefully analyzing market needs, its specifics, culture and history in order to dedicate products to specific markets.
Q: Does it make a difference concerning coin design, the launch of new technologies, pricing or the way of marketing being not government-owned, but private? The Polish Mint has developed quite a lot of price-winning technologies within the last years. Does the need of producing products which sell well influence your decisions about investment in developing new technologies?
A: I’m not in the position to comment or justify the strategies of others’. We have always been looking for new techniques and technologies. We own 80+ different techniques which can be used during production and decoration of our products. It puts us on the top of all mints worldwide. Are we using all of them? No. But most of them. Some of them are still waiting to be appreciated, some of them are not innovative anymore. Some of them are used here, the other ones – somewhere else. We have enough techniques to impress all markets we are entering. And we are still working on the new ones. More than 50% of techniques are invented and developed in-house.
As private entity we follow simple free market rule – either we develop and grow, or we shrink and die. Stagnation is not an option for us.
Q: If you have to compete with national mints or mints which are at least owned by a government institution, what will be your argument for convincing your client that it’s better to cooperate with a private mint?
A: Any client, in particular the National Bank, is extremely important and very demanding. I do not believe there should be any difference in approaching and serving such a client no matter whether we are private or state-controlled. We must deliver on restrictive timing quantity of products of high (acceptable – expected) quality with optimized costs, i.e. competitive with the others.
No National Banks can afford to put at risk the timetable of deliver as well as quality of products. They have extremely important role and function within any country. For them time and quality are a non-debatable issue.
For years we have been winning open tenders by offering and delivering high quality products within requested timetable on the costs’ level more attractive than the others’.
Our financial strength and stability ensure our full performance and sustainability.
We are aware that some of the state-owned mints are not run by the economic factors. Not always. Sometimes they have different tasks, as employment obligation made to the society by politicians, or other factors. Therefore, sometimes we are not in the position to fairly win the tender. We do not win everything what we run for. But we are successful and happy.
We are a tailored and slim organization, sized to the level required by the market. Our staff in minting part of the operation (we do have other non-minting business segments) comprises of 200 people, while our competition can have 5-10 times more employees working in the production line. It gives us advantage which makes us successful.
Our decision process, willingness to accept changing conditions, dynamically changing environment, flexibility provide us with another large advantage over the others, particularly state-own mints.
Q: If you had the choice, would you prefer working as a national mint or rather stay a private mint?
A: I was a member of the Supervisory Board of some state-owned companies, but my experience with this sector is rather limited.
I like the decision process and flexibility which characterizes private sector. I like being responsible for delivering results (all of them – your bullet points above), and I like that what I do is evaluated by owners who base their judgement on the known factors. Running a state-owned company is simply different operation and style. I can’t say I would not be able to do so, but I can’t say if I would like it more.
I do have great respect for my colleagues from other countries who are working for state-controlled operations. It is not easy, and they are exposed to factors not known to private sector. But they are managing that in the most professional way and they are extremely successful in many countries.
Ursula Kampmann conducted this interview.
A short version of this interview was published in the Mint News Quarterly 3 / 2016 in cooperation with Currency News. Here you will find the homepage of Currency News, where you can subscribe to this journal.