April 2002 decisionsGE Capital Finance buys business of AGC Talavera Property, Australia, buys four buildings from Trans Tasman Steel and Tube buys Pipeline Supplies from OneSteel Rayonier sells 3,491 hectare Waipaoa Forest to Huaguang Forests of China 51% of Thermal Ceramics sold to Shinagawa Refractories of Japan Macquarie Goodman buys further property at “The Gate”, Penrose Taranaki land purchased for Pohokura Gas Field development One application refusedOne application was refused this month. GC and DJ Rogers of the U.K., sought approval to acquire 24 hectares at Riwaka Valley Road, Motueka, Nelson, for $540,001 from Limburg Enterprises Limited of Aotearoa. The Rogers intended to sell their existing holiday home in the Riwaka Valley and purchase the property
“to use as a nature reserve and holiday home for six months of the year. The property was previously farmland that was overtaken by gorse. The vendors have cleared the property and now approximately 18 hectares is in an advanced stage of regenerating native bush. The Applicants intended to allow a further 2.5 hectares, that the vendors currently use for grazing, to regenerate into native bush. The Applicants intended to manage the native bush as a private nature reserve for their own enjoyment and enhance the health of the bush and welfare of the birdlife by controlling possums and other predators.
It was also proposed to transform a large pond on the property, which is home to the Golden Bell frog in to a lake, in an endeavour to enhance the existence of the Golden Bell frog which it is claimed is under threat due to the use of weed killers such as round-up. The Applicants advised that once established, the frog colony would be opened to the public.
The proposal does not meet the lifestyle policy which requires any applicant to be intending to either take up New Zealand permanent residency with 12 months of the date of approval; or undertake significant development on the property and convert it from a lifestyle property into a viable investment property; or to have other significant investments in New Zealand. If Applicants cannot meet the policy, applications are not viewed to be in the national interest.” GE Capital Finance buys business of AGCGE Capital Finance Australasia Pty Limited, owned by the General Electric Company of the U.S., has approval to acquire “the business assets and undertakings” of Australian Guarantee Corporation (NZ) Limited” for a suppressed amount from the Westpac Banking Corporation of Australia. GE Capital Finance already provides financial services in Aotearoa “including consumer products in the form of personal loans and store finance for whiteware, brownware, furniture, and motor vehicles purchases, and term life and general insurance, and business finance for equipment purchases and floor plans”.
The purchase included AGC’s operations in both Australia and Aotearoa. Amongst its other operations in Aotearoa, AGC is a 50% shareholder in AA Financial Services Limited, the other shareholder being the NZ Automobile Association. When the sale was announced to the New Zealand Stock Exchange on 2 May 2002, Westpac said that it was “expected that a profit on sale of a minimum $750 million will be recorded in the second half accounts. The final purchase price is dependent on AGC’s net asset value at completion. AGC’s net assets in Australia as at 30 September 2001 totalled $907 million.” GE Capital has head offices in Sydney, Melbourne and Auckland, and more than 2,245 employees. Its receivables in Australia and New Zealand are over A$8 billion. (“Agreement reached with GE Capital on the sale of AGC”, 2/5/02, http://market.nzse.co.nz/market/announcements/companyDetail/full/WBC-77968.html; “GE Capital Obtains ACCC Approval on AGC Acquisition”, 8/5/02, http://www.gecapital.com/news/press/05082002.html.)
Despite fears of lessened competition in Australia, the purchase was given the required statutory approvals. According to the Melbourne Age,
“GE has been a highly acquisitive player in the past seven years, buying Coles Myer’s store-card business in 1995, the Nissan Finance car-finance business in 1998 and consumer and commercial credit operation AVCO in 1999. While some figures show GE would have 80% of the market for the type of in-store credit it provides, [the chief executive of GE Australia New Zealand, Steve] Bertamini said GE’s market share would represent about 6% of a A$42 billion-a-year market in retail sales via credit.
While retailers of bulky goods were strongly opposed to GE buying AGC, in-store credit was not substantially different to other forms of finance available to consumers, the Australian Competition and Consumer Commission’s Ross Jones said.” (Age, 9/5/02, “$800m buyback for Westpac”, by Anthony Hughes, http://www.theage.com.au/articles/2002/05/08/1019441520700.html)
The purchase also received approval from the New Zealand Commerce Commission (“GE Capital Finance receives Commission clearance”, Media Release 2002/42, 24/4/02).
General Electric is one of the world’s largest and most aggressive transnational corporations, ranking number 6 on the Fortune 500 list for the largest corporations in the U.S. in 2002, and number 9 in the Global 500 list also compiled by Fortune magazine (see http://www.fortune.com/indexw.jhtml?channel=/editorial/list_links.html). In 2001 it had 310,000 employees and made profits of US$13,684 million on revenues of US$125,913 million and assets of US$495,023 million. According to the Commerce Commission, the conglomerate operates in a variety of businesses including Global Exchange Services, Industrial Systems, Power Systems, Lighting, Medical Systems, Mortgage Insurance, Plastics, Specialty Materials, Transportation Systems, and Capital and Finance.
Its former CEO “Neutron Jack” Welch made slashing jobs fashionable. He was the epitome of the ruthless head of a transnational. According to Russell Mokhiber, editor of the Washington, D.C.-based Corporate Crime Reporter, and Robert Weissman, editor of U.S. transnational watchdog magazine, Multinational Monitor, writing in 2000,
no company’s record better illustrates the glories of corporate globalization for the well-off, and the misery for the many.
Founded by the American icon Thomas Edison, GE is now headed by Jack Welch, who has said, “Ideally you’d have every plant you own on a barge” – ready to move if any national government tried to impose restraints on the factories’ operations, or if workers demanded better wages and working conditions.
While Welch’s 20-year reign has been a golden era for shareholders – the company’s stock value has risen three times more than the Dow average, leading Forbes magazine to name Welch the “Most Admired CEO of the Century” – it has been a disaster for employees.
GE has slashed its U.S. workforce by almost half since 1986. The numbers are down “because of speed up, downsizing, outsourcing, plant closings, you name it,” says Chris Townsend, political director of the United Electrical (UE) workers.
GE has globalized its operations by shifting production to low-wage countries. (And even in these countries, the jobs remain precarious: GE recently shuttered a factory in Turkey to move it to lower-wage Hungary – and it has threatened to close a factory in Hungary and move it to India. Union officials in Malaysia say they fear GE “putting our plant on a barge and moving to Vietnam,” according to InterPress Service.)
Now GE appears no longer satisfied to close its own plants – it wants to shut down those of suppliers, too. In a startling memo obtained by Business Week, GE Aircraft Engines (GEAE) – a hugely profitable division – told suppliers that they would have to move to Mexico if they hoped to continue their relationship with GE. GEAE has held what it calls “supplier migration” conferences in Cincinnati, near its headquarters, and in Monterrey, where an aerospace industrial park is being built.
An internal report on a GEAE meeting with its suppliers says, “GE set the tone early and succinctly: ‘Migrate or be out of business; not a matter of if, just when. This is not a seminar to provide you information. We expect you to move and move quickly.” (Corporate Focus, “GE: Every Plant on a Barge”, 17/5/02, by Russell Mokhiber and Robert Weissman, http://lists.essential.org/pipermail/corp-focus/2000/000019.html.)
And Welch hasn’t finished with GE, despite no longer being CEO. In September 2002, the New York Times, quoting papers filed by his wife in their divorce case, revealed that
G.E. covered enormous living costs for them while he led the company and will continue to do so for him for the rest of his life. The extent of these benefits has never been disclosed by the company.
General Electric has reported that Mr. Welch’s total compensation, including bonus and salary, was $16.7 million in 2000, his last full year at the company before his retirement last September. It has also said that he will remain a consultant to the company on a retainer of $86,000 a year and will continue to have access to G.E. services and facilities.
But it did not disclose the value and the details of his perquisites as chief executive that will apparently continue through retirement. Along with access to corporate aircraft, mentioned previously in company footnotes, the documents filed by his wife, Jane, describe his use of a Manhattan apartment owned by G.E., floor-level seats to the New York Knicks, courtside seats at the U.S. Open, satellite TV at his four homes and all the costs associated with the New York apartment, from wine and food to laundry, toiletries and newspapers. The privileges, down to certain dining bills at the restaurant Jean Georges in the Manhattan apartment building where he lives, have continued even in retirement, the court papers indicate, without placing a value on them. (New York Times, 6/9/02, “G.E. Expenses for Ex-Chief Cited in Divorce Papers”, by Geraldine Fabrikant.) These revelations led to further reviews of Welch’s reign. GE Capital was right in the middle of one question. As other New York Times reporters wrote a few days later, More fundamentally, especially in the wake of recent accounting scandals, many are now raising questions about the quality of G.E.’s earnings under Mr. Welch and wonder whether the company manipulated earnings so that G.E. would show the same level of growth and reach its earnings targets year after year. Many say G.E. used one-time sales – it acquired and sold more than 100 companies a year in deals arranged by its financial arm, GE Capital – to smooth the ups and downs of its industrial products divisions.
“G.E. did not bring good things to accounting,” said Robert Friedman, an analyst for Standard & Poor’s. “They used accounting sleight-of-hand to meet their short-term earnings goals. I believe they propped up earnings more than they deserved.” (New York Times, 16/9/02, “Jack Welch in Unlikely Company”, by Leslie Wayne and Alex Kuczynski.) Talavera Property, Australia, buys four buildings from Trans TasmanIn a decision originally almost wholly suppressed, and released only in October 2002 after appeal, Talavera Property Pty Ltd of Australia has approval to acquire four Wellington buildings for $85,100,000 from Trans Tasman Properties Ltd, owned 54.8% by SEA Holdings of Hong Kong, 6.319% in the U.S.A., and 38.881% in Aotearoa. The properties are: · The Ministry of Economic Development Building, 33 Bowen St; · Telecom Tower, 13-27 Manners St; · 110 Featherston St; and · Tourism and Travel House, 73-89 Boulcott St.
Talavera’s “principal activity is the development and ownership of retail, commercial and industrial property in the east coast of Australia”. These purchases, which will add to existing property owned in Aotearoa, will diversify Talavera’s holdings. Steel and Tube buys Pipeline Supplies from OneSteelIn a decision originally almost wholly suppressed, and released only in October 2002 after appeal, Steel and Tube Holdings Ltd, owned 50.3% by OneSteel Ltd of Australia and 49.7% in Aotearoa, has approval to acquire Pipeline Supplies Ltd for $11,691,000 from Tubemakers NZ Ltd, a 100% subsidiary of OneSteel. Steel and Tube “is principally a steel merchandiser but also provides reinforcing for construction prohjects, owns a roofing business and distributes fastening supplies… The proposed purchase will strengthen the Applicant’s existing investment in the pipeline industry and provide enhanced purchasing power for supplies.” Rayonier sells 3,491 hectare Waipaoa Forest to Huaguang Forests of ChinaHuaguang Forests Co. Limited, owned by Feng Mingchang and Lu Biru, of China, has approval to acquire 3,491 hectares of leasehold land at Waipaoa Forest, Gisborne for $147,674,419 from Rayonier New Zealand Ltd, a subsidiary of Rayonier Inc of the U.S.A. The purchase includes “three Crown Forestry Licences, four forestry rights, a lease of the Waipaoa forest and other assets”.
Huaguang “currently does not operate in New Zealand but has been a regular purchaser of logs since December 2000. The main objective behind the proposed purchase is to secure a log supply to meet the market for medium density fibreboard (MDF) in China which is in strong demand and has growth potential. The Applicant operates the Huaguang Decorative Board plant in China, which currently has 3 MDF lines requiring 250,000 cubic metres of logs per line annually. The proposed acquisition provides the Applicant with a secure supply of logs for this plant and other operations, and also provide New Zealand with an assured market for logs.”
And assures us that we will remain log exporters, with added value processing being carried out elsewhere in the world – and competing with us if we try to export value-added products.
Although the OIC approval was for 3,491 hectares, the Gisborne Herald reports that Huaguang was purchasing 33,000 hectares of East Coast timberland operations from Rayonier – presumably the remaining hectares are in Crown Forestry licences, the sale of which do not require OIC approval. The price Rayonier announced for the full deal was $US63.5 million. “Huaguang is now the single largest owner of forestry in this region, holding 33,000 of the 139,000 hectares of forestry plantations.” Rayonier had already been exporting logs to Korea and China from its East Coast forests, but Huaguang said they would take all the production available. The forests “support about 400 jobs in the East Coast region, both directly and indirectly, with staff including harvest contractors, trucking firms, port operations, silviculture and roading”. Rayonier also sold its mill for $900,000 Pine Sawmills Gisborne Ltd. Rayonier says the sale does not mean it is quitting Aotearoa. (Gisborne Herald, 3/6/02, “It’s business as usual under Coast’s new forestry owner”, by Kristine Walsh; see also http://www.gisborneherald.co.nz/archives/June2k2/news/news_03-06-2k2.htm.)
Huaguang is a “major company based at the Shiliang Industrial district, Shatou town, Nanhai city. They employ 20,000 people and produce a million cubic metres of plywood a year. Next year they have a target of also producing a million cubic metres of medium-density fibreboard. Most of their production was for the Chinese domestic market.” (Gisborne Herald, 8/4/02, “Rayonier sells to Chinese company”, by John Jones; see also http://www.gisborneherald.co.nz/archives/April2k2/news/news_08-04-2k2.htm) The company also owns forests in Malaysia.
However Huaguang does in fact export around the world. As one of its U.S. representatives said:
We are the largest decorative board producing enterprise in Southeast Asia Region with 10,000 workers and a factory area of more than 1,050,000 square meters. Wood sources include nearly 100,000 hectares of forests purchased in Malaysia, 100,000 hectares of plantation forests in New Zealand. The company has its own wharf with a handling capacity of 5 million tons a year, and a fleet of ships with a freight capacity totalling 150,000 tons a year. We have been exporting our products to Southeast Asia, the Middle East, America etc. (U.S. Society of Wood Science and Technology (SWST) Newsletter, March-April 2001, p.4, http://www.swst.org/news/01mar/nlmar01.pdf.) 51% of Thermal Ceramics sold to Shinagawa Refractories of JapanShinagawa Thermal Ceramics Pty Limited, owned 51% by Shinagawa Refractories Company Limited of Japan and 49% by The Morgan Crucible Company Plc, of the U.K., has approval to acquire Thermal Ceramics New Zealand Limited for $2,500,000 from Morgan Crucible Holdings (NZ) Limited, a 100% subsidiary of The Morgan Crucible Company Plc. The purchase includes 14 hectares at 24 Rayner Road, Huntly, Waikato. Shinagawa, which specialises in refractory production and is one of Japan’s leading refractory makers (see http://www.shinagawa.co.jp/English/CorpProf/index1.html), has an agreement with Morgan to take full ownership by the end of 2006.
“Thermal Ceramics New Zealand Limited (TCNZ) business activities are manufacturing, marketing and selling refractory products. The proposal is a result of a worldwide reorganisation by the Morgan Crucible Group of companies which is intending to place less priority on refractory production. As part of the reorganisation Morgan has agreed to sell its 100 percent interest in TCNZ to the Applicant. The Applicant is currently 51 percent owned by Shinagawa Refractories Company Limited of Japan and 49 percent by Morgan.” Macquarie Goodman buys further property at “The Gate”, PenroseMacquarie Goodman Funds Management Limited of Australia has approval to acquire 0.8 hectares at “The Gate”, 373 Neilson Street, Penrose, Auckland for $4,545,000 from Penrose Logistics Centre Limited of Aotearoa. The property adjoins a 6.0 hectare property owned by Macquarie Goodman Funds Management whose acquisition was approved by the OIC in May 2001, though the purchase price was not revealed. The properties “are currently being developed into an industrial complex known as ‘The Gate’”. Taranaki land purchased for Pohokura Gas Field developmentThe Pohokura Field Development joint venture, owned by Preussag Energie GMBH of Germany (33.33%), Shell (51.668%, made up of Royal Dutch Petroleum Company [N.V. Koninklijke Nederlandse Petroleum Maatschappij] of the Netherlands, 31%, and Shell Transport and Trading Company of the U.K., 20.668%) and The Todd Corporation Limited of Aotearoa (15%) has approval to acquire 54 hectares at Otaraoa Road and Main North Road (State Highway 3), Motunui, Taranaki for $2,000,000 from Methanex Motunui Limited of Canada. The property
“comprises 10.459 hectares of the Methanex site that is currently redundant having been previously been used by the vendor for the manufacture of synthetic petrol which is no longer produced by the vendor. The remaining 43.838 hectares is unimproved land which is a buffer zone between the manufacturing plant and farm land. It is currently leased to a local farmer for casual grazing.
The Applicant proposes to acquire the subject property to develop as the production station for the recently discovered Pohokura gas and condensate field offshore of Motunui. The overall development will include the construction of offshore platforms, a drilling programme, the laying of pipelines and a shore crossing together with the construction of an onshore production and processing station and storage facilities for LPG and condensate.” Land for forestry· Two groups of investors from Taiwan have approval to acquire land at State Highway 22, Te Akau Road, near Ngaruawahia, Waikato from the New Zealand Forestry Group Limited, which is owned 76% by Wesley Garratt of Aotearoa and 24% by J Hong of Taiwan. They are all members of the Brooklands Forest Group, which “has entered into an arrangement with New Zealand Forestry Group, to develop approximately 1200 hectares of land at Ngaruawahia”. They are: · Jeng Chung Yi Family Trust, 16.2 hectares for $103,680; and · Chang Yao Jen Family Trust, 19.8 hectares for $126,720. These sales are like many in this and other regions organised by New Zealand Forestry Group, the last such sales being in March 2002, also in Ngaruawahia, with investors in the Brooklands Forest Group. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. · RKG Limited, owned by 33.34% by R Hartung of Singapore, 33.33% by K Hartung of the U.S., and 33.33% by G Anderson of the U.S., has approval to acquire 40 hectares at Tawhero Forest Estate, Pakowhai Road, Masterton, Wairarapa for $315,075 from DSM Land Limited of Aotearoa. The land is “a forestry block growing pinus radiata which is part of a larger forestry block being sub-divided by the vendor. On average the trees are 5-6 years old.” Like the New Zealand Forestry group schemes, the investors provide the money, while the New Zealand company manages the development of the forestry operation. “The land being acquired is part of a larger property owned by the vendor who intends to develop a total of 1,221 hectares into forestry. A total of 554 hectares is currently planned to be subdivided and sold to investors and if demand is sufficient the total property may be subdivided. To date some 300 hectares have been planted and this proposed sale will provide capital to the vendors to further develop the forest on the remaining land.” · Forest Creek Station Limited, owned by T R D and M H Harpur of Canada, has approval to acquire 2,831 hectares at Cainard Road, Fairlight, Southland for $5,400,001 from the RW Butson Trust and the Fairlight Trust of Aotearoa. The Harpurs “propose to convert the property which is currently operated as a sheep and cattle farm into a commercial forestry and deer farming operation. Approximately 1,000 hectares of the property has been identified as being suitable for forestry. This area is mostly summer grazing blocks at high altitude with low stock carrying capacity. The land has been assessed as suitable for growing douglas-fir. The more productive farmland on the property will be retained and a deer farming operation established with the property carrying predominantly deer with some sheep and cattle.” In September 2001, Mari Hill Harpur of Canada and J.J. Hill III of the U.S.A. gained approval to acquire 600 hectares of Glenmore Station, Northcoat Road, Garston, Southland for $506,250. They planned to use it for douglas fir and some Ponderosa Pine. The land was “within 10km of Cainard Station” which the two received consent to acquire and convert to forestry in September 2000 (though Harpur was then described as being from U.S.A.). In April 2000, the OIC approved T.R.D. and M.H. Harpur of Canada purchasing the 2,228 hectare Garondale Station, Peel Forest, South Canterbury, for $2,474,998. Garondale was used mainly for sheep and cattle farming and the Harpurs intended to develop a 1,400 hectare Douglas Fir forest on the property. They were already partners in a deer breeding business based at the nearby Peel Forest Estate. Land for wine· Morton Estate Wines Limited, owned by the Coney Family of Canada, has approval to acquire 1.5 hectares at Maraekakaho, Bridge Pa, Hawkes Bay for $37,464 from M M Campbell of Aotearoa. The property was planted in grapes in August 2001. It adjoins a 20 hectare vineyard which Morton acquired and planted in 1998. The area of land being acquired is “too small to be an economically viable standalone unit. Accordingly, the amalgamation with the Applicant’s existing property will ensure the most productive utilisation of the land.” Morton last received approval to buy land in November 2001, which was for 43 hectares of freehold and 129 hectares of leasehold land at Waihopai Valley Road, Blenheim, Marlborough, for $1,528,612. Other rural land sales· Waiaua Bay Farm Limited, owned by Julian Hart Robertson of the U.S., has approval to acquire 312 hectares at Matauri Bay Road, Matauri Bay, Northland for $2,812,500 from JL Matthewson of Aotearoa. According to the OIC,
“Robertson has previously obtained consent to acquire a property at Matauri Bay, Northland. That property has subsequently been developed into a high quality international golf course and lodge known as Kauri Cliffs… The Applicant is now looking for other suitable properties to develop along similar lines with the aim of establishing a high quality golf/accommodation circuit in New Zealand.
The Applicant now proposes to acquire the subject property, which is immediately across Matauri Bay Road from the Kauri Cliffs development. The existing areas of pine plantation and native bush will be retained. Part of the property will continue to be farmed in conjunction with the adjacent property owned by the Applicant. This is likely to result in the continued viability of the farming activities at Kauri Cliffs by enabling the Applicant to maintain economies of scale through the replacement of agricultural land that was withdrawn from farming to accommodate the golf course /resort development at Kauri Cliffs. In addition the Applicant has long term plans to use part of the land for a lower cost/higher use golf course and accommodation more affordable to the average golfer than Kauri Cliffs provided there is sufficient demand to make that viable.”
This is the third purchase by Robertson in as many months – see the March 2002 decisions for the last one – which added to two he already owned. · B A Angliss of the U.K. has approval to acquire 27 hectares at Tongatu Road, RD 3, Ngunguru, Whangarei, Northland for $2,250,000 from JA & PK Ferguson Family Trust of Aotearoa. Angliss “has applied for New Zealand permanent residency under the family category and proposes to acquire a lifestyle property situated at Ngunguru, Whangarei. The Applicant intends to reside on the property and construct a dwelling. The property is not of sufficient size nor is it economically viable as a farming unit. The Applicant’s family already reside in New Zealand and he wishes to reside close to them. Immigration consultants, Malcolm Pacific have advised Mr Angliss’ application for permanent residency is likely to receive favourable consideration given that he has family members residing permanently in New Zealand.” · Heoung Reall Lee and Jung Woo Byun of Korea have approval to acquire 6.7 hectares at 185D Patumahoe Road, Patumahoe, South Auckland for $450,000 from DG & PJ Wilson of Aotearoa. The property is currently used for grazing cattle and the purchasers intend to develop the property into a market garden growing tomatoes for the local market. They “were issued with New Zealand work visas in September 2001 for a three year period and intend to apply for permanent residency once their business operation is established”. · John Harold Thomas Lewis of the U.K. has approval to acquire eight hectares at Pilmer Road, Gisborne for $270,000 from DH MacLaurin of Aotearoa. Lewis “intends to develop a citrus orchard on the property. It is located on the opposite side of the road from his existing orchard development. The property has 7.2 plantable hectares of which currently 2.7 hectares are planted in citrus. The remaining plantable area is to be planted in valencia oranges. The Applicant plans to develop the property for organic production and advises that this will be the first fully organic citrus orchard in the Gisborne district.” Lewis gained OIC approval to acquire 13 hectares at Pilmer Road for $337,500 for a citrus orchard in October 2001, which in turn adjoined an 11 hectare block property whose acquisition was approved by the OIC in July 2001. · Benson Farms Limited, owned by RC and M Benson of the U.S., has approval to acquire 33 hectares at Woodstock Road, Oxford, Canterbury for $337,500 from DA and JV Burnett. The Bensons already own a 603 hectare deer farm (for which the OIC gave approval in February 2002 – see our commentary for that month) and have “entered into an agreement with a neighbouring land owner which will result in boundary adjustments being made.” They are to “sell to the neighbour 79.50 hectares which does not adjoin the Applicant’s main farm and in return purchase 32.87 hectares which will be adjoined. The 32.87 hectares to be acquired will be converted into a deer unit in conjunction with the Applicant’s plans to convert the remainder of the farm.”
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