QUESTION: name all the globally known Australian brands. ANSWER: Qantas and Foster’s. That’s right. There are only two. One is the result of John Elliot and his successors spending more than $2billion of profits largely generated by Victoria Bitter in Australia developing a global beer barnd that is barely drunk br Australians these days.
QUESTION: Name all the globally known Australian brands.
ANSWER: Qantas and Foster’s.
That’s right. There are only two. One is the result of John Elliott and his successors spending more than $2 billion of profits largely generated by Victoria Bitter in Australia developing a global beer brand that is barely drunk by Australians these days.
And the other is the national carrier of a country which is a highly popular tourist destination.
It took Stan Wallis and his committee which reviewed our financial system to really bring the chickens home to roost on the question of foreign ownership in Australia.
Included in the Wallis report was a table which showed that foreign investors owned $450 billion worth of OUR assets yet Australian companies only owned about $150 billion worth of assets overseas.
Australia’s three fold deficit when it comes to foreign investment is close to the most lopsided record of any large, modern, western economy. Now Crikey is not about to advocate foreign investment restrictions but it is very sad that our companies have made relatively little headway overseas while the foreigners have swooped time and again on our prime assets.
The following list is the first step Crikey is taking to raise awareness of this problem of corporate Australia becoming a branch office for the rest of the world.
We can barely come up with 40 Australian owned companies that generate more than $200 million a year offshore yet there is more than 100 foreign companies doing exactly that in Australia.
The lists are done in alphabetical order but there are a few industries where we really have failed to develop our own companies.
Foreigners Dominate Hotel Industry
If we’ve got a national airline flying tourists to Australia all the time, why don’t we have an international hotel management or development company? We have hundreds of quality hotels but the vast majority of them are run by companies such as US giants Starwood and Marriott, French monolith Accor or the British company Bass. Alan Rydge has built a good chain of Australian hotels so if you want to help an Australian company, buy shares in Amalgamated Holdings and qualify for the shareholder discount when you stay at Rydges.
We Even Struggle In Mining
Now if there was one industry where Australia should dominate the world then surely it is mining. We have the richest mineral deposits of any country but can anyone name a truly global Australian mining house. Hugh Morgan and WMC are enjoying a share price recovery but the majority of their value and profits is tied up in their 40 per cent stake in the worldwide alumina and bauxite joint venture with Alcoa of America. And this entire operation is managed by Alcoa – WMC just enjoys the profitable ride. BHP stuffed it with many of their overseas operations with the exception of the Escondida copper mine in Chile where many people argue the Poms at Rio Tinto tell them what to do anyway. MIM might have doubled their share price in recent times but they were once Australia’s second biggest company. Apart from smelting operations on the Thames they haven’t got much left overseas except for Alumbrera in Chile which is causing it and their partner North Ltd all sorts of problems.
And with all this oil and gas around us, why don’t we have a global Australian oil company. BHP leaves the operating of Bass Strait to the world’s biggest oil company, Exxon-Mobil, and foolishly sold out of North West Shelf operator Woodside at a paultry $2.82 a share back in 1990. The stock is now at $14 and controlled by British-Dutch giant Shell. Ampol Exploration was the Arnotts of the oil industry but was snapped up in a $1.6 billion takeover by Mobil three years back.
Foreigners Love Those High Growth Telcos
Telecommunications is another area where we have failed to make any sort of global impression. Telstra’s international division is very small and our second biggest telco, Cable & Wireless Optus, is controlled out of the UK, just like the third mobile carrier Vodafone. Motorola snapped up a key stake in emerging technology company ERG and MCI-Worldcom gobbled up Ozemail for about $300 million two year ago. Now Telecom NZ is gobbling up AAPT, our third biggest long distance player but at least One.Tel has emerged as a serious player in the ISP market, mobile and now the local call market.
We Consume The Foreign Consumer Goods
Then we move along to Australia’s pathetic record in consumer goods and food where we have not produced a single company with a well known global product. The likes of Phillip Morris, which own Kraft, Proctor & Gamble, the American personal products giant, Unilever, which gives us Streets ice cream, Coca Cola Amatil, Mars Corporation, Swiss dairy giant Nestle and the Idaho spud farmer who bought Pacific Dunlop’s pastry brands such as Four ‘N Twenty and Big Sister, are the biggest names in this roll call of foreign invaders.
The best known Australian consumer goods companies are Goodman Fielder and Pacific Dunlop and both are performing dreadfully at the moment with the prospect of a foreign takeovers rising all the time as their share prices drift further south.
Banking Ain’t So Bad
One industry in which we have done okay overseas is financial services, but even then our reach is limited. The New Zealand banking industry is dominated by the major Australian players and NAB has done well buying four regional banks in the UK and the Homeside mortgage processing business in the US. National Mutual saved itself from bankruptcy through its spectacular performance in Hong Kong but then French insurance giant Axa swept in and took control when they were still in a distressed state. AMP and Colonial have both done reasonably well in the UK, although there are some emerging problems for the AMP now. Westpac got seriously burnt overseas when it almost went broke in 1992 and ANZ dropped $500 million trading Russian bonds out of London over the past two years.
And Wine Is Fabulous
The stand out Australian export industry in which we have largely retained local ownership is wine. Although we still haven’t built any true global giants, partly because the wine industry is enormously fragmented around the world. The wine export story – it now earns more than $1 billion a year on the export market – is a great one and a model to all others. The likes of Foster’s Brewing, BRL Hardy and Southcorp Wines have all done tremendously well over the past five years and, whilst not exactly rushing in, they are slowly buying some offshore operations to complement the Australian exports.
The car industry is a good story in that we have an industry, but wouldn’t it have been nice to have an Australian car company. Afterall, the Italians have got Fiat, the French Peugeot, the Swedes Volvo and the Koreans Daihatsu. We have all the raw materials required to build cars so why did it have to be all built on foreign capital that gets shipped offshore.
Lowy, Murdoch And Pratt : Own Only Heroes
So who are our true national corporate heroes, the big players who are making it internationally. We’ve clearly got the management talent with Australians now running American giants such as Ford, the Coca Cola Company, Phillip Morris and the Campbell Soup company. We probably only have three genuine corporate heroes, the most obvious being Rupert Murdoch, who has built a $90 billion global media empire from one afternoon newspaper in Adelaide. The second is Frank Lowy, who is now the third biggest retail landlord in the world through his Westfield group which is kicking serious butt in the US and dominates the Australian shopping centre market. Thirdly there is Dick Pratt who has a fabulous paper and packaging business in Australia which he is increasinly taking to the US.
Lend Lease and Brambles are the next two standout performers, both now generating about half of their profit offshore and enjoying strong support on the share market. Having been cut loose from ICI two years back, Orica is making a brave fist of the global explosives market but it is a tough game and its shares are not performing well.
Foster’s Brewing lost plenty in the UK and China, but is trying to build an impressive wine club operation in Europe. Pacific Dunlop’s Ansell business is a world leader but even that can’t be that good with the stock now down at a miserable $1.80.
WE’RE AN EMERGING SHARE REGISTRY FORCE
In the exciting growth area of managing share registries we now have Melbourne-based Computershare kicking some serious goals with operations in Hong Kong, South Africa, the UK, Ireland and the US.Isn’t strange how we are the greatest share owning democracy in the world and also one of the most foreign owned countries at the same time.
Construction A Mixed Bag
The construction industry is a mixed bag with Boral, CSR and James Hardie all doing quite well in the US after some earlier hiccups but Pioneer International has now been taken over by UK giant Hanson Plc. Two German-controlled giant in Leighton Holdings and Baulderstone Hornibrook are the leading players in the Australian construction game. Transfield and the Grollo brothers fly the Italian immigrant corporate flag in Australia and have done a great job building their businesses. Lend Lease is an unusual best because its CEO David Higgins is now based in London and chairman designate Jill Kerr-Conway lives in the US. Still, this Australian company has now emerged as a global player in the property development and management business, partly thanks to the recent acquisition of the Bovis construction group from P&O.
So while we rule the world in sport, our performance on the business front is very disappointing. The following lists demonstrate this. Over time we are going to try and get the specific revenue figures for each entry on the list so if anyone knows figures for some of the companies please send them through to [email protected]
Australian Companies Generating More Than $200M A Year Offshore
Amcor: US, European, NZ, Asian paper
AMP: NZ, UK and Chile
AGL: NZ gas assets
ANZ: NZ and the Grindlays network
Amcor: European, NZ and US paper and packaging
BHP: Escondida, Canadian diamonds, US copper etc
Boral: US bricks, tiles, flyash. Asia plasterboard
Brambles: Chep, records business etc
BRL Hardy: wine
Burns Philp: US and European herbs, spices, yeast
Commonwealth Bank: NZ and limited Asian operations
Computershare: UK, HK and South African registry businesses
Colonial: UK, NZ and Asian insurance operations.
CSR: US building products
Faulding: US pharmaceuticals
Foster’s Brewing: China, Molson and European wine clubs
Goodman Fielder: Nth and Sth American food operations.
HIH: New Zealand and US insurance
Lend Lease: UK property, US property management, Asian development
Liberman family: property, banking
Macquarie Bank: Asian property development, global trading
Mayne Nickless: Indonesian hospitals, UK express freight, US security
MIM: Alumbrera mine in Argentina, UK smelting
News Corp: global media
NAB: UK banking and Homeside in US
Normandy Mining: Gold mines and base metal assets
North: Canadian iron ore, Alumbrera mine, Swedish base metals.
Orica: Worldwide explosives business.
Pacific Dunlop: Ansell, batteries
Pasminco: US zinc
PBL/Packer: chemical, publishing, gambling, film production, cinemas.
Qantas: airline business
QBE: various insurance operations
Telstra: international operations
Visy: US paper
Village Roadshow: cinemas
Westfield: US, NZ and Malaysian property development and management
Westpac: NZ operations
WMC: aluminium/bauxite operations
Foreign Companies Generating More Than $200m In Australia Each Year
ABB: Swiss, engineering, Redbank power station
ABN Amro: Dutch, investment banking and funds management
Accor: French, Manages dozens of Australian hotels
AIG: US, Insurance
Air New Zealand: NZ, 50% of Ansett
Alcoa: US, aluminium and bauxite joint venture with WMC
Anglo America: South African, bought Acacia
AOL-Time Warner: internet, magazines, film production, theme parks
Axa: French, 51% of National Mutual
Babcock & Brown: bought AIDC
Bass Group: UK, various hotels
BAT: UK, tobacco
Baulderstone Hornibrook: German, construction
Billiton: South African, QNI nickel business
Brierley Investments: NZ, retail, James Hardie and Wills
British Airways: UK, stake in Qantas
British Telecom: UK, various telco investments
Cable & Wireless: UK, 51% of CW Optus
Cadbury Schweppes: UK, confectionary and drinks
Campbell Soup: US, control of Arnotts
Canwest: Canadian, controls Ten network
Cargill: US, various agribusiness investments
Carter Holt Harvey: US/NZ, forestry
CED: US, bought cable company Metal Manufactures
CGEA: French, transport, water
Chevron: US, oil and gas
Chemcor: US, chemicals
CITIC: Portland aluminium smelter, beef
Citigroup: US, banking and financial services
CMS: US, 50% of Loy Yang A power station
Coca Cola Company: US, control of Coca Cola Amatil
CS First Boston: Swiss-US, investment banking
Dairy Farm: HK, Franklins
Deutsche Bank: German, investment banking
Du Pont: US, chemicals and textiles
Duke Energy: US, gas pipelines
Edison Mission: US, owns Loy Yang B power station
EDS: US, Commonwealth Bank IT contract
Erricson: Swedish, telecommunication products
Exxon-Mobil: US, oil and gas
Fletcher Challenge: NZ, construction, forestry
Ford: US, car manufacturing
General Electric: US, card processing
General Motors: US, car manufacturing
Glaxo-Wellcome/Smithkline Beecham: UK, pharmaceuticals
Glencore: Swiss, various mining projects
GPU: US, Vic energy distribition
Granda: UK, Seven Network stake, production
Grand Hotel Group: Malaysian, various hotels
Hanson: UK, coal and bought Pioneer
Heinz: US, food, Weight Watchers
Hilton Corp: US, Jupiters casinos and various hotels
Hochtief: control Leighton Holdings
Hoechst: German, chemicals, food
Homestake: US, Kalgoorlie super pit
Huntsman: US mormons, chemicals
Hutchison: HK, telecommunications
IBM: US, computers, IT
Illinois Tool Works: US, bidding for Siddons Ramset
ING: Dutch, investment banking, insurance
KPN: Dutch, bought TNT
Kumugai Gumi: Japanese, hotels and property
Li Ka Shing: Hong Kong, bought SA power industry
Lion Nathan: NZ, brewing
LVMH: French, leather goods and drinks
Malaysia Mining Corp: Malaysia, Ashton Mining, Plutonic
Marriott: US, hotels
Mars: US, chocolates pet food
MCI-Worldcom: US, telecommunications, Ozemail
Merrill Lynch: US, stockbroking
Metro Cash & Carry: Sth African, controls Davids Holdings
Mitsubishi: Japanese, car manufacturing
Motorola: US, stake in ERG, telecommunications
National Express: UK, Vic public transport
National Power: UK, Vic power station
Nestle: Swiss, former PacDun assets and various other food
Norwich Union: UK, financial services
Nufarm: NZ, chemicals
Obayishi: Japanese, tollroads
Ong Beng Seng: Singapore, hotels, retail
Orlando: French, wine
Parmalat: Italian, dairy industry
Pearson: UK, Grundy TV production, financial information.
Philip Morris: US, food and tobacco
Placer Dome: US, gold mining operations
P&O: UK, stevedoring, ports, cold storage, resorts.
Principal Group: US, BT funds management
PowerGen: UK, Vic power assets
Rio Tinto: UK, Comalco control and various mining assets
Rothmans: South African, tobacco
Royal-Sun Alliance: UK, insurance
San Miguel: Phillipines, beverages (20% of Coca Cola Amatil)
SBC: Swiss, investment banking
Service Corp International: US, death industry
Shell: Dutch-UK, oil, coal and gas
Spudman: US, bought PacDun pastry businesses
Sony: Japanese, music, electricals
Starwood: US, hotels
Telecom NZ: NZ, AAPT
Texas Utilities: US, Vic gas and electricity assets
Thames Water: UK, water
Toyota: Japanese, car manufacturing
Unilever: Dutch-UK, detergents and ice cream
UnitedGlobalCom: US, control of pay-TV group Austar
Vivendi: French, Victorian public transport, publishing, water
Vodafone: UK, mobile phone business