Economic reforms, 1980s
Over the 1980s many of the large companies that had dominated New Zealand business for decades lost ground and new companies were established. In the early 1980s companies termed ‘corporate raiders’, such as Brierley and Chase, took over companies whose shares they thought were under-priced, bought shares until they had a majority shareholding, then sold off assets (termed ‘asset stripping’) or restructured the company.
The deregulation of financial markets from 1984 made global finance available, and corporate raiders looking to raise finance to buy shares in takeover bids had little trouble. Readily available credit fueled a share market bubble, and ultimately led to a crash in 1987. The fallout of the unregulated 1980s was a tightening up of the legal requirements for large companies through the 1990s, especially law relating to insider trading – selling or buying shares with insider knowledge unavailable to others.
Privatisation and corporatisation
Perhaps the largest influence of historic regulation was preserving large companies against competition. For example regulations limiting road transport protected the large government-owned railways. Once the restriction was lifted in the 1980s large road transport firms such as Mainfreight grew.
The requirement for companies that froze meat to have a licence protected existing large enterprises and frustrated innovation and new processing activities located near sources of supply. This also changed in the 1980s.
In the 1980s the privatisation and corporatisation of state-owned enterprises and deregulation of the economy saw a flurry of unimaginative company names: Electricorp, Coalcorp, Goldcorp, Landcorp, Petrocorp and Equiticorp.
Many large companies formed or grew as the government removed regulations and opened up the economy. It also established state-owned enterprises, government operations which were now to be run on a profit-making basis. This process was called corporatisation – if the ownership was still held by the government. Some companies were privatised. In 1987 Telecom became a state-owned enterprise when the former Post and Telegraph Office was corporatised. Telecom was then sold in 1990.
The electricity industry underwent a series of reforms over the 1990s. From one government-owned supplier, Electricorp (ECNZ), it devolved into competing companies. Trustpower was formed in 1993. In 1996 Contact Energy, with 22% of total electricity production, commenced operations as a state-owned enterprise generator in competition with ECNZ. Meridian, Mighty River Power and Genesis became large companies in 1999.
The Rich List
The NBR Rich List has been published since 1986. It outlines the richest people in the country and their holdings in different companies. Many on the list have family trusts. Determining who owns what is complicated with the greater foreign ownership in companies that has occurred since the 1980s. Another complication is that increasingly, large companies operating in New Zealand are owned by shareholders who are not individuals, but rather are other companies. In 2008 the 178 individuals and families on the Rich List (earning more than $50 million) controlled an estimated $44.4 billion.
Since the 1980s the list of the 50 largest companies in New Zealand has been a changing one. It is still difficult to measure which are the largest, as not all large companies are listed on the New Zealand exchange. For example giant dairy company Fonterra continues to have a cooperative structure and is not listed on the stock exchange.
In the early 2000s many of New Zealand’s largest companies were subsidiaries of overseas organisations. Capitalisation on the New Zealand stock exchange remains the best available indicator of a large New Zealand enterprise. In 2009 the largest was Fletcher Building (part of the former Fletcher Challenge conglomerate) followed by Telecom, Contact Energy and Auckland Airport.
In the 50 largest companies it was difficult to categorise what activity a business was in – some corporations have diversified and their activities have changed. In rough terms the largest group was financial services, just as it was in the 19th century. The next largest group was manufacturers of various kinds, often using both New Zealand materials and imports.