Vertical integration in Australia, ahead of beef liberalisation (1991)

Foresight that secured the terms — and the question it left open

The heart of this decision, one could say, is that a maker of processed ham and sausage recast itself as a company that handles meat itself. It took the liberalisation of beef imports not as a threat but as a long-standing given, and built its upstream procurement base overseas before the rules actually changed — a forward stance that became the strength which held first place in Japan while many competitors withdrew after liberalisation. The choice of Australia rather than the United States as the axis had the same long range: it weighed the quality of the cattle and the future of Asian demand above the conditions immediately at hand.

Yet leading in procurement was not the same as earning money abroad. The power to secure meat cheaply and in volume underwrote the company’s strength at home, while the logic by which foreign subsidiaries were to be grown into independent pillars of profit was left ambiguous for a long time. The path by which overseas investment that had won through liberalisation would, two decades on, be called to account for its capital efficiency and turn into the central theme of restructuring may already have been germinating in this period. The strength produced by aggressive investment and the problem left behind it continue, to this day, as two faces of the same decision.