Salient. Victoria University Student Newspaper. Volume 38, Number 25. 2nd October 1975
Super profits for Fords & GM
Super profits for Fords & GM
There are four large motor assembling companies in New Zealand. Of these, two are entirely foreign owned — Fords and General Motors.
Fords established itself in NZ in 1936 with a share capital of .400.000 pounds ($800,000). Today their share capital stands at $5,300,000. Ford Motor Company of New Zealand Ltd it is entirely owned by Ford Canada Ltd, which is in turn owned by Fords in the USA.
General Motors New Zealand Ltd was established in 1925 with a capital of 50.000 pounds ($100.000) Their share capital today is $10,000,000. GM New Zealand Ltd is entirely owned by GM of the USA. When an American official of GM visits the plant, the American flag is raised to mark the occasion.
Every year both these motor companies make huge profits. Some years they send these profits to the USA as dividends, and in other years they retain their profits in New Zealand to finance their expansion Privately owned companies like Ford and GM have only had to file accounts in the Companies Office since 1970. Since that date GM has averaged $4,635,000 profit a year and sent back to the USA an average dividend of $2,100,000. For Fords the figures are $4,150,000 and $1,542.000.Those are superprofits! On average GM's profit is 46% of capital and Fords is over 75%. This means that every two years (less in the case of Fords) these companies get back what they put into New Zealand.
Not all these superprofits are returned to the USA. A large amount is retained in New Zealand to finance further expansion in our country. GM's profit retained in New Zealand stands at $19,000,000 — and increase of $12,000,000 since 1970. For Fords the figures are $13,500.000 and $9,000,000. Thus the major part of shareholders funds — assets held in New Zealand by GM and Fords — were actually earned in New Zealand.
Where do these profits that go to the USA or are used to expand Fords and GM in New Zealand come from? The workers employed by these companies produce a certain amount of value by assembling cars for sale on the New Zealand market. By the time the car is assembled, it is worth more than it was as separate parts. Part of this is due to the efforts of the workers who assembled the car. Workers are paid about $16 per day before tax The value they create in a day is greater than this $16, Therefore, for part of the day they work to create value to pay their wages, and for the rest of the day they create value which goes to Fords and GM as profit (also to banks as interest, and as rent).
Every year the fruits of New Zealand labour are exported to giant overseas corporations such as Fords and GM's, or saved up in New Zealand to help these giant companies expand their interests here. The original investment has been repaid many times, but because they still own that capital they can continue to drain New Zealand.
What benefits have these foreign companies brought us? The existence of two equally large New Zealand owned companies in the same field (Todd Motors and New Zealand Motor Corporation, the latter with a 13.3% minority shareholding held by British Leyland) shows that it is not necessary to have foreign capital to establish industries in these fields. All the large motor companies assemble a similar range of models. If this spurious competition were eliminated, the New Zealand car market is large enough to make all the component parts. But this is impossible with large foreign concerns assembling and marketing their own mass produced models and making massive profits. If the whole car were made in New Zealand, and profits were retained here, our economy would be greatly strengthened.
A stronger economy and a proper car industry in New Zealand would greatly benefit working people in New Zealand, especially those present working for GM's and Fords. When workers try through their union to improve their standard of living and working conditions, they meet special obstacles when dealing with the foreign giants. For example, during the 1974 lockout of Coachworkers by Fords and GM, workers at GM understood from the company that if they didn't knuckle under to what they the company wanted. GM could very easily close the plant down. GM is so large that its New Zealand subsidiary only appears under 'Other foreign operations' in their accounts. Closing the New Zealand plant down would greatly affect the welfare of the workers, but not GM's international profits.
New Zealand should nationalise the car assembly industry, and establish a full motor industry. This will strengthen our economic independence and our living standards.