The cost of hubris

Abstract

The demise of Gunns in the spring of 2012 was as much a psychological shock to Tasmanians as it was economic. Alongside cricket stars Ricky Ponting and ‘Boonie’, Gunns had become the best-known Tasmanian. On 25 September 2012, Gunns went into voluntary administration after its creditors, who were owed more than $500 million, refused to bankroll the business any longer. Gunns had posted a$904 million loss for the 2011/2012 financial year and had been in a trading halt since March 2012 with a share price of just sixteen cents. The shareholders are now unlikely to see any of their investment returned. The announcement that Gunns would go into administration also resulted in more than six hundred job losses, about three hundred of which were in Tasmania. This effectively marked the end of one of Tasmania’s most successful businesses. Founded in Launceston in 1875 by brothers John and Thomas Gunn, the business quickly grew with interests in timber trading, sawmilling, build- ing, brickmaking and hardware. According to Tom Gunn, the historian great-grandson of John Gunn, by the turn of the twentieth century Gunns ‘was one of the first companies in Australia to become an integrated business’. At one point, Tom Gunn explains, you could walk into the company’s office in Launceston with title to a block of land and they could design and build you a house from the ground up to put on it. Gunns dominated the building and timber industries of northern Tasmania and from the 1890s onwards built many of Launceston’s impres- sive heritage buildings. Launceston’s current mayor and anti-pulp mill politician, Albert van Zetten, agrees that Gunns has left an important mark on the city. ‘They’ve employed a lot of people over those years, which has been a very significant part of our economy,’ he says. Gunns remained in family hands until it went public in 1986, and John Gay took over as managing director. The Gunns family sold their remaining shares soon after, signalling the end of one chapter and the beginning of another in the company’s history. As a public company, Gunns was able to raise funds for an aggressive expansion, buying out other timber businesses including Boral Timber, North Forest Products, Auspine, and ITC Timber. With the purchase of North Forest Products for $335 million in 2001 Gunns became the largest exporter of woodchips in the southern hemisphere. In 2004, in the midst of this expansion Gunns announced its controversial proposal to build Australia’s biggest pulp mill at Bell Bay in the picturesque Tamar Valley. The pulp mill turned into a game-changer for Gunns, but not the kind it wanted. Increasingly, Gunns and its ‘pet’ project came to represent all that was wrong with Tasmanian politics: deals with mates, secret dinners with a premier, flagrant indifference to the planning process. For Gunns, the normal rules of the game didn’t seem to apply. Read the full article > This essay first appeared in Griffith REVIEW 39: Tasmania – The Tipping Point? Photo Credit: Cheeseness via Compfight c