Pioneer International Limited

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Pioneer International Limited

Level 20
Coopers & Lybrand Tower
580 George Street
Sydney, New South Wales
Australia
(02) 364-4000
Fax: (02) 364-4009

Public Company
Incorporated: 1956 as Pioneer Concrete Services Limited
Employees: 11,000
Sales: A$4.91 billion (US$3.88 billion)
Stock Exchange: Sydney

Pioneer International was formed during the period of industrial growth in Australia that followed World War II. Originally founded to supply a limited range of concrete materials to the domestic construction industry, Pioneer has extensive investments in building materials, petroleum refining and marketing, and oil and gas exploration and production. Diversification into mineral mining in the late 1970s proved unprofitable, and the company began to sell its mineral assets in 1989. In the 40 years since Pioneer Concrete Services was founded, the company has grown into a major international operation, with subsidiaries throughout Australia and in 11 other countries. Under the leadership of Sir Tristan Antico, the company has grown to become one of Australia’s most productive corporations.

Pioneer Concrete Services was established in 1949 as a partnership between two young Australian entrepreneurs— Tristan Antico and Kelvin Conley—providing concrete placing and formwork to the Australian construction industry. The postwar economic environment in Australia was extremely favorable to the building industry. While the country’s infrastructure had escaped damage during World War II, the following years saw an influx of immigrants, which, with the baby boom of the early 1950s, created the need for increased house-building in Australia. The growth of the Australian economy after World War II was relatively slow, but Pioneer benefited from increased government investment in housing in the 1950s.

Pioneer grew slowly during the early 1950s, expanding its businesses with minor acquisitions in New South Wales. The company formed a new subsidiary—Pioneer Readymixed Concrete and Mortar Proprietary Ltd.—in 1954, following the acquisition of a Canberra-based concrete producer which owned one concrete plant. In October 1956 Pioneer was incorporated as Pioneer Concrete Services Limited. Three years later, in 1959, it was listed on the Sydney Stock Market as a public company, and the name was changed to Pioneer Concrete Services Ltd. Following its flotation, Pioneer embarked upon a period of rapid expansion in the pre-mixed concrete and quarrying markets in Australia. Much of the growth came from new acquisitions, but diversification into new building-materials products was also undertaken.

Despite the economic recession in Australia from 1961 to 1962, and the marked decline in government assistance to the construction industry, Pioneer had developed an effective expansion strategy based on conservative spending and consolidation. This allowed the company to prosper while more ambitious construction companies failed. Tristan Antico’s guiding policy, from the inception of Pioneer to his retirement as chief executive in 1988, was based on the belief that long-term stability and growth is best maintained by cushioning the company from economic recessions while taking advantage of periods of sustained economic growth elsewhere. Accordingly, the company reacted to the fluctuations in the Australian economy during the late 1950s and early 1960s by embarking on a period of geographical expansion. Having established its first successful foreign venture, a pre-mix concrete plant, in Hong Kong in 1961, Pioneer began to look to the European markets for the first time. Construction and building materials operations were established in the United Kingdom in 1962, where, in the same year, the worst winter in a century hit the industry badly. Pioneer survived its second overseas venture and then had about 140 construction and quarrying operations in the United Kingdom. In the following year, the company established operations in Israel and, in 1964, in Italy. At the same time, Pioneer was expanding throughout the Australian states, and by the middle of the decade had established a wide network of lucrative operations in its home market.

In 1965 a new subsidiary, Pioneer Asphalts Pty. Ltd., was formed, jointly owned by Shell Australia Ltd. This marked Pioneer’s first entry into asphalt manufacture and supply. In the same year, the company diversified into aggregate quarrying in Hong Kong. Two years later, Pioneer acquired F. W. Williams Holdings, a large and diverse Australian company with plastic manufacturing operations, and tea and coffee plantations in Papua New Guinea. The program of vigorous expansion and development at home and abroad continued until the end of the 1960s, although profits did not increase proportionately with spending. The company’s policy after the 1960s was to consolidate the businesses it had acquired over the last ten years, and to make no further major investment or diversification.

However, expansion continued in the 1970s, although not at the rate of the previous decade. In 1970, Pioneer acquired pre-mix and quarrying companies in Spain and by the middle of the decade the company’s interests had spread to Asia, Africa, and most of Europe. In 1973, together with CSR Limited, one of Australia’s largest cement manufacturers, Pioneer acquired Australian and Kandos Cement (Holdings) Ltd. The takeover gave Pioneer substantial cement production facilities in Victoria and New South Wales. Antico was knighted in 1973 in recognition of his services to industry.

A significant commercial development took place in 1975, when Pioneer began to invest heavily in resources. Pioneer’s first venture into the mineral-exploration field was a joint project with Pennzoil of Australia in 1975. While many companies had suffered losses as a result of making incautious mineral investments during the resources boom of the mid-1970s, Pioneer had considerable experience in the quarrying industry and it was thought logical to invest in other resources. From 1975, profits from Pioneer’s building materials division were used to expand the minerals operations in Australia. The drive to exploit mineral mining and marketing continued until 1988, when mineral sales represented only 5% of Pioneer’s total revenue.

In the United Kingdom in 1977, the company’s subsidiary, Pioneer Concrete UK, was among a number of companies being investigated by the Office of Fair Trading for alleged contract fixing. Pioneer Concrete U.K. was one of 21 companies eventually put on the Register of Restrictive Practices, although senior managers insisted that they knew nothing about local deals, “many of which were agreed over a drink in the evening,” according to one newspaper report. With the Australian economy stagnating in the mid 1970s, and with continuing industrial disputes, Pioneer was increasingly dependent on its overseas construction activities. Political unrest in Italy was adversely affecting Pioneer’s Italian operations, and in Spain and West Germany, profits were falling. Antico’s policy of geographical diversification to insure against isolated economic downturns seemed to be effective; despite recession in most European building markets, and restrictive government construction policies at home, Pioneer announced a 46% increase in earnings for 1976-1977.

In 1978, Pioneer became involved in a major coal coking and steaming development. Set in the Hunter Valley area of New South Wales, the project operated in conjunction with the Electricity Commission of New South Wales and Ampol Petroleum Limited. Initial research indicated that there was enough coal in Hunter Valley to provide mining opportunities for 100 years. The following year, Pioneer acquired a 20% stake in Ampol Petroleum, which was increased to a controlling stake of 65% in 1980. The investment in Ampol marked a crucial commercial turning point for Pioneer; Ampol Petroleum Limited and its associate company, Ampol Exploration Limited, were giant oil exploration, production, and refining companies in Australia. The Ampol companies provide the Pioneer group with 50% of its profits and represent 50% of assets. Pioneer’s mineral operations expanded considerably in 1979, notably in uranium and beach-sands mining. Ampol and Pioneer formed a new, jointly owned company to control new mineral acquisitions: the Nabarlek uranium mine and Queensland Mines Ltd., another major uranium producer. When Queensland Mines and Kathleen Investment (Australia) Ltd., a major beach-sands mining company, became wholly owned subsidiaries of Pioneer in 1981, the company’s profits rose by 30% in one year.

Widely varying world economic conditions in the early 1980s reversed the dependency Pioneer had had on overseas operations in the previous decade. By the mid-1980s, the company was increasingly reliant on the Australian construction and resource markets. In 1982, Pioneer attempted to take over Mixconcrete (Holdings), a large British building materials producer with widespread concrete plants and aggregate reserves in the United Kingdom. The takeover was completed in 1983, and Pioneer’s building materials division became the third-largest readymix concrete producer in the United Kingdom. In Australia at this time, Pioneer was experiencing several commercial problems. A fall in demand for domestic building materials, a sharp decline in concrete and quarrying activities, and the state governments’ interference in the pricing of petroleum products threatened the stability of the Pioneer group.

In 1984, Pioneer began a series of investments in the United States, to capitalize on its earlier American successes in concrete production. The US$23 million acquisition of Lone Star Industries’s sand, gravel, and quarrying operations in 1985 gave Pioneer the opportunity to cash in on the impending construction boom in the United States. The following year Pioneer was the subject of a hostile takeover bid. F.A.I. Insurances, Australia’s largest general insurer, offered A$1 billion for the company, and pursued Pioneer for a year before retreating. Its vulnerability to predators forced Pioneer to make fundamental changes in its strategy. The company had a history of refusing to sell unprofitable assets. However, in 1986 the building materials divisions in Italy, Portugal, and South Africa were sold in an attempt to consolidate Pioneer’s more lucrative assets and to strengthen the company’s stock rating. In 1987, the year of the stock market crash, Pioneer began an important period of growth and restructuring. The company gained control of Giant Resources, a group with mineral and gold assets in Australia, New Zealand, Canada, and Guyana. Later that year, the Bell Group, a failing investment company, sold its shares in the former Ampol Petroleum—which, had been renamed Ampol Ltd. in 1982—to Pioneer, giving Pioneer the opportunity for full ownership of Ampol.

The acquisition of Giant and the potential for 100% ownership of Ampol, which it achieved in 1988, provided Pioneer with the means of streamlining its increasingly diverse management structure. However, Pioneer’s regrouping strategy, in which mineral assets were to be amalgamated under Giant Resources, and petroleum exploration and production controlled by Ampol Exploration was thwarted by the A$32.5 million loss made by Giant in 1988. Sir Tristan Antico retired as chief executive that year but stayed on as group chairman. His deputy, Des Quirk, who had been with Pioneer for 31 years, and who had been responsible for the company’s expansion in Europe, took over the leadership. The company changed its name to Pioneer International Limited at the end of 1988.

Ill health forced Quirk into early retirement, and in April 1989 Rodney Price was appointed managing director. Price began to refocus Poineer on its core activities following the disposal of most of the company’s mining assets. Taking advantage of the domestic construction boom in order to extricate the company from costly mineral activities is generally considered to have secured Pioneer’s future stability. Under Price’s leadership there has been a review of all aspects of the company, with the goal of rebuilding Pioneer’s traditional concentration on building- and construction-materials and oil refining and exploration.

Principal Subsidiaries

Ampol Exploration Pty Ltd.; Ampol Ltd.; Solo Oil Ltd.; Brick & Pipe Industries Ltd.; Pioneer International Finance Ltd.; Besser (Qld) Ltd.; Pioneer Concrete & Quarries (NSW) Pty Ltd.; Pioneer Plasterboard Pty. Ltd.; Pioneer Roof Tiles Pty Ltd.; Pioneer International Investments BV (Netherlands).