Zak flanked by his mother Sarah, at left, and Auntie Betty Gemmell, at right, outside the family home.

Chain reaction

Zak Williams’s quest to understand the fortunes of AFFCO Di Billing writes

Working on the chain in a freezing works is a monotonous, repetitive and bloody business. To ease the boredom, there’s talk. About sport, sex, the next smoko, and, inevitably, about the bosses, the company that owns the works and pays the workers.

On the chain at the Wairoa works near Gisborne, Zak Williams did a lot of listening. The Auckland Farmers’ Freezing Company, now AFFCO Holdings Limited, his employer had weathered tough times, particularly after deregulation in the ’80s. It survived, by a whisker, an industry rationalisation that forced it to acquire works from R and W Hellaby and Waitaki International. It had unexpectedly – and controversially – listed on the Stock Exchange in 1995. Most of the talk among the workers was worried, remembers Zak, who little expected that one day he would become an expert in the company’s governance.

Until recent years, Zak had had little formal education. On leaving school he went straight on the chain at Wairoa. And for a long time he was comfortable enough with his life. He had his mates, was a union member like everybody else, and enjoyed a beer. Then he discovered learning. “One of the fellas on the chain, a Pa-keha-, decided to do night classes in te Reo in Wairoa. He asked me to go along with him so he’d have someone else on the chain to talk Ma-ori to. I got into it then reached the point where I couldn’t learn any more there. So the instructor, a kaumatua, suggested I enrol as an extramural student at Massey, doing Ma-ori Studies.

“One day, while I was on campus at Palmerston North, an elder said, ‘Listen, it’s good to learn the Ma-ori language but we have a fair few people doing that already. Go and do some Pa-keha- papers – we need more business knowledge.’ So, I changed waka.”

Still studying extramurally and still working on the chain, Zak accumulated the papers for a Bachelor of Business Studies. “I put up my hand for the night shifts which left me the daytime to study and think. Plus get a bit of sleep.”

After graduation he returned to the chain, but now that he knew a little more, those old questions nagged at him. What had driven a farmers’ cooperative to become a publicly listed company rather than a farmers’ cooperative? How had the company come so perilously close to bankruptcy in the mid ’90s?

He enrolled in the Master’s of Management programme. He planned to research the company’s past, and its governance in particular, for his masterate report.

The problem, he and his supervisor foresaw, would be getting the information he needed. Would company directors and senior managers agree to talk to him, sharing information that could awaken controversy or possibly be commercially sensitive? Zak made careful plans to enlist their cooperation. He found an AFFCO director who was willing to smooth his way and help persuade the chairman of the worth of the study.

With the agreement of the College of Business, Zak adopted a flexible schedule. “I needed time to talk to the chairman but obviously he wasn’t always available. So I made a choice to align my schedule with his schedule, rather than the business school’s. The logic was simple: without the chairman’s approval to investigate governance issues involving AFFCO, there would be no research project.”

His research process has been praised as extremely innovative by Dr James Lockhart, Director of the University’s Graduate School of Business.

The project took three years. For most of that time Zak continued to work on the chain but he did take nearly a year off, the better part of 2004, between the end of peak killing season in February and the beginning of the next, in November.

Zak’s found that one reason AFFCO struggled in the 1980s was its structure as cooperative. Beset by the debt accumulated in making necessary upgrades to its plant, the board remained intent on realising income for its farmer shareholders rather than the good of the company. Moreover, the cooperative’s large board membership and, as Zak puts it, “excess democracy” limited its agility.

In March of this year in AFFCO’s boardroom Zak formally presented his project to those who had made it possible: AFFCO’s past and present directors and chairmen, chief executives, senior managers and financial advisers. (Hearteningly, everyone approached eventually agreed to be interviewed, though most on the condition that they not be named.) With him for the occasion were his mother Sarah, friends Clarry and Mary Agnew, and wha-nau member Alicia Beuving, and, from Massey, Dr James Lockhart.

At the beginning of the meeting, Zak had accepted an invitation from chairman Sam Lewis to sit in the chairman’s seat. Going to the head of the table, he gingerly sat down, saying “I could get used to this!” But he was happy enough to leave it when the meeting closed. He had heard enough stories, analysed enough balance sheets, and knew enough about AFFCO’s fortunes, to know the seat is not always comfortable.