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Two honoured while Norgate shown the door

By Hugh Stringleman

Friday 4th July 2003

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While Craig Norgate was ousted from Fonterra Co-operative Group last week, the dairy industry honoured his two highest-ranking competitors.

Tatua chief executive Mike Matthews and Westland's Barry Richardson received the industry's leading accolades while surrounded by Fonterra middle management at a Rotorua conference.

Dr Matthews got the Dairy Industry Association senior service award and Dr Richardson the Institute of Food Science and Technology's JC Andrew award.

Low-key achievers who have built their careers on innovative dairy science leading to senior management, the pair now head companies which provide better returns to milk suppliers than Fonterra.

Meanwhile, the chairman and directors of the giant co-operative decided that a complete outsider from Canada, Andrew Ferrier, offered better prospects than the proven NZ dairy industry leader, Craig Norgate.

Without a fixed contract term for Mr Ferrier, the appointment puts a huge onus of responsibility on the board, which farmers will come to resent bitterly if the highly paid chief executive does not succeed in raising milk returns.

Fonterra managers at the Rotorua conference were all shocked by the Norgate ouster and some said he had been great to work for.

None looked forward to the possible work disruption if Mr Ferrier hastened reorganisation.

The most optimistic hoped that it would signal the end to farmer and director factionalism, which has dogged Fonterra since before the merger.

There was also a grudging respect for chairman Henry van der Heyden, who appears to know what he wants in a CEO, is prepared to make a bold appointment and can enforce discipline in the board, the shareholder council and senior management.

Industry commentators now say Mr Norgate was on a hiding to nothing and that the van der Heyden-led New Zealand Dairy Group interests in the merged Fonterra only reluctantly accepted the interim appointment.

For the powerful NZDG faction, Mr Norgate represented yet another compromise in the merger negotiations with Kiwi Co-operative (Norgate's former power base) and the Dairy Board.

Nor was that argument just about personalities but about philosophy.

Kiwi had already corporatised many aspects of its business and launched new ventures in added-value products.

NZDG, in contrast, held the old dairy co-operative ethos firmly, processing the greatest volume of milk into commodities for the common good.

If you believe that NZDG and Kiwi factions continue to plague Fonterra, then at best Mr Norgate has been keeping the seat warm for the past two years as an interim CEO.

His options for reform were constrained by conservative farmers, a divided board and by former Dairy Board CEO Warren Larsen's pre-emption in placing Chris Moller and David Pilkington as deputies.

Now all of that disfunctionality will land in the lap of Mr Ferrier.

Until 1999 Mr Ferrier headed the North American division of Tate & Lyle, the world's largest sugar company.

Since then he has run a public company called GSW, that sells plastic guttering and water heaters, and has a turnover of $500 million, compared with Fonterra's $14 billion.

"I am aware there is a fair amount of politics and my role is to break down the disagreement," Mr Ferrier said last week.

He also said he was used to dealing with grumbling farmers.

While paying tribute to Mr Norgate's achievement in the past two years, Mr van der Heyden said: "Rather than Craig coming up short, I'd say when we measured them Andrew Ferrier came out ahead."

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