Move north tipped to hurt Fonterra

By PHILIPPA STEVENSON agriculture editor

Fonterra's plans to move more than 200 Wellington staff and sack another 200 could come at a high cost to its major NZMP business already suffering the loss of key senior executives.

In a company survey, only 80 of 400 staff in the former Dairy Board's Pastoral House were willing to leave the capital.

Fonterra said yesterday most of NZMP's Wellington staff would have to move north under the restructuring putting head office in direct control of the $7.7 billion business.

Up to 150 staff would be asked to transfer to Auckland, 50 to Hamilton and 20 to Palmerston North while 200 would be made redundant.

Last month, Fonterra chief executive Craig Norgate anticipated fewer than 30 redundancies.

Yesterday, he said the figure rose to 200 after a review of the whole organisation, though the "substantial proportion" would be in NZMP with no impact on the consumer goods business, NZ Milk, whose staff would remain in Wellington.

Fifteen-year company veteran Chris Moller, managing director of NZMP until last month, quit over the restructuring.

He was followed by NZMP's chief financial officer Peter Schuyt and its global human resources director Jackie Lloyd.

Other key staff lost to NZMP include treasurer Geoff Taylor and a team of about 30 who did not want to move to Auckland, communications head Neville Martin, and overseas, managing director for the Americas Jim Hepburn, and in the same role for Africa, India and the Middle East, Geoff Walker, and for Europe, Paul Macgilvray.

Critics of the shake-up said staff's unwillingness to shift would cost Fonterra dearly in intellectual capital and institutional memory.

Norgate said that would be the case if, as indicated, only 20 per cent of Wellington staff relocated.

But the poll had been taken when staff had no detail of the plans and he believed 40 per cent, or about 160 staff, would be willing to move.

"Our preference is not to [lose them] but we have to be prepared for that and plan for it because the reality is that sooner or later we were going to have to make these sort of changes," he said.

Norgate said a head office in Auckland was agreed in the merger creating Fonterra to ensure it was not dominated by any of its three formation organisations.

Asked whether he was dismantling a Wellington power base, Norgate said that "the days of power politics in business had long gone".

Fonterra's Auckland Airport-based head office, envisaged as a small corporate centre, had "grown like topsy", said one critic.

It houses about 60 staff with more in three other city offices.

Norgate said the Auckland International Airport company, which owns the company's present head office, would build another office block nearby to accommodate about 300 Fonterra staff.

One commentator said it appeared Fonterra had been unable to create a head office of senior staff, many new to the industry, without the key people who knew how to run the business.

There was logic to the latest move but the timing in the middle of the dairy season was unfortunate.

It would cause a lot of staff unrest, and "the corporate drive may go into neutral for a while".

Fonterra was to sell Pastoral House and expected the return to offset re-structuring costs.

Some staff should move in the next few months, but most would relocate from the end of the dairy season in May and during 2004.