Norgate steps into the limelight

Two months ago, Craig Norgate's mother was concerned her high-achieving son was a little testy.

A few days later, she found out why. After much public and private speculation, it was revealed he had won the battle to head New Zealand's largest company.

Last week, one of New Zealand's youngest and highest-paid chief executives made a big announcement of his own - an alliance between what is now known as Fonterra and Swiss dairy giant Nestle, which has been hailed as the country's biggest-ever commercial deal.

You would think the 36-year-old former accountant would be getting used to the limelight. Yet he has only just got around to giving his first media interviews.

Following his appointment on July 4, Mr Norgate took a week off work to holiday with his family. Since then, his main focus has been recruiting key people for the newly merged organisation.

Previously, he explains, people had been working in parts of the business: "Now we've got a whole business."

The next key date marked in his calendar is September 11, when the select committee considering the Dairy Industry Restructuring Bill is due to report back to Parliament. Not that he is expecting any surprises.

"The real objective there is to try and have the first three levels of the organisation in place by then so we've got people accountable for delivering the money, making sure we're not dropping the ball in terms of customer response and service.

"Since we've had the farmer vote the whole world knows there is going to be a normal sort of a company in New Zealand, and everybody wants to know us at the moment."

Integration has involved about 40 projects, each focused on a chunk of the merger benefits which are expected to amount to $332 million a year from the third year of Fonterra's operation.

"A lot of hard yards behind the scenes, and that will be the case for a few more weeks yet because come October 1 we want to be able to make those changes which are possible before the peak of the processing season [mid to late October] and getting as many people in place as possible so that we can hold people accountable as well."

There has been much speculation in Australia about Fonterra's next move, and Mr Norgate admits he is "not uncomfortable" that the Australians appear to be leaving the ball in Fonterra's court.

"We've got to be absolutely clear on how we put money in our shareholders' pockets out of that.

"It's not just about improving how farmers get on over there. Secondly, there are issues of capital application as well. We are not necessarily going to commit a lot of capital in Australia that might be better put to use somewhere else in the world."

One suggestion is that it might sell West Australian-based Peters and Browne, or invest in Singaporean beverage group Fraser & Neave, in which Brierley Investments already owns a stake.

The main issue in Australia is the duopoly in Western Australia between Peters and Browne and National Foods, he concedes. In New South Wales, the same situation exists with Dairy Farmers and National Foods.

As for Fraser & Neave: "No, Brierleys haven't been to see us, and we haven't been to see them since we bought Huttons Kiwi."

Markets he is keen on are Latin America and Asia. "If we don't regard Asia as our home market, we haven't got one."

In Latin America, he notes, there are "natural dairy consumers".

The Mexican market alone is as big as the whole of Asia, and Fonterra has substantial businesses in Chile and Venezuela. A number of initiatives are also under way in Brazil.

At a meeting of some of the largest co-ops in the world last week, he found Fonterra the focus of interest as to "what's next" but he knows the opportunity will last only a couple of years.

"It is a key focus. We've got a huge change process under way in New Zealand but we can't stop what's going on in the world while we go through that. We've got to keep moving on both fronts."

The opportunity now facing the industry is "testimony to what the industry has been able to do with one arm tied behind its back", he says. Nevertheless, some farmers remain concerned that until last week, it had been too quiet.

Mr Norgate feels farmers have been "communicated out" in the lead-up to the vote. He is also conscious they have been busy calving. A round of meetings is planned this week, however, to explain a number of initiatives.

He was notable for his presence, however, at the Knowledge Wave conference which, as part of an informal business group, he helped initiate. The same group is also working to ensure momentum created at the conference is maintained by fostering talent.

Fonterra had a role there, too, with its goal to be a "true national champion", he says, and he believes the publicity has already paid off judging by the number of calls from expatriates wondering if there is a place for them at Fonterra.

The company will be formally launched some time next month. Until then, it is "too presumptuous", he says, to change the sign above Kiwi Dairies' headquarters near Auckland Airport. Nevertheless, it is NZMP that will be seen on manufacturing sites and tankers, with only the small print mentioning Fonterra.

He admits the timing of local market price rises was unfortunate, but defends the reason for the increase.

"The fact of the matter is the reason a lot of consumer goods aren't linked to export markets elsewhere is because the markets are disconnected totally - they make more money in the home market than they do overseas. We don't.

"Why would farmers want to cross-subsidise the domestic market? You're wanting a bunch of farmers to take a lower price for their milk to keep prices down on the local market when they could actually sell the same milk overseas for more.

"I don't think there's those sort of farmers around."

Fonterra will spend around $100 million a year on research and development. Lack of quality people has potentially been a limiting factor in research and development in the past but he believes there is no shortage of ideas.

"Our biggest issue is taking those ideas and commercialising them. To a certain extent, I think we have that issue in Fonterra, which is partly why we will have a specific new-ventures unit within the strategy area that is focused on commercialising innovation.

"We want to see new businesses driven out of there. We don't start enough new businesses in the industry."

There would be similar units in NZMP and New Zealand Milk. "We've got the people around the ideas in the research. We need to keep the pipeline full."

Meanwhile, he is looking forward to no longer having to defend the dairy industry's structure. "It just wasn't on for the Dairy Board to take a seat alongside the Minister for Trade in certain environments, and it is now absolutely appropriate and essential."

Driving home late one night, the thought struck that it was "great to have a real job again."

"It's been the best part of three years to get it to this stage, and you don't know what it's doing to you until you get to the other side of it.

"We are now talking about real opportunities and real money for people instead of what's been a charade for three years as we've tried to get the industry to where we are."