Fonterra’s board, under heavy fire for the losses racked up in the last two years, may at last be getting something right. Its recruitment of Mercury’s CEO Fraser Whineray to the newly created post of chief operating officer puts him in pole position to drive innovation, efficiency, and sustainability in the co-op.
When he joins Fonterra next year he will bring with him the credentials of having transformed Mercury, simplifying the business through the divestment of overseas interests and developing a compelling strategy for sustainable growth.
Harbour Asset Management’s Shane Solly said Whineray adds “a bit of grunt to the front row at Fonterra”.
In that context, Point of Order notes, Whineray would be following the example of his renowned uncle, the late Sir Wilson Whinerary, who not only captained the All Blacks from the front row, but subsequently had a successful career as a businessman and company director.
That’s not the only distinguished family connection. His brother Matt is chief executive of the NZ Super Fund.
At Mercury, where he has been earning a salary of close to $2m, he proved himself as a “results-oriented” NZ business leader.
He started his career as a graduate of the NZ Dairy Board’s technical training programme and spent time at some of Fonterra’s sites and in its export markets.
He has held roles at Credit Suisse, Puhoi Valley Cheese and Carter Holt Harvey and is chair of the Prime Minister’s Business Advisory Council.
Miles Hurrell, Fonterra’s CEO, reckons Whineray has demonstrated he can transform organisations to achieve growth in complex environments through a focus on innovation, customers and his team.
So what can Fonterra’s shareholders and suppliers expect from Whineray?
Let’s look in more detail at his record at Mercury.
Whineray has been a key figure in the geothermal renaissance in NZ which has been been the greatest decarbonisation achievement of the century, displacing fossil fuels. Renewable steam powers 17% of the country’s electricity without the need for rain, wind or sun.
Earlier this year Mercury announced the development of the company’s first wind farm, being built at Turitea near Palmerston North at a cost of $265m. It is NZ’s first major generation development since 2014 and will produce enough electricity for more than 200,000 cars, and will work well in combination with the largest peaker in the North Island, which is the Waikato hydro system.
There’s a message for climate change warriors and extinction rebellion campaigners in the Mercury record under Whineray,
He says NZ is in the box seat for a world desperately looking for decarbonisation that works.
“Our electricity system is already renewable, reliable and low cost.It is a story that needs to be more widely known, and shared. NZ’s renewable electricity system is a true competitive advantage. The two global technologies of wind generation and electrification of transport are arriving in perfect time for NZ to extend this competitive advantage, lower structural costs in the economy, reduce emissions, improve balance of payments and improve wellbeing. And just as NZ is in the box seat for decarbonisation, Mercury is in the front row, and has a balance sheet, bench strength, focus and development pipeline to support that position”.
From that background, farmers can expect Whineray to lead the charge in accelerating the mitigation of the negative impacts of dairying on global warming.
Just as he turned Mercury’s focus fully to renewable generation, he simplified the business through the divestment of overseas interests and the sale of its former smart metering business, Metrix for $272m and he oversaw the mothballing of the Southdown gas-fired power station in Auckland.
Whineray is a great believer in partnerships. He says they have been very important for Mercury because
“ … they help us achieve more without having to DIY everything. We have taken our landowner partnerships at Turitea to the next stage with the commencement of the Turitea wind farm. And on the larger scale, we have continued to invest in our commercial geothermal partnerships with Maori land trusts: the Tuaropaki Trust and the Tauhara North #2 Trust. Mercury has the largest commercial partnerships with the Maori economy of any listed company, by some distance.
“While an emphasis on the Maori economy is receiving a lot of attention of late, Mercury initiated and developed these relationships, and near billion-dollar joint ventures, starting about twenty years ago. What these Maori land trusts achieve for their people with their share of the cashflow is phenomenal and we are inspired by their approach”.
Alongside his belief in partnership, Whineray uses a system of high performance teams within the Mercury corporate structure.
He says quality teamwork is a very delicate and critical value driver for productivity, quality decisions and long-term outcomes.
“A great team can get through the mahi 10 times better than a non-performing team. There is no physical or technology asset can get that performance uplift for an equivalent investment. Along with the new work environment, High Performance Teams foster a more agile work flow around business priorities”.
Whether other ideas Whineray may introduce to Fonterra will be easily applied remains to be seen.
For example, he changed the way they work at Mercury HQ in Newmarket. He has no office, no desk and the same laptop as everyone else.
It might be popular with Fonterra’s farmer-suppliers but would that go down well in millionaires’ row at Fonterra?