Dairy

Management overhaul

By Geoff Adams

Lino Saputo Jr’s drive to introduce changes in the former Murray Goulburn Co-operative, has resulted in some senior executives leaving.

In an interview with Country News, the Canadian owner of the former Australian co-operative made it clear he wanted a new culture for the company.

The grandson of an Italian migrant, Mr Saputo keeps an eye on the human capital he employs and likes to drop in on the suppliers who provide milk to his dairy operations — something that Smithton Tasmania farmers found out last year.

Mr Saputo has been a busy man during the past year with the acquisition of Murray Goulburn and the recent purchase of a dairy processor in the United Kingdom, Dairy Crest, valued about £1billion.

While the purchase of Australia’s largest co-operative, Murray Goulburn, did not move as fast as he would have liked, he said the extended time it took to get through regulatory hurdles gave him a good opportunity to get to know the assets of the company, including the human resources.

‘‘The board of Murray Goulburn was gracious enough to allow us to understand the business well.

‘‘When we hit the ground we were running for the first 100 days. That’s when people are most receptive to change,’’ he said.

‘‘For the leadership team, the top eight executives at Murray Goulburn, only one remained, because there was a difference in culture, or vision or perhaps level of competence we were looking for.

‘‘So we had that one leader, in human resources, a phenomenal person who helped us build the team.

‘‘We also had the great fortune of this other company we had been operating for four years, Warrnambool Cheese and Butter, and tapped into resources there and allowed the people from Warrnambool to rise to the occasion and take on more responsibilities,’’ he said.

‘‘The secret to all of this was merging the talents together — Warrnambool and Murray Goulburn together under one harmonised group, Saputo Dairy Australia.

‘‘You have to be present and active. Some issues were negotiable, others not.

‘‘Market strategies, brands, ideas and technologies were all up for negotiation. What was not negotiable was our culture and values. Things that are fundamental to us; our principles, how we treat our employees, our suppliers, our customers. That was not negotiable.

‘‘Early out of the gates, we said, ‘well, you may have talent and competence but the fit is just not right’.

‘‘We are very good at identifying people who do not fit our culture and structure.

‘‘There were many we had to have that conversation with and most of them were at the executive level.

‘‘Once we got there it was easy to lock arms and fight the fight together.

‘‘I think we have, in Australia, one of the strongest management teams in any of our divisions. And that includes Canada. The Australian team would rival any management team in either Canada, the United States or Argentina.

‘‘One of the casualties in the take-over was management at the Cobram factory where changes were made when Saputo took over.

‘‘We recognised through the due diligence process that Cobram had a cultural issue.’’

Saputo installed a manager from Canada to run the Cobram factory.

Mr Saputo said the company was committed to the site and foreshadowed more spending on the plant in the order of tens of millions of dollars.

Asked about his remarks that the industry needed more niche products but also that in some places there was too much stainless steel, he said production needed to be geared towards market outcomes.

‘‘We would take that milk that we have and it would go into value-added products. So it’s not that we are processing more, we are processing better.

‘‘Don’t you have to build more stainless steel to do that?

‘‘It’s not the stainless steel per se, it’s the capacity that is too much. We are not adding capacity, we are converting some stainless steel from commodity to value added.

‘‘We are not afraid to, where we have redundancies and antiquated plants, shut plants.

‘‘In Australia we are very fortunate that we have a good footprint in the regions. So all the plants have some value but we need to be mindful of the fact that maybe some of the production will be converted to more value-added products.’’