Lessons for all in Fonterra debacle

16:00, Nov 16 2013
Ross Keeley
PURELY NZ: SeaDragon Marine Oils chief executive Ross Keeley.

Fonterra's botulism scare has damaged New Zealand's reputation as a quality producer of dairy products, but for companies of all kinds the dairy giant's false alarm could prove salutary.

"Quality" means different things to different companies and achieving it consistently is not easy. For some it means simply winning repeat business while for others it means embracing, or at least coming to terms with, complex certifications, audits and regulation.

Fairfax Media and GE Capital invited the chiefs of nine mid-market companies to a roundtable in Nelson to discuss what quality means for them and whether New Zealand has a cultural problem in achieving it consistently.

Just before the event, Fonterra chief executive Theo Spierings told a China Business Summit in Auckland a "she'll be right" attitude was partly to blame. That was no longer acceptable, he said.

The Nelson group agreed "she'll be right" doesn't cut it any more and everyone has to constantly lift their game.

At one end of the scale was Ron Geiger, managing director of Alaron Products, a contract manufacturer of dietary supplement and complementary medicines.


"We actually hold in the neighbourhood of two digits of licences of different kinds which all involve auditors and systems and certifications which have to be maintained."

Geiger said it is the details that catch companies out. New Zealand is an exporting nation and we have no choice but to meet the world's expectations of quality.

But beyond that, being a quality producer that meets all regulatory requirements is an advantage in foreign markets. Often it's something competitors can't match. Geiger said a few years ago Alaron resisted regulation but now embraces it for that reason.

"If you are in the export sector ‘she'll be right' doesn't work long-term," he said.

But not every business is in industries such as food and pharmaceutical production where quality is critical.

For Tony Woodall of Nelson printer Printhouse, quality is about repeat business.

"There's a difference in the importance. For us we have to get it right to sell the product," he said. You don't always get it right every time, so what matters is how you deal with any issue, Woodall said.

"If there is a problem, you deal with it quickly."

In more commodity-oriented businesses, the product quality and ability to service markets and be a little bit different counts, said Peter Crighton, general manager of sawmillers South Pine.

It has focused on automation and has reduced staff considerably over the last decade while doubling production capacity. But installing heavy new machinery and training staff has to be done safely in what can be a dangerous period, he said.

Insulation specialist Absolute Energy focuses on training.

"Quality is very important. To me it has to come from within and is passed on through training," business owner Paul Brockie said.

A lot of younger guys come into the business and need to be guided by older hands, he said.

"There's a lot of work going on behind the scenes to achieve quality and when you do get there it is long lasting," Brockie said.

Another Nelson business, Fertilizer New Zealand, is at the start of the food chain, managing director John Barnes said.

As a commodity market driven exporter, everything New Zealand sells overseas starts off as some form of fertiliser, he said.

In particular, Barnes is trying to deliver more efficient use of fertilisers and to develop fertilisers that won't increase the level of cadmium in the soil.

"So we believe in 100 per cent, 100 per cent of the time."

Barnes said the issue he has seen with large New Zealand co-operatives isn't so much a "she'll be right" attitude as a siege mentality. They are often not prepared to listen to anyone from the outside.

Helicopters New Zealand works in an industry where once again quality is critical. The company shifts people and equipment in industries such as oil and gas.

"Safety for us is closely correlated with quality," chief executive Keith Mullett said. If they get it wrong the consequences can be fatal.

"We happen to work in a very heavily regulated industry. The amount of scrutiny and oversight is quite amazing. You simply can't operate effectively in that environment without investing in quality and safety to the extent we have."

Mullett said his company has to meet and exceed the international standard or there is no business.

"Doing away with some of the attitudes we've been talking about is not easy but once you get there it's sustainable," he said.

Ross Keeley, chief executive of SeaDragon Marine Oils, said that while his company supplies other businesses the end user is the consumer.

"Our product safety and integrity culture, as it relates to customers and product, is that we look at who the most vulnerable consumer of our product is. For us that's the unborn child."

Keeley said the danger he sees with a "she'll be right" attitude, is that foreign companies can, and are, coming here to take advantage of it and leverage the cachet and purityattached to NZ products.

"That's something I'm pretty parochial about, and jealously seek to promote and protect New Zealand image in export markets," he said.

Sunday Star Times