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  Reply # 2090259 13-Sep-2018 16:38
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mattwnz:

 

gregmcc:

 

their obsessive health and safety just eats through money like you would not believe, Most jobs I was involved with the quoted hours were doubled in order to comply with their paperwork requirements.

 

 

 

 

 

 

 

 

IMO health and safety , plus compliance costs in NZ are simply out of control. My parents run a small food based sideline business, but likely closing it down in the near future because all the costs involved will outweigh the income from it. It is a sad state, because it means we end up with a lot more imported stuff, where we don't really know if it has been made to the same standards as in NZ.

 

 

Well yeah - but on the other side of this is that as Fonterra have seen, the potential cost to their business of not meeting food safety standards are astronomical.  IIRC $180m of their loss was payout for a "near miss" - the botulism finding that turned out not to be -and the subsequent lawsuit by Danone.  If it had been botulism, the cost would have presumably been very much higher - plus the cost to long-term business.

 

 

 

 


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  Reply # 2090263 13-Sep-2018 16:43
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The Spinoff did a good article on the issue: https://thespinoff.co.nz/business/13-09-2018/fonterras-200m-loss-explained-why-our-biggest-company-is-in-the-red/

 

Basically it is a run of the mill ballsup by those at the top - stupid investments and stupid decisions yet some how the big cheese *giggle* still gets $9 million parachute.





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  Reply # 2090291 13-Sep-2018 17:57
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Chorus - 542 employees earned over 100k from a total of 933 employees.

 

Spark - 1,757 current employees earned over 100k from a total of 5,500 employees.

 

Fisher & Paykel Healthcare - 872 current employees earned over 100k from a total of 4,174

 

AirNZ - 4,244 out of 11,074

 

Meridian Energy 395 out of 1,012.

 

Westpac Group has a staff cost of $4.1b (NZ cost not disclosed) across its 35,000 (4,300 in NZ) employees (avg A117k pa)

 

 

 

The number of employees earning more than 100k is nothing more than sensationalism and is meaningless unless placed in the context of a similar size and natured organisation.   The key question is whether those employees are productive - and they probably are else they'd be earning that salary elsewhere.  Poor investments in a commodity based business that has an obligation to its farmer shareholders through milk price setting rather than delivering a high net profit has resulted in a poor financial result.  Will it ever post spectacular profits?  IMHO, no - to do so will open it to criticism from farmers not receiving enough at the farm gate.

 

 

 

As to the high price of dairy products in NZ - if you had significantly lower prices in NZ cf other export markets where do you expect volumes to go?  Volumes will follow the money leading to high demand vs local supply = price increases to meet the market demand.  Much like other primary produce we will pay the export price equivalent (meat, fruit, logs etc).  Thats just the price of globalisation.

 

 


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  Reply # 2090298 13-Sep-2018 18:10
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matisyahu:

 

The Spinoff did a good article on the issue: https://thespinoff.co.nz/business/13-09-2018/fonterras-200m-loss-explained-why-our-biggest-company-is-in-the-red/

 

Basically it is a run of the mill ballsup by those at the top - stupid investments and stupid decisions yet some how the big cheese *giggle* still gets $9 million parachute.

 

 

That's not quite what the Spinoff article says.

 

I must say that the journalist - Maria Slade - seems to have done a very good job, nothing sensationalist, in plain language, brief, and to the point.

 

It's a crying shame that standard isn't the norm and what we (as news "consumers") should expect.

 

 


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  Reply # 2090306 13-Sep-2018 18:45
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In the context of skilled and experienced staff, particularly specialists, a $100K salary isn't really that much these days.

 

I am also unsurprised that in a business of this type over a quarter of the staff would be over that.

 

Whether costs and salaries are out of control is ultimately a matter for the shareholders. They, via the Board that they elect, are the ones who pay them, and also the ones who bear the cost.

 

I'm not entirely sure what the point is here?


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  Reply # 2090324 13-Sep-2018 20:27
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Maybe more of a worry that good NZ CEO's are not wanting to apply for the Fonterra top job or so I read on the Stuff website. Is this an indication that anyone who takes the job is on a hiding to nothing?

 

https://www.stuff.co.nz/business/farming/107011027/kiwi-execs-turn-down-chance-to-head-fonterra-and-earn-5m-a-year

 

When Allan Mulally left the Boeing 777 programme to become the CEO of the Ford Motor Company he obviously thought it would be a good move with lots of challenges but also opportunities.  Would Mulally have left to become the CEO of Lada Russia?


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  Reply # 2090327 13-Sep-2018 20:35
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Handle9:I don't really get what your fixation is with salaries being above 100k. I'd make an assumption that you earn significantly more than that as well. Do you not think that employees should earn a market income?

Do you really think that if they had people earning less then they would drop milk prices? It doesn't work that way on commodities.

 

You're talking economics and logic to someone who's immune to both things. Don't waste your time.

 

 

 

 


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  Reply # 2090329 13-Sep-2018 20:38
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amiga500:

 

Maybe more of a worry that good NZ CEO's are not wanting to apply for the Fonterra top job or so I read on the Stuff website.

 

 

I highlighted the part of your post above where everything comes unstuck.

 

The problem is that if a prerequisite to "good" (or "qualified") is to have managed a $20 billion company, then sure, there aren't going to many qualified applicants in NZ.

 

OTOH the skills required to successfully manage a $20 million company may be all that's needed - the difference is only some zeroes on the end.  It's not as if the new CEO is tasked with commencing from a startup to become a global player.


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  Reply # 2090336 13-Sep-2018 21:10
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What do the salaries have to do with anything? It's the first loss posted in a very long time and the salaries are not altered on a monthly basis depending on performance.
Many of the staff will have no direct effect on profitability and the Danone compensation accounts for most of the loss and that's a one off.





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  Reply # 2090439 14-Sep-2018 08:26
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JimmyH:

 

In the context of skilled and experienced staff, particularly specialists, a $100K salary isn't really that much these days.

 

I am also unsurprised that in a business of this type over a quarter of the staff would be over that.

 

Whether costs and salaries are out of control is ultimately a matter for the shareholders. They, via the Board that they elect, are the ones who pay them, and also the ones who bear the cost.

 

I'm not entirely sure what the point is here?

 

 

You are completely right, shareholders bear the cost.  It makes you wonder if there will be a turning point where shareholders revolt?   I can't see it myself. 

 

There has been some shareholder agitation in the USA over recent years but it has not resulted in much happening . 

 

Incidentally, executive salaries boomed when companies introduced performance pay in the 90's (which was an attempt to reduce executive pay). Backfired.


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  Reply # 2090449 14-Sep-2018 09:00
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surfisup1000:

 

JimmyH:

 

In the context of skilled and experienced staff, particularly specialists, a $100K salary isn't really that much these days.

 

I am also unsurprised that in a business of this type over a quarter of the staff would be over that.

 

Whether costs and salaries are out of control is ultimately a matter for the shareholders. They, via the Board that they elect, are the ones who pay them, and also the ones who bear the cost.

 

I'm not entirely sure what the point is here?

 

 

You are completely right, shareholders bear the cost.  It makes you wonder if there will be a turning point where shareholders revolt?   I can't see it myself. 

 

There has been some shareholder agitation in the USA over recent years but it has not resulted in much happening . 

 

Incidentally, executive salaries boomed when companies introduced performance pay in the 90's (which was an attempt to reduce executive pay). Backfired.

 

 

One reason for that - and I'm stating it with some skepticism verging on cynicism - is that "mom and pop" investors in equity markets have more or less disappeared.  These days moms and pops have fund managers looking after equity investments for them via assorted pension schemes similar to Kiwisaver in most western countries. They're removed a step from the indignation - not likely to turn up at an AGM baying for blood.

 

OTOH Fonterra is a different kettle of fish, with farmer shareholders the only voting investors - it's a bit closer to a cooperative than a typical listed corporate.


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  Reply # 2090464 14-Sep-2018 09:24
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networkn:

 

Linux: Maybe Ritchie might need a pay cut back from doing the ads

John

 

Many many things could be made more efficient.

 

 

Well, they're looking for a new CEO, you could always throw your hat in the ring. It only pays 8 million or so a year (not counting bonuses), so you might have to tighten your belt.

 

But if you offer to do the job for $99,999 a year, they might be keen.




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  Reply # 2090467 14-Sep-2018 09:31
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BlueShift:

 

networkn:

 

Linux: Maybe Ritchie might need a pay cut back from doing the ads

John

 

Many many things could be made more efficient.

 

 

Well, they're looking for a new CEO, you could always throw your hat in the ring. It only pays 8 million or so a year (not counting bonuses), so you might have to tighten your belt.

 

But if you offer to do the job for $99,999 a year, they might be keen.

 

 

Well, one thing is for sure, if I was CEO (Regardless of my pay), I wouldn't be too gutless to turn up in person to explain why my company lost $200M.

 

I am not saying some roles aren't worth $100K+ either. I am questioning whether 6000 of them are. I have my doubts, but many here do not. I guess it's a matter of opinion/more information.

 

 

 

 


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  Reply # 2090519 14-Sep-2018 10:47
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networkn:

 

BlueShift:

 

networkn:

 

Linux: Maybe Ritchie might need a pay cut back from doing the ads

John

 

Many many things could be made more efficient.

 

 

Well, they're looking for a new CEO, you could always throw your hat in the ring. It only pays 8 million or so a year (not counting bonuses), so you might have to tighten your belt.

 

But if you offer to do the job for $99,999 a year, they might be keen.

 

 

Well, one thing is for sure, if I was CEO (Regardless of my pay), I wouldn't be too gutless to turn up in person to explain why my company lost $200M.

 

I am not saying some roles aren't worth $100K+ either. I am questioning whether 6000 of them are. I have my doubts, but many here do not. I guess it's a matter of opinion/more information.

 

 

 

 

 

 

 

 

I don't regard that salary point as anything more than typically reasonable for a skilled professional and on the low side of that. I have no idea why, as a figure, it attracts so much attention. 

 

I'd be more interested in how many are earning over $300,000 but even that is no great indicator of much in a company the size of Fonterra.

 

Are all these staff only NZ staff, or are overseas staff included? FTE only or contractors as well (they have a fair few of those). How many were on 6/12/18 month projects not permanent?

 

So many variables.

 

 






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  Reply # 2090523 14-Sep-2018 10:51
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gregmcc:

 

I've worked for a Fonterra contractor, and it's no surprise they have made a $200m loss, their obsessive health and safety just eats through money like you would not believe, Most jobs I was involved with the quoted hours were doubled in order to comply with their paperwork requirements.

 

A lot of companies that have been bidding for their work have simply walked away as it's just not worth the time and hassle, the only companies left bidding are the ones that dish out the heavy price tags.....

 

 

I see these OSH costs at many clients now days. Management, even down to fairly low level carry *personal* liability under OSH law so the arse covering becomes mandatory right through the business.

 

As far as Fonterra's loss is concerned - they lost over $200m in a settlement to Danone over that false botulism scare and over $400m on a useless investment in China. If not for those two events they would have been profitable.


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