From April issue of NZ Manufacturer magazine

 

Geerten Lengkeek, Managing Director Productivity People

 Miles Hurrell’s resignation marks the end of a significant chapter for Fonterra, and in many ways, for New Zealand.

Fonterra isn’t just another company. It’s our largest business, a global-scale manufacturer, and the commercial engine behind a big part of our primary sector.

When Fonterra performs, New Zealand performs.

What stands out to me about the Hurrell era is this:the real turnaround wasn’t about growth, it was about productivity.

He inherited a business that had achieved global scale, but not always strong returns. Revenue was high, but capital wasn’t working as hard as it could.

Over the past six to seven years, that has fundamentally shifted.

Return on capital has moved from around 5–6% to consistently around 11–12%, without a material increase in milk supply.

That tells you something important. This wasn’t a volume story. It was a conversion story, and that’s what productivity really is.

Better conversion of milk into value. Better use of assets to drive throughput and margin. Better deployment of capital into earnings.

A big part of that has been strategic focus. Simplifying the portfolio, exiting lower-return businesses, and refocusing on Ingredients and Foodservice where Fonterra has real advantage.

But just as important is what’s happened inside the system.

This is a manufacturing business at scale. Productivity is won or lost in how well you manage flow, yield, and asset utilisation: from farm through to processing and export.

Many years ago, my colleague Nick Brownsword and I were involved in the early operational excellence work in Fonterra. Even then, it was clear how much opportunity existed in improving flow, reducing waste, and aligning the system end-to-end.

What’s been encouraging is seeing how those ideas have evolved and matured, and how this is now part of Fonterra’s DNA.

Because while headlines focus on strategy or divestments, the real gains come from thousands of smaller improvements: in plants, processes, and decisions about where milk goes and how capital is deployed.

It’s also worth remembering that Fonterra is a co-operative.

Its owners and shareholders are farmers, not the public. Many New Zealanders and politicians may have an opinion about the brands sale, but it is the farmer shareholders for whom decisions are made.

For farmers, capital is hard-earned, tied up in land, and often held across generations.

In that context, return on capital isn’t just a financial metric; it’s a measure of how well the co-op is stewarding scarce, long-term resources.

By that measure, the last few years represent a meaningful lift.

Miles Hurrell’s legacy is not just in strategy or expansion, but in restoring discipline, focus, and productivity to New Zealand’s most important business.

And that’s a legacy that will matter well beyond Fonterra.