Fortescue boss Dino Otranto has provided a candid assessment regarding market conditions and the company’s recent decision to cull 700 jobs.
Fortescue boss Dino Otranto has provided a candid assessment regarding market conditions and the company’s recent decision to cull 700 jobs.
Speaking at Tuesday morning’s Business News Success and Leadership breakfast, an upfront and open Mr Otranto said the layoffs – announced on July 17 – were something the Andrew Forrest-founded company didn’t take lightly.
“I’ll try and de-couple the notion of us having to do a job cut as a response to the long-term market trend,” the Fortescue metals-focused chief executive said.
“And I know I’m supposed to say that in my role – but at Fortescue, for us, being competitive in terms of our unit costs is existential for us and goes far beyond just profit.
“It’s a ticket to get in the door to recognise that the culture we have is different.”
Mr Otranto said he could emphathise those impacted by the layoffs, which impacted three to five per cent of its workforce.
“The biggest contributor to the 700 was the fact that over the last two years, we’ve developed two separate teams at Fortescue – an energy team and a metals team,” he told the room.
“And three months ago, we made the decision for it to come under the one Fortescue group.
“So unfortunately, some of those white-collar corporate functions that were doubled up, were no longer needed.”
Mr Otranto also spoke openly following news on July 30 that US-based investment manager Capital Group Companies had executed a major sell-down of its Fortescue shares.
The estimated $1.8 billion offload by Capital Group, which were offered between $18.55-19.10 per share, resulted in Fortescue’s share price taking a hit on the Australian Securities Exchange – falling from $20.35 to $18.38 in the space of 24 hours.
As of 9.56am WST, its shares were $18.55, up 1 per cent.
“The good thing though for us is we’ve seen different types of shareholders now acquire all of those shares – and they’re not the long investors that this particular group was,” Mr Otranto said.
“We’ve seen investors that are coming in for an appetite now of backing a company that has a clean energy transformation.”
The Fortescue boss also reiterated comments made earlier in the week regarding concerns about Australia’s leading role in the global steel supply chain.
With pressure on China to decarbonise, the importance of a green iron industry in Australia is rising and Mr Otranto doesn’t want Australia to miss the opportunity from being left behind.
“The (Chinese) steel mills have been very open – they want to do business with Australia but they’re not going to wait,” he said.
“The Saudis are there, the Africans are there, the Brazilians are there. Let’s be there. We have more potential than them put together.
“We’ve got the sun, the wind, the iron ore, geographical proximity. What’ve we got to wait for?
Mr Otranto, who was born in Germany and migrated to WA at a young age with his Italian family, also provided considerable insight into his childhood, tertiary education and his enjoyment working with the board and Fortescue Energy CEO Mark Hutchinson.
Aside from Mr Forrest, other prominent board members include deputy chair Mark Barnaba and former chief executive officer and managing director Elizabeth Gaines.
“If you look at other countries and their corporate structures – and I look at it from a sports analogy – you don’t retire people at the top of their game and just move them on,” Mr Otranto said.
“What you do with people like that is actually promote them into bigger leadership roles in the organisation.”
Mr Otranto said some board conversations at Fortescue were “tough”, “gritty” and “real” from time to time, as is the case for most families in everyday life.
“There are some really honest conversations that we have,” he said. “But after all of them, the amount of support, care and love that you feel? It’s pretty awe-inspiring to be honest.”
