Magazine article New Zealand Management

What Fires Up Solid Energy's Don Elder?

Magazine article New Zealand Management

What Fires Up Solid Energy's Don Elder?

Article excerpt

Four years ago Solid Energy, once State Coal, was technically insolvent. Now it's chalking up impressive annual profits, lifting production by up to 25 percent a year and giving environmentalists a run for their money. The turnaround is the work of fast burning chief executive Don Elder. What are his leadership secrets?

At 44, Don Elder must be one of the fittest chief executives in New Zealand. He doesn't just run. Elder hits the tennis court competitively, plays soccer, mountain bikes, tramps, yachts and skis. He also coaches his daughter's soccer team. While he insists he's just a sporting "jack of all trades'; Elder's physical energy is a good analogy for his business style and motivation: he embraces serious challenge; he strives for swift momentum and he applauds preparation, planning and effort.

Christchurch born and bred, Elder slipped into Solid Energy's top slot in 2000. He'd neither worked in the coal industry nor been a CEO before. But with high-level experience and qualifications in environmental and soils engineering behind him and an extensive stint consulting to the Canadian government he felt, what he calls, an instant affinity with the organisation. Now he simply loves the job.

In double quick time he has built a reputation as an astute company leader with the ability to get things moving. And fast.

Solid Energy, once the grubby imaged State Coal and then, post corporatisation Coal Corp, was in woeful condition when Elder joined. Reeling from the Asian economic crisis and low global coal prices, the company recorded an $86 million loss (including write-downs) in the year to June 1999. It was, in fact, facing technical insolvency. It survived because of a subordinated equity investment from the government and stringent bank loan extensions.

"The primary job when I came on board was to repay debt," Eider recalls. "That meant we didn't do anything new. The objective was to mine out the existing coal resources and cash up whatever we could."

The core management team, which is much the same today, had already started to edge the company around progress for which he claims no credit. But nevertheless, Elder has been central to leading the revival of Solid Energy's fortunes.

First steps back to profitability were accompanied by a series of commissioned studies into the economy, the energy sector, and the impacts of competing energy interests all taking an unprecedented 20-year focus. The studies indicated substantial opportunities for growth in coal. Further, says Elder, they suggested that taking other courses of action could lead to the economy becoming energy-constrained within five years.

Outsiders were sceptical. Inside Solid Energy the feeling was different. "We were confident we had done the work so we stuck to our guns and developed a growth-oriented rolling 20-year business plan," says Elder who values in-depth study and planning.

Elder is a former Rhodes Scholar. Both he and his wife have doctorates from Oxford University. He spent several years as a visiting lecturer and associate researcher to a number of universities. From 1990 to 2000, while holding senior management positions in a private company, he also represented the Canadian Association of Consulting Engineers and was involved in negotiation and lobbying campaigns up to ministerial and international level. The experience gained in the process has rubbed off. Elder prizes considered action. It is better for a management team to miss a deadline, he says, than to proceed with incomplete thinking and make a bad decision.

The rolling 20-year business plan is now crucial to maximising Solid Energy's profit. As Elder puts it: "Ninety percent of the value doesn't come from digging coal from the ground, it comes from knowing everything you can about that coal, long before you mine it. Where it is, how much there is, what its qualities are, how you will extract it, what blends you will sell where and to whom, and how you will get it there. …

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