Mestrallet, Gérard 1949–

Gérard Mestrallet
1949–

Chairman and chief executive officer, Compagnie de Suez

Nationality: French.

Born: April 1, 1949, in Paris, France.

Education: École Polytech, 1968; École Aviation Civile, 1971; Institute for Study of Politics; National School of Administration, 1978.

Family: Son of Georges Julien Marie and Paule Andrée Augustine (Besnard); married Joëlle Emillienne Renée Arcens, 1974; children: three.

Career: Compagnie de Suez, 1984–1986, vice president of special projects; 1986–1991, executive vice president; 1991–1995, executive director and chairman of the management committee of Société Générale de Belgique; 1995–1997, chairman and chief executive officer; Suez Lyonnaise des Eaux, 1997–2001, chairman of executive board; Suez, 2001–, chairman and chief executive officer.

Address: Compagnie de Suez, 16 rue de la ville l'Eveque, 75008, Paris, France; http://www.suez.com.

■ Gérard Mestrallet became the chairman and chief executive officer of Compagnie de Suez in 1995. He made a bold choice to change the company's focus shortly after taking over, beginning Suez's transformation from a marginal financial company into a profitable water, gas, and electric provider. Mestrallet was known as a steady and reliable manager who persevered in globally expanding his company. As a result of his successes he was able to focus not just on maximizing profits but also on creating safer water supplies on a global scale. He was described as neither harsh nor difficult but as hardworking with great expectations for his employees and his company. Once Suez had attained sizable profits and expanded globally, Mestrallet knew that his transformation had been successful.

EDUCATION AND EARLY CAREER

Mestrallet graduated from the French engineering school Polytechnique in 1968 and then went on to study at the wellknown

National School of Administration, earning a degree in 1978. In 1984 he was hired by Compagnie de Suez to serve as vice president of special projects. He worked his way up through the ranks at Suez, serving as executive vice president, then as executive director and chairman of the management committee, and finally as chairman and chief executive officer. Over the years Mestrallet proved his worth to the company; he would be entrusted with many important decisions.

SUEZ BEGINS A TRANSFORMATION

When Mestrallet took over as chairman and CEO in 1995, he spent some time questioning whether or not Suez could become a truly profitable financial company. After studying options for nearly six months, he decided that Suez should change its focus; he gambled that the company could become a global provider of energy services. He believed that a great need for global growth existed in the utilities industry, and that in meeting those needs Suez could earn substantial amounts of money. Mestrallet sold the subsidiary Indosuez to Crédit Agricole, and Suez made the jump into utilities.

"Mestrallet wants to be a world leader in supplying water, gas, and electricity to municipalities, states, and countries. He's already a large part of the way there: Suez Lyonnaise des Eaux now gets more than 65 percent of its revenues from those core businesses" (Institutional Investor, July 1998). Mestrallet envisioned Suez being able to provide water, gas, electricity, and waste collection as well, at which point the company would be unique worldwide in its offering of that combination of services. To achieve his grand vision, Mestrallet would have to overcome various obstacles, especially through operations in the developing world. Frequently endeavors did not work out as planned; Suez had to wait for better times. Yet patience often paid off; for example Suez came to modernize and manage water, electricity, and wastewater treatment services in all of Casablanca, Morocco, a city of five million people.

PURCHASES NALCO

In 1999 Mestrallet and Suez purchased Nalco Chemical Company, the water treatment group based in Naperville, Illinois. As Nalco had possessed the world's largest water treatment facility, the acquisition was important for Suez, as it could then provide services to over 50,000 customers in 120 countries. Mestrallet was happy with the transaction, noting in an article distributed by the Associated Press, "The acquisition of Nalco Chemical Company fits perfectly into our strategic plan, which emphasizes international expansion and the integration of our core businesses" (June 29, 1999). Mestrallet thought it especially important to own businesses in the United States, knowing that if Suez wished to be a worldwide company, it would need to forge partnerships with U.S. firms.

Mestrallet believed that with the Nalco purchase Suez would be able to offer more services and products—especially in water, energy, and waste—and to better integrate those services. At the end of 1999 Mestrallet's goals for the company were being realized; Suez was an industry leader in providing water to 77 million people and wastewater services to 52 million people worldwide.

SERVES AS ADVISOR

Mestrallet not only ran Suez successfully but also served as an advisor to many groups and individuals around the world. He worked with important leaders to help make their cities more desirable places to live and more efficient centers for business growth. He conferred with Lee Myung Bak, the mayor of Seoul, South Korea, on the Seoul International Business Advisory Council; together they hoped to make Seoul the center of economic development in northeastern Asia. Mestrallet also advised to Tung Chee Hwa, the chairman of the special administrative zone of Hong Kong. The two worked to develop a positive image for the city so that businesses would want to establish themselves there. Mestrallet also worked with Chen Liong Yu, the mayor of Shanghai, to create a better image for the Chinese commercial center.

COMMITS TO SUSTAINABLE DEVELOPMENT

Mestrallet believed it essential not only to provide services such as water, gas, and electricity but also to do so with minimal impact on the environment. In terms of sustainable development he aimed to develop ways to run his business in a financially successful manner without having a negative effect on resources in the process. While admitting that his first and foremost responsibility was to earn profits for his company, he remarked in OECD Observer, "Economic responsibility means always understanding the risks associated with one's business better in order to anticipate, control, and hedge them; their cost to the community, not just the company can be unbearable" (May 2002).

Suez was a global leader in providing people with essential services on a daily basis. Mestrallet continually worked toward improving his company, trying to minimize the use of raw materials and ensure that little waste was produced. He thought these considerations were common sense; when managing a resource, one would not want to let any of it go to waste. As he described in OECD Observer, he maintained such a conservative approach through hard work and dedication: "The key is to articulate a strong vision and share it as widely as possible, so that it is translated concretely into management and decision making" (May 2002). Over the course of three years he created a standard of performance for all of his employees to follow; in the end all followed a unifying principle, so that each division could do its part in working toward a common goal.

A DIFFICULT YEAR

Mestrallet felt confident about his vision and goals for the future when speaking in 2001; however, Suez did not perform well in 2002. Company shares lost two-thirds of their value due to rising debt levels and low electricity prices. Mestrallet was disappointed; he created a new plan for Suez. Thanks to the high debt levels he was forced to halt expansion efforts across the Atlantic. In Utility Week he put forth "five clear objectives: a streamlined organization; a cost-cutting purge; much lower net debt; reduced exposure to emerging country risk; and the establishment of self-financed business lines" (March 28, 2003). Mestrallet sold riskier investments and continually reevaluated his business plan, making key decisions that would ideally have positive effects in the future.

MANAGEMENT STYLE

Gérard Mestrallet was a calm leader who made educated and careful decisions when it came to expanding his company. He took control of Suez at a time when it was necessary to make big changes; he successfully turned the financial services company into a global leader in the provision of gas, electricity, and water to many countries around the world. He sold unnecessary assets and bought into markets that were viable for Suez. He led by example and was always willing to give his time and energy. Mestrallet was relentlessly focused on turning his company into a global leader, and Suez met this goal by 2002. Even in difficult times Mestrallet did not get discouraged but simply altered his business plans accordingly.

sources for further information

"Creating a Gusher in Power and Energy: Unlike Some of His Peers, Mestrallet Has Largely Avoided Overpaying for Assets," BusinessWeek, June 17, 2002, p. 42.

"Making Money from Water," Institutional Investor International Edition, July 1998, v23, i7, 21.

Mestrallet, Gérard, "Q&A with Suez's Gérard Mestrallet," BusinessWeek Online, June 17, 2002, http://www.businessweek.com/@@JIV**oYQoHj91xYA/magazine/content/02_24/b3787605.htm.

——, "The Suez Commitment: An Interview with Gérard Mestrallet," OECD Observer, May 2002, p. 21.

Ockenden, Karma, "The Suez Corral," Utility Week, March 28, 2003, p. 26.

Philips, Ian, "French Firm Pours It On," Associated Press, June 29, 1999.

—Deborah Kondek