Lafarge Coppée S.A.

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Lafarge Coppée S.A.

28, rue Emile-Menier
75116 Paris
France
(1)47 04 11 11
Fax: (1) 47 27 54 57

Public Company
Incorporated: 1919 as Chaux et Ciments de Lafarge et du Teil
Employees: 31,000
Sales: FFr22.68 billion (US$3.93 billion)
Stock Exchanges: Paris New York Toronto

Lafarge Coppée (Lafarge) is the world’s leading producer of building-materials, with an enormous network of production facilities in more than 30 countries. The French group’s founder was Auguste Pavin de Lafarge, a French noble who in 1831 established a small lime kiln along the Rhone River in the Ardèche region of France.

The lime from Lafarge’s Le Teil quarry was not unique: it had been used in bridges spanning the Rhone River for centuries. The novelty lay in the expanding range of industrial uses for which the Lafarge family found markets in the mid-19th century. By 1833, Auguste Pavin de Lafarge had already handed over responsibility for the lime quarry to his eldest son, Leon, who later brought his younger brother Edouard into the business.

Lafarge’s markets were so geographically spread in the 1840s—the business was by now selling lime in such far-flung regions as the Mediterranean basin—that in 1843 Edouard invited the Marseilles firm of Gueyraud et Fils Cadet, headed by Felix Gueyraud, to help manage Lafarge. Gueyraud, a graduate of the Ecole Centrale des Arts et Manufactures at Paris, brought a much-needed scientific grounding to Lafarge. In 1853, the business began to pay regular dividends to share-holders.

Lafarge was put on the map when in 1864 it won a contract to supply 110,000 tons of hydraulic lime for concrete blocks to form the jetties of the Suez Canal. Suddenly, a medium-sized company was thrust into the big league of cement production with markets now reaching into North Africa.

In the 19th century Lafarge proved its ability to grow by acquisition, transforming itself into a group of companies headed by a single authority. By the turn of the century this organization enabled the group to supply markets in, among other world centers, New York City, Rio de Janeiro, and Saigon.

By the outbreak of World War I, Lafarge had raised its sales of cement products to 800,000 tons annually, making it the world’s largest lime producer. The war, however, brought business to a standstill. Lafarge could supply cement for shelters and bunkers, but much of French industry had turned to arms production, leaving the lime producer well behind. Emerging from the war, in 1919 Lafarge moved from a limited partnership to a full business corporation under the name of Chaux et Ciments de Lafarge et du Teil. The group’s stock was first listed on the Paris Bourse in 1923.

While the group retained Joseph Lafarge as its chairman and Edouard II, son of Raphaël Lafarge, and Charles Daher, son of Paul Lafarge, as two of the three managing directors, a former banker, Jean de Waubert de Genlis, became increasingly influential on the Lafarge board during the inter-war years.

Jean de Waubert, upon becoming managing director of Lafarge in 1928, made two key changes. First, he moved the group’s headquarters from the Ardeche region to Paris, the center of France’s industrial and banking structures. He then created a management structure on four levels that has become standard today: general management, technical operations, sales, and finance. Jean de Waubert effectively transformed the group from a fledgling 19th-century company, controlled by a patriarchal family, into a modern, innovative heavy-industrial concern.

Lafarge’s expansion in the early part of the 20th century depended heavily on its technical expertise in developing new cement products. The development of Portland cement, for example, made the application of hydraulic lime virtually obsolete. To capitalize on this new product, Lafarge in 1923 set up a Portland cement company in Algeria called Société Nord Africaine des Ciments Lafarge.

Among Lafarge’s many acquisitions in this period was the purchase in 1928 of Chaux et Ciments du Maroc in Casablanca, which established a second operational base outside France in North Africa.

The stock market crash in 1929 impacted Lafarge’s fortunes greatly. One-third of all manpower in the French cement trade was laid off before 1936. A period of consolidation set in, and Lafarge swallowed up its fair share of failing competitors.

This consolidation enabled Lafarge to complete its transition from lime to cement in the years leading up to World War II. During the war the group’s French subsidiaries were divided under the German occupation, until 1945. Lafarge’s North African operations continued to operate at full capacity and produce good profits.

After Jean de Waubert’s death in 1948, the Lafarge family turned over the company’s management to Alfred François, a graduate of the Ecole Polytechnique, and Marcel Demonque, who was trained as an engineer. Lafarge’s balance sheets were in the red, its plants required massive upkeep, and the morale of the work force was low.

The group’s management turned its attention to organic growth, streamlining existing facilities and building new, more efficient cement plants. The Le Teil quarry, which employed more than 1000 workers, was at long last mechanized. Other investments included a 100,000-ton oven in Fives-Lille, built in 1951. By 1959, Lafarge had emerged from its postwar doldrums to regain the lead role in the French cement industry with 3.2 million tons of cement produced annually.

In 1959, the Lafarge board, headed by group chairman, Alfred François, managed to persuade the Lafarge family to withdraw from day-to-day control of the business. As its support from share-holders grew, Lafarge was able to take on more long-term debt, enabling stronger growth.

Also in this period, Lafarge put down its first business roots in Canada. In 1956 Marcel Demonque proposed building a 200,000-ton-capacity plant in Vancouver, on the west coast of Canada. The subsidiary in which the Paris-based group held a majority stake was named Lafarge Cement of North America.

The Vancouver plant was started up in 1958, not without delays. The ribbon-cutting ceremony in May of that year was interrupted twice by a break-down of the main oven, but initial troubles with the Vancouver subsidiary did not deter Lafarge from doubling its Canadian operations. Two ready-mix cement operations, Anglo-Canadian and Deeks McBride, were bought in 1960. Then, in 1967, Lafarge built a plant in Quebec, under the direction of Ciments Lafarge Quebec. It aimed at capitalizing on contracts from the 1967 Montreal World’s Fair.

Lafarge’s main rival in Canada during the 1960s was Canada Cement, first established in 1909 by Max Aitken, later Lord Beaverbrook, the British newspaper magnate. By the 1950s, Canada Cement boasted nearly 13,000 share-holders, 97% of whom were Canadian. In 1956, it held a 75% market share in the Canadian cement industry. Canada Cement also perfected the shift from cement production based on teams of workers mixing cement, sand, and gravel with water to create concrete, toward ready-mix concrete mixed at a central site and then transported to delivery points by bulk carriers.

A series of battles in the Canada Cement boardroom and with trade unions convinced the group to consider a merger with Lafarge. The French group, operating in British Columbia and Quebec but not in Ontario, felt—when approached by Canada Cement—that just such a merger would help it extend its network into the country’s largest province.

In 1969, Marcel Demonque and Jean-Charles Lofficier, acting for Lafarge, met in Montreal with Peter McEntyre and Taylor Kennedy, who represented Canada Cement. A merger was announced in September of that year. In February 1970, however, the offices of Lafarge Canada and Canada Cement were visited by officers of the Canadian Mounted Police and the merger plans, beset by an antitrust inquiry into the 50% market share the new company would command, were put in jeopardy.

The merger was eventually cleared, and a formal merger between Lafarge Canada and Canada Cement was completed in March 1970. Peter McEntyre became chairman of the combined group, Canada Cement Lafarge, and Olivier Lecerf became its executive vice president. With the new group, Ciments Lafarge France, the Paris-based parent company for the worldwide cement group, had at long last completed its expansion on both side of the Atlantic Ocean.

The other acquisition which catapulted Lafarge into the forefront of the North American cement industry was that of General Portland. Based in Dallas, Texas, General Portland originally grew out of the Cowham system of cement producers, established in 1901. Peninsular Portland Cement, the brainchild of W. F. Cowham, grew throughout the early part of the century through acquisitions of cement plants in Georgia, Kansas, and Iowa, among other regions. Each acquisition proved larger than the last, many boasting of production capacities exceeding 250,000 tons annually.

Cowham did not restrict his business activities to cement production. Investments in the U.S. oil industry, principally in Oklahoma and Kansas, led to his stationing his headquarters in Dallas.

In 1912, Cowham suffered a stroke, opening the way for John Lawson Senior to succeed him as head of what became Cowham Engineering. In 1926, Senior formed Consolidated Cement Corporation, incorporating the Peninsular operations with a series of earlier midwestern acquisitions.

Although the Great Depression hit Consolidated Cement hard, the group emerged from a bout of consolidation in the U.S. cement industry during the 1930s to become a principal supplier of cement to the war effort in the 1940s.

In 1946, John Senior died, having led the cement group for 33 years, a period spanning two world wars and the Depression. The group restructured in Senior’s absence, splitting into two companies. The first was Consolidated Cement and the second General Portland, which incorporated plants in the southern states. The twin companies struggled without Senior’s direction. General Portland’s first year of business in 1959 produced an impressive $12 million in profit, on a turnover of $67 million, but earnings fell off sharply in succeeding years. The original Peninsular cement plant in Cement City, Michigan, was shut down in 1962.

Robert Pflaumer became president of General Portland in 1962 and was succeeded in 1966 by L. James Wade, but neither could stem the fall in earnings of the embattled cement producer as the 1960s drew to a close. By 1970, Canada Cement and Lafarge Canada had completed their own merger. General Portland was benefiting from buoyant growth in the U.S. economy, but this came to an end with the 1973 recession and a slump in house construction, brought on by the oil crisis in that year.

In 1975, with Jim Lendrum serving as General Portland president and chief executive, the board set out to decentralize its operations to recoup profitability. The two key motives were cash conservation and improved productivity per employee—in short, hands-on control of the company.

By 1977, the prospects for General Portland were looking up. Sales for the group reached $200 million annually, with net earnings standing at $8 million. Sales picked up even further in 1979 to stand at the year-end at $277 million, on earnings of $26.7 million.

In 1980, however, General Portland’s success was to be eclipsed as Lafarge Coppée, acting through Canada Cement Lafarge, prepared for a takeover bid of all of the group’s shares. Also in 1980, Lafarge sold Emballage, its packaging side, to Cellulose du Pin, a part of the rival Saint-Gobain-Pont-a-Mousson group. The French group identified a new growth area in biochemicals, specifically the manufacturing of amino acids in animal feedstuffs. The leading maker of amino acids in Europe at the time was Evence Coppée, with plants in the French towns of Nesle and Amiens. An acquisitive Lafarge set its eye on Coppée’s operations. A merger was completed in 1981.

At the same time, across the Atlantic Ocean, Lafarge was eyeing General Portland as a possible U.S. acquisition. In 1980, John Redfern, president of Canada Cement Lafarge, made an initial approach to Jim Lendrum. The General Portland boss refused Lafarge’s overture, but not unequivocally.

A period of cooperation between the U.S. and French cement producers ensued. This came to an end in 1981 when Lafarge, elated by the election in France of a pro-business Socialist president, offered to buy up all of General Portland’s shares at $45 each. This put the value of the U.S. cement maker at over $310 million. Lafarge Coppée succeeded in acquiring 96% of the unwilling General Portland’s shares in August 1981, at a total cost of $349 million.

The acquisition led to a merger between Canada Cement Lafarge and General Portland, giving birth to a holding company, Lafarge Corporation. Lafarge holds 58.8% of Lafarge Corporation’s shares. The remaining shares were offered on the New York Stock Exchange in 1982. The merger gave Lafarge Coppée headquarters on both sides of the Atlantic Ocean, in Paris and Dallas.

Meanwhile, Evence IV Coppée, chairman of the Coppée group, was offered a place on the Lafarge board to seal the merger of the two groups. To Coppée, Lafarge represented the same French-speaking culture, and both groups throughout their long histories had been controlled by a family dynasty. Coppée’s roots date back to a coke oven patented in 1853 by Evence Dieudonné Coppée. Lafarge could now help Coppée expand its biochemicals and engineering operations.

The early 1980s were difficult for Lafarge Coppée as the group worked to integrate its Coppée and General Portland acquisitions. In 1983, the number of workers in the French group had fallen to 25,500, from over 30,000 two years before. In the same year, Olivier Lecerf had taken a year off as chairman of Lafarge Coppée, enabling Jean Bailly, a close colleague, to spend his last year in the group as board chairman.

Following his trip around the world in 1983, Olivier Lecerf, having returned to the position of chairman, emphasized the importance of his groups moving into the far eastern market, in particular Japan. Breaking into the Japanese cement market has been difficult owing to its heavy restrictions. In 1985 Lafarge Coppée concluded a joint venture with Ajinomoto Company, the Japanese food processor and biochemicals manufacturer. In hope of further Japanese cooperation in the future, Lafarge Coppée’s international advisory board includes Yutaka Aso, the chairman of Aso Cement of Japan, and Jack Tang, chairman of South Sea Textile, the Hong Kong-based biochemicals manufacturer.

Since the mid-1980s, the U.S. cement industry has undergone a period of retrenchment. Following Lafarge Coppée’s acquisition of General Portland, European companies have taken a 50% market share in the United States. In 1987, senior management at Lafarge was rejuvenated with the arrival of Bertrand Collomb, chief executive of Lafarge Corporation, Bernard Kasriel, in charge of construction materials in Europe, and Jacques Lefevre, who formerly headed Lafarge’s finances and international operations.

In August 1989, Olivier Lecerf left Lafarge Coppée after 33 years with the group, and was replaced by Bertrand Collomb as chairman and chief executive. In 1989, Lafarge Coppée acquired as new subsidiaries Cementia of Switzerland and Asland of Spain, thus becoming the world’s second-largest cement producer.

Principal Subsidiaries

Ciments Lafarge (99.9%); Portland Zementwerk Wössingen GmbH (Germany, 83%); Lafarge Corporation (U.S.A., 58.8%); Companhia Nacional de Cimento Portland CNCP (Brazil, 50%); GIE Lafarge Coppée Asie (51%); Les Matériaux du Gabon (69.5%); Société des Ciments Antillais (51.5%); Lafarge Coppée (Pte) Ltd. (Singapore); Lafarge Australia Pty Ltd; Lafarge Coopération International (99.8%); Lafarge Fondu International (99.9%); Compagnie du Platre (99.9%); Lafarge Nouveaux Matériaux (50.2%); Allia (75%); Compagnie de Participations Bio-chimiques (66%).