Compagnie de Saint-Gobain S.A.

views updated Jun 27 2018

Compagnie de Saint-Gobain S.A.

Les Miroirs
18, avenue DAlsace
Cedex 27 F-92096
Paris-La Défense
France
(1) 47 62 30 00
Fax: (1) 47 78 45 03

Public Company
Incorporated: 1665 as Compagnie des Glaces
Employees: 87,000
Sales: FFr66.00 billion (US$11.43 billion)
Stock Exchange: Paris

Saint-Gobain began life more than three hundred years ago, in 1665, as the royal glassmakers to Louis XIV, the Sun King of France. Today it is a multinational group of 113 companies, 66 of them outside France, in 21 countries worldwide, but still retains a strong French identity, having survived both nationalization and re-privatization in the 1980s virtually unscathed.

Saint-Gobain is one of the leading 10 French industrial groups and in the worlds top 100 in sales. In addition to its 113 consolidated companies, the group includes more than 300 others, mostly subsidiaries.

From its original base of flat glass manufacture in the 17th century using traditional methods, the company rapidly began to organize production on an industrial basis, establishing a strong European presence during the 19th century. It diversified into the chemical sector as well as other glass-based products. It has operated in Brazil since the 1930s, and in the United States since 1974. Following an attempted take-over bid by a much smaller French glass concern in 1969, Saint-Gobain merged with Pont-á-Moussonfounded in 1854 which makes products for the construction industry, and is famous for its cast-iron pipes. The group then took its present form.

In addition to flatincluding automotiveglass, a large range of glass products, including bottles and containers, glass fibers, and wool, now account for about half of group sales. The merger with Pont-à-Mousson made Saint-Gobain the worlds leading manufacturer of ductile cast-iron piping for water supply systems. The group also produces a wide range of other construction materials, as well as paper, paper-wood productsincluding cardboard and chipboard; and industrial ceramics.

Saint-Gobain is the only survivor of a group of private manufacturers founded in 1665 as part of the economic revival of France planned by Jean Baptiste Colbert, chief minister of Louis XIV. The letters patent which created the Compagnie des Glaces granted the company a monopoly on production and sale of glass in France. The original name of the company was Dunoyer, after the individual to whom these privileges were accorded. A group of Venetian glass-workers was persuaded to come to Paris, and production began in the Faubourg Saint-Antoine. However, disputes and difficulties arose with the Venetian authorities and workers, and they returned to Venice after two years. The company then formed an association with Richard Lucas de Nehou, proprietor of a glassworks at Tourlaville, near Cherbourg. Glass produced here was sent to Paris for the finishing process of grinding and polishing. In around 1680, Richards nephew Louis was responsible for the invention that transformed the manufacture of glass, and that remained in use until 1920; it could now be rolled out on a flat surface, allowing much larger sheets to be produced. After Colberts death in 1683, his successor Louvois allowed the establishment of rival companies, and restricted the original company to the production of blown glass. This led to the establishment in 1692 of a new factory at the village of Saint-Gobain, which lay nearer Paris and was designed for the new process.

Following the death of Louvois, the newly-created companies were united with Dunoyer under the name of Plastrier, but problems continued, and by 1702 Plastrier was declared bankrupt. Rescue came in the surprising form of the Geneva bank of Antoine Saladin. After complex negotiations, Saladin purchased the company, now to be called Dagincourt. The influence of the Swiss bank was to be felt throughout the 18th century.

The company now possessed a more entrepreneurial spirit, and was able to exploit the new technique of rolled glass, benefiting from 18th-century prosperity and the numerous new uses for glass, especially mirrors. Technical expertise was brought in from 1740, to supplement the aristocratic element always prevalent in the company. Various rationalizations and reforms took place during 1755-1760, in response to the expansion of the market.

The company ceased glass-blowing in 1763, and the ovens were improved. At the village of Saint-Gobain itself, a separate workers enclave was established in 1775, partly as a solution to rivalry between the workers and other villagers.

The French Revolution of 1789 and its aftermath caused serious disruption, and it took 40 years to restore sales to the level of the best years of the Ancien Régime. In 1806 the first attempts at diversification took place, with the implementation of the Leblanc process for producing soda ash, an important ingredient for glass and later for many other industrial materials. This activity was tranferred to new works at Chauny in 1822. The Tourlaville glass works closed in 1824, and production was concentrated at Saint-Gobain. In 1830 the company was incorporated as a société anonyme. The revolution had ended its monopoly, and there was a threat of competition from English glassworksRavenhead had been started by ex-Saint-Gobain workersand several new French glass factories established during the 1820s, notably Saint Quirin. The distribution of shares in the new company still reflected an aristocratic bias not suited to the world of 19th-century industry. Nevertheless, rationalization was taking place during this period, led by directors recruited from among technical university graduates. The process of mechanization had begun at the turn of the century.

With the boom in public building, the middle of the 19th century was a turning point for Saint-Gobain, heralding a golden age under the long presidency of the Due de Brogue from 1866 to 1901.

Foreign ventures began with the lease of a factory at Stolberg in Germany in 1857, and in the following year a merger with its principal French rival Saint Quirin gave Saint-Gobain a second presence in Germanythe glassworks built in 1853 at Mannheim, which was also to be the site of a French workers city. Two other younger French rivals, Commentry and Prémontré, had been acquired jointly before the merger. These moves were prompted by the growing threat of competition from Belgium, as well as the expanding English glassworks. Brogues predecessor as president, Antoine-Pierre Hély DOissel, recruited Hector Biver, an Englishman who had also worked in Belgium. Following its 1858 merger, the company became the Société Anonyme de la Manufactures des Glaces et Produits Chimiques de Saint-Gobain, Chauny et Cirey. On the chemical side, the company benefited from the presence of the famous chemist Joseph Louis Gay-Lussac, who had been president from 1844 to 1850, and who perfected his method of sulfuric acid production at Chauny. Considerable effort was devoted to improving the social and educational conditions of the workers, with the provision of schools, chapels, orphanages, savings and pension schemes, and even philharmonic and shooting societies. The image of aristocratic incompetence was largely dispelled during the second half of the 19th century.

After two hundred years, a fundamental shift occurred as a result of the merger with the firm of Perret-Olivier in 1874. The company consequently comprised nine chemical works compared with eleven, including three overseas, for glass: the turnover was almost equal in both sectors. Continuing strong Belgian and U.K. competitors in the glass industry were now joined by the United States and Germany, reducing Saint-Gobains share of an expanding market. Pittsburgh Plate Glass, founded in 1883, attained the size of Saint-Gobain in only six years. The company responded by improving production methods and constructing further production sites in Europe: at Pisa, Italy, in 1889, and at Franière, Belgium, between 1898 and 1900. Subsidiaries were acquired in Holland, Spain, and Germany. Turnover increased from FFr18 million in 1890 to FFr47 million in 1913. Saint-Gobain was now Europes leading glass producer, with 26.8% of the market, followed by Belgium with 23.3% and Pilkington with 22%. Engineers played a growing role in a centralized administration in this period, but provisions continued to be made for the workers: at Pisa there was a childrens home, dispensary, and school, and training in housework was provided.

The early 1900s also saw the introduction of highly significant technical developments in glassmaking, including the Bicheroux and Fourcault processes, which allowed continuous sheets to be produced. A joint venture undertaken with Pilkington to exploit the American Window Glass process, although not a technical success, helped in the forging of a commercial treaty between the glassmakers of Belgium, France, and the United Kingdom, which lasted until World War II. The end of the 19th century also saw a radical change in the chemical division, where new processes resulted in the conversion of plants to superphosphate fertilizer production, for which Saint-Gobain was to remain famous in France until the abandonment of all its chemical interests in 1970.

The presence of French aristocrats and Genevan families still exerted considerable influence on the company, but with the quotation on the French Bourse in 1907 came greater dispersion of capital. From 1893, a new administrator, the archeologist and diplomat Melchior de Vogüé, accelerated administrative reform, giving more power to the divisions and creating the new posts of secretary-general and inspector of finances. He was president from 1901 to 1916. New headquarters were constructed in Paris between 1899 and 1902. Moves were made towards a more open management, with the consensus of share-holders, but capital ventures continued to be financed on an internal basis.

At the beginning of the 20th century, key factors in the companys development were the growth of U.S. competition, further technical developments in glassmaking, and extensions of its use. In addition to new types of continuous processes and improved furnaces, there were innovations in grinding and polishing techniques and, perhaps most significant, the discovery of tempering to produce security glass and allow its shaping. This discovery opened the way for expansion into the automobile market as well as the structural and artistic markets. Security glass was developed and patented by Saint-Gobain, and manufacturing on a production line for Citroën began in 1929. A new factory had been opened in 1920 at Chantereine to exploit the new processes.

International relations were important in the late 1920s; various accords led to stabilization of the industry between manufacturers in the United States, United Kingdom, and France. Saint-Gobain chose the Pittsburgh process for window glass as technically superior to its competitors. Surprisingly, glass bottles and flagons were still being manufactured at this time by the traditional glassblowing method, usually by small family enterprises scattered throughout France, Spain, and Italy. Saint-Gobain gradually absorbed these firms, as the increasing pace of mechanization rendered them uncompetitive. The 1930s witnessed perhaps the most important strategic move in the recent history of the company: diversification into glass fiber. Known by 18th-century English nobles, whose wigs had to be fireproof because of candles, it was also said to have been used in the Empress Josephines coronation dress. Saint-Gobain, convinced by its U.S. contacts of the potential market for this product, obtained the necessary licenses, formed a new company, Isover, and acquired Balzaretti-Modigliani in Italy. However, production did not begin on an industrial scale until after World War II. Considerable research into improvements followed, which led to the intervention of the TEL and SUPERTEL processes for insulating materials, licensed by Saint-Gobain throughout the world.

Meanwhile the chemical side of the business had continued to decline, partly because of unsucccessful diversifications in this area. Of various diversifications attempted, including petroleum refining, one proved to be a long-term success: cellulose production. This began in 1920 and is the only process surviving from this period. An association with Papeteries Navarre in 1924 led to the formation of Cellulose du Pin, and construction of a works at Facture in the Landes in 1928. It was planned at first to produce fibers for paper-based artificial textiles, but their decline after the war led to a switch to Kraft paper and bags.

The rest of the chemical side continued to be dangerously exposed. Saint-Gobain had refused an offer from Solvay for a merger in 1927 and 1928, which would have created a Franco-Belgian group on a par with ICI or I.G. Farben. Another proposal, from Kuhlmann for a French chemical union, was also turned down. These negative responses may have sprung from the desire by management to cling to the old regime. Management reforms in the 1920s and 1930s had been only tentative, and it was not until the presidency of Pierre Hély DOissel from 1936 to 1953 that fundamental changes in management and structure were initiated, heralding the new models of management of the 1950s and 1960s.

The period from 1950 which led up to the merger of the two very dissimilar firms of Saint-Gobain and Pont-à-Mousson in 1970 was characterized by the growing power of the state in the French economy, begun during World War II under the Vichy regime. Senior officials of government were closely involved in the management of a planned economy, and saw much of French industry as archaic and fragmented. The glass industry continued to flourish, and Saint-Gobain acquired a stake in its famous Belgian rival, Glaceries de Saint-Roch. Overseas expansion in glass fiber was dramatic, and the development of a presence in Brazil from 1960 supplemented solid bases in Belgium, Germany, Italy, Switzerland, and Spain. The TEL process was proving successful in the United States, and led to the acquisition of interests in the CertainTeed Corporation and the conversion of three old factories, which gave the company 10% to 15% of the U.S. market. However, another U.S. venture went wrong. A new subsidiary, American Saint-Gobain, founded in 1959, having already acquired four glassworks, then designed a new one in Greenland, Tennessee, intended to exploit the latest techniques in grinding and polishing. Disastrously, this factory did not open until 1962, after the invention of float glass by Pilkington. This revolutionary technique obviated the need for lengthy finishing processes. To compound the problem, the United States reacted strongly to the French invasion by an increase in tariffs of 30%.

Although the invention of float glass effectively killed off American Saint-Gobain, the parent company did not take the new process seriously until 1965, when it had to be acquired on much less favorable terms than were available just after the invention in the 1950s. Saint-Gobain however, made up for lost time by rapidly modernizing all of its factories, starting with those overseas, thus helping amortize the old installations.

The 1960s also witnessed unsatisfactory alliances during the companys last attempts to revive its chemical operations, notably the creation of Péchiney-Saint-Gobain to develop organic chemicals, in particular the new plastics materials. Due to the instability of this sector, a government commission recommended a fundamental regrouping. However, before these recommendations could be acted upon, Rhône-Poulenc preempted them by acquiring Péchiney-Saint-Gobain. Péchiney itself did not want the chemical interests, and Saint-Gobain could not afford to buy them.

During this period the company raised capital to fund various ill-fated ventures. The increasing deficit caused further recourse to the banks, much against the Saint-Gobain tradition. At the end of 1968 came a major turning point: the dramatic offensive by Boussois Souchon Neuvesel (BSN) with a public offer for exchange to acquire 30% of Saint-Gobain, following tentative negotiations, which Saint-Gobain had rebuffed. BSN, a small but ambitious glass producer with an annual turnover of just under FFr600 million, had set its sights on a company with consolidated funds of more than FFr5 billion. BSN had chosen the moment when Saint-Gobain was suffering from the effects of the chemical restructuring as well as internal management struggles; these difficulties were reflected in the low price of the shares at the time. The offensive was a technical failure, securing only 7% of Saint-Gobains capital, 1 million shares out of the minimum 3.4 million required. A vigorous rescue bid had to be mounted by a consortium of banks led by the Compagnie de Suez, and 40% of the shares changed hands during the battle. This shift left the company badly shaken and with diminished funds. As a direct consequence of this affair, the bankers took the initiative in arranging the merger with Pont-à-Mousson, which they saw as a means of securing Saint-Gobain against further attacks of this nature. Arnaud de Vogüé, president since 1952, was initially reluctant, but eventually recognized the end of the grand liberal regime of Saint-Gobain and the beginning of a new era.

One-third of the size of Saint-Gobain, Pont-à-Mousson, founded in the 1850s, had begun to detach itself from its coal and metallurgical interests during the 1960s. Originally founded by local coal merchants in the Lorraine after the discovery of new iron-ore deposits, the little town of Pont-à-Mousson between Metz and Nancy was chosen as the site of the first blast furnace in 1860. The company began to pursue a strategy of vertical integration, with the control of mines, ironworks, and end products, a policy continued right up until the 1960s. In 1866 it made the key decision to specialize in the production of cast-iron pipes. The invention in Brazil in 1915 of an improved technique of casting pipes using centrifugal force led to the companys establishing production in Brazil in 1937. After World War II, a new importance was given to cast-iron by the ductile iron process, discovered by researchers at International Nickel in Canada during the 1940s. Pont-à-Mousson quickly obtained a license from a U.K. subsidiary of International Nickel, and began production in 1950. Even so, the old type of cast iron pipe remained in production until the end of the 1960s.

In contrast to Saint-Gobain, the dominant personalities in the history of Pont-à-Mousson were engineers, notably Camille Cavallier, sole administrator from 1900 to 1917 and president from 1917 to 1926. In 1970, following the merger, a provisional organizational structure was adopted, based on the Pont-á-Mousson model, and it was Pont-à-Moussons director, Roger Martin, who succeeded Arnaud de Vogue at the head of the new group. A gradual process of rationalization then took place, involving decentralization, the establishment of a management structure, and the creation of product-based departments. In 1978, following a convention of all 41 directors, more fundamental reorganization of the new group led to the replacement of the six market departments by ten production-oriented branches. The 1970s also witnessed the jettisoning of the remaining chemical and petroleum investments, as well as the iron and steel interests inherited with Pont-à-Mousson. A brief flirtation with the products for nuclear reactors in 1972 was abandoned for political reasons. In glass fiber, the U.S. presence was reinforced by control of CertainTeed, and in France a new factory for insulation products was built at Orange. The energy crisis helped here: between 1973 and 1975 Saint-Gobain doubled its European production of glass fiber. Significant investments were also made in float glass, with Saint-Gobain building 10 out of the 17 new plants constructed in Europe during 1976.

The new strength of the combined companies was illustrated by their ability to weather the crises of this period, including heavy losses in brassware and machinery during 1977 and 1978, and a sudden downturn in the insulation market in 1981, resulting in massive overproduction.

After the 1978 reorganization, a search for further diversification led to the decision to enter the information technology sector. A joint subsidiary, Eurotechnique, was set up with National Semiconductor to produce electronic components, a partnership established with Cii-HB, and 30% of the capital of Olivetti acquired. However, before this venture could get off the ground, Saint-Gobain was nationalized by the new government of 1981, and forced to liquidate these holdings between 1982 and 1983. Yet Saint-Gobain was the only nationalized company to retain its top management, who continued to pursue their vigorous investment strategy and maintain a high level of industrial activity. The result was increased debt, countered by austerity measures such as plant rationalization. The group had to be slimmed down further with approaching reprivatization in 1986. The effect of these policies was spectacular; global profits increased by a factor of seven in six years.

Saint-Gobain is a French group with a predominantly European base but a growing international involvement. Recent moves include the development of industrial operations in Southeast Asia, which began in 1989 in South Korea. The political and economic changes in Eastern Europe will lead to challenges and opportunities for the group. Acquisition in the United States in 1990 of the Norton Company, which manufactures industrial abrasives, and the purchase of majority holdings in glass, cardboard, and refractory products companies in Italy during 1989 illustrate the dynamic development policy of the group in both its core activities and its continuing efforts to strengthen its international presence.

Principal Subsidiaries

Saint-Gobain Vitrage France; Saint-Gobain Emballage; Saint-Gobain Desjonquères; Pont-à-Mousson SA (99%); Everite; Isover; La Cellulose du Pin (76%); Socar; Société Européenne des Produits Réfractaires; Vetrotex Saint Gobain; Glaceries de Saint-Roch (Belgium, 98%); Barbará (Brazil, 60%); Brasilit (Brazil, 86%); Scan-Gobain Glass (Denmark, 81%); Vegla GmbH (Germany, 99%); Halbergerhütte GmbH (Germany, 99%); Fabrica Pisana (Italy); Balzaretti (Italy, 84%); Vetri (Italy, 73%); Cristaleria Española (Spain, 73%); Gullfiber (Sweden, 99%); Trempex (Sweden, 99%); Stanton PLC (U.K., 99%); TSL Group (U.K., 99%); CertainTeed Corporation (U.S.A.); Norton Company (U.S.A.).

Further Reading

Hamon, Maurice, Saint-Gobain (1665-1990). The Making of a French Multinational, [n.p.], Editions Jean-Claude Lattès, 1990.

Peter W. Miller

Compagnie de Saint-Gobain S.A.

views updated May 18 2018

Compagnie de Saint-Gobain S.A.

Les Miroirs
F - 92096 La Defense Cedex
France
(33) (1) 47 62 30 00
Fax: (33) (1) 47 78 45 03

Public Company
Incorporated:
1665 as Compagnie des Glaces
Employees: 80,909
Sales: FFr74.5 billion (1994)
Stock Exchanges: Paris
SICs: 3211 Flat Glass; 3086 Plastics Foam Products; 2657 Folding Paperboard Boxes, Including Sanitary; 3296 Mineral Wool; 3241 Cement, Hydraulic; 3494 Valves & Pipe Fittings, Not Elsewhere Classified

Compagnie de Saint-Gobain S.A. came into existence more than 300 years ago, in 1665, as the royal glassmakers to Louis XIV, the Sun King of France. Today it is a multinational group of 292 companies in 37 countries worldwide but still retains a strong French identity, having survived both nationalization and reprivatization in the 1980s virtually unscathed. Saint-Gobain is one of the leading 10 French industrial groups and in the worlds top 100 in sales. The companys subsidiaries fall into six main divisions: flat glass; containers, insulation and reinforcement; pipe; building materials; and industrial ceramics and abrasives. In each of these divisions, Saint-Gobain operates across Europe and in South America and Asia as well. Principal products include flat glass for buildings; glass bottles; automotive glass; grinding wheels; insulation; glass and rock wool; industrial ceramics; fiber reinforcements for automobile body parts, electrical insulation and printed circuit boards; cast iron pipes and fittings; drain pipes; water pipes; concrete pipes; roofing materials, and many others.

From its original base of flat glass manufacture in the 17th century using traditional methods, the company rapidly began to organize production on an industrial basis, establishing a strong European presence during the 19th century. It diversified into the chemical sector as well as other glass-based products. It has operated in Brazil since the 1930s, and in the United States since 1974. Following an attempted takeover bid by a much smaller French glass concern in 1969, Saint-Gobain merged with Pont-á-Moussonfounded in 1854which makes products for the construction industry and is famous for its cast-iron pipes. The group then took its present form. In addition to flat glass, a large range of glass products, including bottles and containers, glass fibers, and wool, now account for about half of group sales. The merger with Pont-a-Mousson made Saint-Gobain the worlds leading manufacturer of ductile cast-iron piping for water supply systems.

Early History

Saint-Gobain is the only survivor of a group of private manufacturers founded in 1665 as part of the economic revival of France planned by Jean Baptiste Colbert, chief minister of Louis XIV. The letters patent which created the Compagnie des Glaces granted the company a monopoly on production and sale of glass in France. The original name of the company was Dunoyer, after the individual to whom these privileges were accorded. A group of Venetian glass-workers was persuaded to come to Paris, and production began in the Faubourg Saint-Antoine. However, disputes and difficulties arose with the Venetian authorities and workers, and they returned to Venice after two years. The company then formed an association with Richard Lucas de Nehou, proprietor of a glassworks at Tourlaville, near Cherbourg. Glass produced there was sent to Paris for the finishing process of grinding and polishing. In around 1680, Richards nephew Louis was responsible for an invention that transformed the manufacture of glass and that remained in use until 1920; glass could now be rolled out on a flat surface, allowing much larger sheets to be produced. After Colberts death in 1683, his successor Louvois allowed the establishment of rival companies and restricted the original company to the production of blown glass. This led to the establishment in 1692 of a new factory at the village of Saint-Gobain, which lay nearer Paris and was designed for the new process.

Following the death of Louvois, the newly created companies were united with Dunoyer under the name of Plastrier, but problems continued, and by 1702 Plastrier was declared bankrupt. Rescue came in the surprising form of the Geneva bank of Antoine Saladin. After complex negotiations, Saladin purchased the company, now to be called Dagincourt. The influence of the Swiss bank was to be felt throughout the 18th century.

The company now possessed a more entrepreneurial spirit and was able to exploit the new technique of rolled glass, benefiting from 18th-century prosperity and the numerous new uses for glass, especially mirrors. Technical expertise was brought in from 1740, to supplement the aristocratic element always prevalent in the company. Various rationalizations and reforms took place from 1755 to 1760 in response to the expansion of the market.

The company ceased glassblowing in 1763, and the ovens were improved. At the village of Saint-Gobain itself, a separate workers enclave was established in 1775, partly as a solution to rivalry between the workers and other villagers.

The French Revolution of 1789 and its aftermath caused serious disruption, and it took 40 years to restore sales to the level of the best years of the Ancien Regime. In 1806 the first attempts at diversification took place, with the implementation of the Leblanc process for producing soda ash, an important ingredient for glass and later for many other industrial materials. This activity was transferred to new works at Chauny in 1822. The Tourlaville glass works closed in 1824, and production was concentrated at Saint-Gobain. In 1830 the company was incorporated as a société anonyme. The revolution had ended its monopoly, and there was a threat of competition from English glassworksRavenhead had been started by ex-Saint-Gobain workersand several new French glass factories established during the 1820s, notably Saint-Quirin. The distribution of shares in the new company still reflected an aristocratic bias not suited to the world of 19th-century industry. Nevertheless, rationalization was taking place during this period, led by directors recruited from among technical university graduates. The process of mechanization had begun at the turn of the century.

With the boom in public building, the middle of the 19th century was a turning point for Saint-Gobain, heralding a golden age under the long presidency of the Duc de Brogue from 1866 to 1901.

Foreign ventures began with the lease of a factory at Stolberg in Germany in 1857, and in the following year a merger with its principal French rival Saint-Quirin gave Saint-Gobain a second presence in Germanythe glassworks built in 1853 at Mannheim, which was also to be the site of a French workers city. Two other younger French rivals, Commentry and Prémontré, had been acquired jointly before the merger. These moves were prompted by the growing threat of competition from Belgium, as well as the expanding English glassworks. Broglies predecessor as president, Antoine-Pierre Hély DOissel, recruited Hector Biver, an Englishman who had also worked in Belgium. Following its 1858 merger, the company became the Société Anonyme de la Manufactures des Glaces et Produits Chimiques de Saint-Gobain, Chauny et Cirey. On the chemical side, the company benefitted from the presence of the famous chemist Joseph Louis Gay-Lussac, who had been president from 1844 to 1850, and who perfected his method of sulfuric acid production at Chauny. Considerable effort was devoted to improving the social and educational conditions of the workers, with the provision of schools, chapels, orphanages, savings and pension schemes, and even philharmonic and shooting societies. The image of aristocratic incompetence was largely dispelled during the second half of the 19th century.

Entering the Modern Era

After 200 years, a fundamental shift occurred as a result of the merger with the firm of Perret-Olivier in 1874. The company consequently comprised nine chemical works compared with eleven, including three overseas, for glass: the turnover was almost equal in both sectors. Continuing strong Belgian and U.K. competitors in the glass industry were now joined by the United States and Germany, reducing Saint-Gobains share of an expanding market. Pittsburgh Plate Glass, founded in 1883, attained the size of Saint-Gobain in only six years. The company responded by improving production methods and constructing further production sites in Europe: at Pisa, Italy, in 1889, and at Franiére, Belgium, between 1898 and 1900. Subsidiaries were acquired in Holland, Spain, and Germany. Turnover increased from FFr18 million in 1890 to FFr47 million in 1913. Saint-Gobain was now Europes leading glass producer, with 26.8 percent of the market, followed by Belgium with 23.3 percent and Pilkington with 22 percent. Engineers played a growing role in a centralized administration in this period, but provisions continued to be made for the workers: at Pisa there was a childrens home, dispensary, and school, and training in housework was provided.

The early 1900s also saw the introduction of highly significant technical developments in glassmaking, including the Bicheroux and Fourcault processes, which allowed continuous sheets to be produced. A joint venture undertaken with Pilkington to exploit the American Window Glass process, although not a technical success, helped in the forging of a commercial treaty between the glassmakers of Belgium, France, and the United Kingdom, which lasted until World War II. The end of the 19th century also saw a radical change in the chemical division, where new processes resulted in the conversion of plants to superphosphate fertilizer production, for which Saint-Gobain was to remain famous in France until the abandonment of all its chemical interests in 1970.

Company Perspectives

Saint-Gobain is a worldwide leader in engineered materials. We transform materials in which we have a long history of experience: glass, cast iron piping, fibre reinforcements, ceramicsadding our technological know-how in order to respond to increasingly diverse customer needs worldwide.

The presence of French aristocrats and Genevan families still exerted considerable influence on the company, but with the quotation on the French Bourse in 1907 came greater dispersion of capital. From 1893, a new administrator, the archeologist and diplomat Melchior de Vogue, accelerated administrative reform, giving more power to the divisions and creating the new posts of secretary-general and inspector of finances. He was president from 1901 to 1916. New headquarters were constructed in Paris between 1899 and 1902. Moves were made toward a more open management, with the consensus of shareholders, but capital ventures continued to be financed on an internal basis.

At the beginning of the 20th century, key factors in the companys development were the growth of U.S. competition, further technical developments in glassmaking, and extensions of its use. In addition to new types of continuous processes and improved furnaces, there were innovations in grinding and polishing techniques and, perhaps most significant, the discovery of tempering to produce security glass and allow its shaping. This discovery opened the way for expansion into the automobile market as well as the structural and artistic markets. Security glass was developed and patented by Saint-Gobain, and manufacturing on a production line for Citroen began in 1929. A new factory had been opened in 1920 at Chantereine to exploit the new processes.

International relations were important in the late 1920s; various accords led to stabilization of the industry between manufacturers in the United States, United Kingdom, and France. Saint-Gobain chose the Pittsburgh process for window glass as technically superior to its competitors. Surprisingly, glass bottles and flagons were still being manufactured at this time by the traditional glassblowing method, usually by small family enterprises scattered throughout France, Spain, and Italy. Saint-Gobain gradually absorbed these firms, as the increasing pace of mechanization rendered them uncompetitive. The 1930s witnessed perhaps the most important strategic move in the recent history of the company: diversification into glass fiber. Known by 18th-century English nobles, whose wigs had to be fireproof because of candles, glass fiber was also said to have been used in the Empress Josephines coronation dress. Saint-Gobain, convinced by its U.S. contacts of the potential market for this product, obtained the necessary licenses, formed a new company, Isover, and acquired Balzaretti-Modigliani in Italy. However, production did not begin on an industrial scale until after World War II. Considerable research into improvements followed, which led to the intervention of the TEL and SUPERTEL processes for insulating materials, licensed by Saint-Gobain throughout the world.

Meanwhile the chemical side of the business had continued to decline, partly because of unsuccessful diversifications in this area. Of various diversifications attempted, including petroleum refining, one proved to be a long-term success: cellulose production. This began in 1920 and is the only process surviving from this period. An association with Papeteries Navarre in 1924 led to the formation of Cellulose du Pin and construction of a works at Facture in the Landes in 1928. It was planned at first to produce fibers for paper-based artificial textiles, but their decline after the war led to a switch to Kraft paper and bags.

The rest of the chemical side continued to be dangerously exposed. Saint-Gobain had refused an offer from Solvay for a merger in 1927 and 1928, which would have created a Franco-Belgian group on a par with ICI or I.G. Farben. Another proposal, from Kuhlmann for a French chemical union, was also turned down. These negative responses may have sprung from the desire by management to cling to the old regime. Management reforms in the 1920s and 1930s had been only tentative, and it was not until the presidency of Pierre Hély DOissel from 1936 to 1953 that fundamental changes in management and structure were initiated, heralding the new models of management of the 1950s and 1960s.

Postwar Changes

The period from 1950 which led up to the merger of the two very dissimilar firms of Saint-Gobain and Pont-a-Mousson in 1970 was characterized by the growing power of the state in the French economy, begun during World War II under the Vichy regime. Senior officials of government were closely involved in the management of a planned economy and saw much of French industry as archaic and fragmented. The glass industry continued to flourish, and Saint-Gobain acquired a stake in its famous Belgian rival, Glaceries de Saint-Roch. Overseas expansion in glass fiber was dramatic, and the development of a presence in Brazil from 1960 supplemented solid bases in Belgium, Germany, Italy, Switzerland, and Spain. The TEL process was proving successful in the United States, and led to the acquisition of interests in the CertainTeed Corporation and the conversion of three old factories, which gave the company 10 percent to 15 percent of the U.S. market. However, another U.S. venture went wrong. A new subsidiary, American Saint-Gobain, founded in 1959, having already acquired four glassworks, then designed a new one in Greenland, Tennessee, intended to exploit the latest techniques in grinding and polishing. Disastrously, this factory did not open until 1962, after the invention of float glass by Pilkington. This revolutionary technique obviated the need for lengthy finishing processes. To compound the problem, the United States reacted strongly to the French invasion by an increase in tariffs of 30 percent.

Although the invention of float glass effectively killed off American Saint-Gobain, the parent company did not take the new process seriously until 1965, when it had to be acquired on much less favorable terms than were available just after the invention in the 1950s. Saint-Gobain, however, made up for lost time by rapidly modernizing all of its factories, starting with those overseas, thus helping amortize the old installations.

The 1960s also witnessed unsatisfactory alliances during the companys last attempts to revive its chemical operations, notably the creation of Péchiney-Saint-Gobain to develop organic chemicals, in particular the new plastics materials. Due to the instability of this sector, a government commission recommended a fundamental regrouping. However, before these recommendations could be acted upon, Rhóne-Poulenc preempted them by acquiring Péchiney-Saint-Gobain. Péchiney itself did not want the chemical interests, and Saint-Gobain could not afford to buy them.

Merger Negotiations in the 1960s

During this period the company raised capital to fund various ill-fated ventures. The increasing deficit caused further recourse to the banks, much against the Saint-Gobain tradition. At the end of 1968 came a major turning point: the dramatic offensive by Boussois Souchon Neuvesel (BSN) with a public offer for exchange to acquire 30 percent of Saint-Gobain, following tentative negotiations, which Saint-Gobain had rebuffed. BSN, a small but ambitious glass producer with an annual turnover of just under FFr600 million, had set its sights on a company with consolidated funds of more than FFr5 billion. BSN had chosen the moment when Saint-Gobain was suffering from the effects of the chemical restructuring as well as internal management struggles; these difficulties were reflected in the low price of the shares at the time. The offensive was a technical failure, securing only seven percent of Saint-Gobains capital, one million shares out of the minimum 3.4 million required. A vigorous rescue bid had to be mounted by a consortium of banks led by the Compagnie de Suez, and 40 percent of the shares changed hands during the battle. This shift left the company badly shaken and with diminished funds. As a direct consequence of this affair, the bankers took the initiative in arranging the merger with Pont-á-Mousson, which they saw as a means of securing Saint-Gobain against further attacks of this nature. Arnaud de Vogüe, president since 1952, was initially reluctant but eventually recognized the end of the grand liberal regime of Saint-Gobain and the beginning of a new era.

One-third of the size of Saint-Gobain, Pont-á-Mousson, founded in the 1850s, had begun to detach itself from its coal and metallurgical interests during the 1960s. Originally founded by local coal merchants in the Lorraine after the discovery of new iron-ore deposits, the little town of Pont-á-Mousson between Metz and Nancy was chosen as the site of the first blast furnace in 1860. The company began to pursue a strategy of vertical integration, with the control of mines, ironworks, and end products, a policy continued right up until the 1960s. In 1866 it made the key decision to specialize in the production of cast-iron pipes. The invention in Brazil in 1915 of an improved technique of casting pipes using centrifugal force led to the companys establishing production in Brazil in 1937. After World War II, a new importance was given to cast iron by the ductile iron process, discovered by researchers at International Nickel in Canada during the 1940s. Pont-à-Mousson quickly obtained a license from a U.K. subsidiary of International Nickel, and began production in 1950. Even so, the old type of cast-iron pipe remained in production until the end of the 1960s.

In contrast to Saint-Gobain, the dominant personalities in the history of Pont-á-Mousson were engineers, notably Camille Cavallier, sole administrator from 1900 to 1917 and president from 1917 to 1926. In 1970, following the merger, a provisional organizational structure was adopted, based on the Pont-à-Mousson model, and it was Pont-à-Moussons director, Roger Martin, who succeeded Arnaud de Vogue as the head of the new group. A gradual process of rationalization then took place, involving decentralization, the establishment of a management structure, and the creation of product-based departments. In 1978, following a convention of all 41 directors, more fundamental reorganization of the new group led to the replacement of the six market departments by ten production-oriented branches. The 1970s also witnessed the jettisoning of the remaining chemical and petroleum investments, as well as the iron and steel interests inherited with Pont-à-Mousson. A brief flirtation with the products for nuclear reactors in 1972 was abandoned for political reasons. In glass fiber, the U.S. presence was reinforced by control of CertainTeed, and in France a new factory for insulation products was built at Orange. The energy crisis helped here: between 1973 and 1975 Saint-Gobain doubled its European production of glass fiber. Significant investments were also made in float glass, with Saint-Gobain building ten out of the 17 new plants constructed in Europe during 1976.

The new strength of the combined companies was illustrated by their ability to weather the crises of this period, including heavy losses in brassware and machinery during 1977 and 1978, and a sudden downturn in the insulation market in 1981, resulting in massive overproduction.

The 1980s and 1990s

After the 1978 reorganization, a search for further diversification led to the decision to enter the information technology sector. A joint subsidiary, Eurotechnique, was set up with National Semiconductor to produce electronic components, a partnership established with Cii-HB, and 30 percent of the capital of Olivetti acquired. However, before this venture could get off the ground, Saint-Gobain was nationalized by the new government of 1981 and forced to liquidate these holdings between 1982 and 1983. Yet Saint-Gobain was the only nationalized company to retain its top management, who continued to pursue their vigorous investment strategy and maintain a high level of industrial activity. The result was increased debt, countered by such austerity measures as plant rationalization. The group had to be slimmed down further with approaching reprivatization in 1986. The effect of these policies was spectacular; global profits increased by a factor of seven in six years.

The company made several important acquisitions in the early 1990s. In 1990 Saint-Gobain acquired the U.S. company Norton, which was the worlds leader in abrasives. The company paid $ 1.9 billion for Norton, one of the biggest French takeovers of an American company. The deal with Saint-Gobain rescued Norton from a hostile takeover by a British conglomerate, and Norton was a valuable asset. Norton was the only world producer of all three leading kinds of industrial abrasivesgrinding wheels for machining metals, coated abrasives for polishing wood and glass, and super-abrasives with a diamond or boron nitride base. Norton had a strong reputation for quality, and its purchase gave Saint-Gobain a firm presence in the North American market. Saint-Gobain also acquired two German glassmakers in 1991, GIAG and Oberland. By 1992, Saint-Gobain had become the worlds leading manufacturer of glass.

However, sales began to slump by 1992, and net income fell precipitously. Despite sales of over FFr 70 billion each year from 1991 through 1993, the company was beset by a downturn in the industrial cycle that it could do little to control. Demand for its products was low across Europe, and the companys activities in Asia were not vigorous enough to offset the lull in its home economy. In 1993, Saint-Gobains profits plunged 45 percent. The company struggled to rein in costs and reduce its debt. The next year, Saint-Gobain took a major step to strengthen its core business by selling off its paper, pulp and packaging unit. The company raised FFr5.63 billion ($1.07 billion) by selling its paper subsidiary La Cellulose du Pin to an Irish company, Jefferson Smurfit Group PLC. Saint-Gobain had been involved in the paper industry for 70 years, but the companys chairman, Jean-Louis Beffa, called La Cellulose du Pin too small and too French to be a global player like the rest of Saint-Gobains divisions. The loss of the paper business was expected to cut Saint-Gobains sales by 10 percent, but the injection of cash was badly needed.

The next year, the recession in Europe seemed to be ending. Sales volume rose, although prices were still slack. Saint-Gobain did very well in North America in 1994, which improved the companys overall performance, and Saint-Gobain announced that it was ready to resume acquisitions, now that sales and profits were back to manageable levels. In June 1995 the company announced a complex deal with two companies that would effectively make Saint-Gobain the largest glass-packaging manufacturer in the world. Saint-Gobain spent $1 billion for management control of a joint venture with Ball Corp., an American manufacturer. The joint venture bought up Ball Glass Container Corp. and another U.S. glass container manufacturer, Foster Forbes, giving Saint-Gobain control of 22 U.S. plants. The deal put Saint-Gobain second only to Owens-Illinois in the U.S. glass-packaging market. Saint-Gobain was already the leader in the European glass-packaging market, and it was important to the company to expand into the North American market. The deal with Ball Corp. seemed indicative of the companys future plans, to increase Saint-Gobains presence in markets far from Europe.

Principal Subsidiaries

Saint-Gobain Vitrage; Saint-Gobain Emballage; Saint-Gobain Desjonquéres; Pont-à-Mousson SA (99%); Everite; Isover Saint-Gobain; Socar; Sociéte Européenne des Produits Réfractaires; Vetrotex Saint-Gobain; Glaceries de Saint-Roch (Belgium, 98%); Barbará (Brazil, 60%); Brasilit (Brazil, 86%); Scan-Gobain Glass A/S (Denmark, 81%); Vegla GmbH (Germany, 99%); Halbergerhütte GmbH (Germany); Fabrica Pisana (Italy); Balzaretti Modigliani (Italy, 87%); Vetri (Italy, 73%); Cristalería Española (Spain, 73%); Gullfiber AB (Sweden, 99%); Stanton PLC (U.K., 99%); TSL Group (U.K., 99%); CertainTeed Corporation (U.S.A.); Norton Company (U.S.A.).

Further Reading

Comes, Frank J., The Yuppie Whos Rewriting the Socialist Agenda, Business Week, May 13, 1985, p. 46.

Frances Saint-Gobain Says It Expects Drop in Net Profit for 1993, Wall Street Journal, April 2, 1993, p. A4B.

Hamon, Maurice, Saint-Gobain (1665-1990): The Making of a French Multinational, Editions Jean-Claude Lattés, 1990.

Kamm, Thomas, Gobain in Deal to Establish a Bottle Giant, Wall Street Journal, June 28, 1995, p. 10A.

, Transaction Gives Saint-Gobain New Growth Potential, Wall Street Journal, August 23, 1994, p. 4B.

Truell, Peter, Scandals Crimp Business for French Firms, Wall Street Journal, October 20, 1994, p. 10A.

Peter W. Miller

updated by A. Woodward

About this article

Compagnie de Saint-Gobain S.A

All Sources -
Updated Aug 08 2016 About encyclopedia.com content Print Topic