7, place du Chancelier Adenauer
Telephone: (+33) 1-56-28-20-00
Fax: (+33) 1-56-28-33-38
Incorporated: 1885 as Compagnie des Produits Chimiques d'Alais et de la Camargue
Sales: EUR 10.7 billion ($10.20 billion) (2000)
Stock Exchanges: Euronext Paris New York
Ticker Symbols: PEC; PY
NAIC: 331312 Primary Aluminum Production; 326112 Unsupported Plastics Packaging Film and Sheet Manufacturing
The objective is to create value through continuous improvement and selective and profitable growth.
1855: Henri Merle founds Compagnie des Produits Chimiques d'Alais et de la Camargue in order to produce caustic soda.
1860: Company begins production of aluminum, using a chemical-based production method, and holds French monopoly position on aluminum production for 30 years.
1889: Alais et Camargue exits chemical-based aluminum production.
1897: Company returns to aluminum production, now using electrolytic production methods.
1912: Alais et Camargue enters United States, building aluminum production plant in South Carolina.
1921: Alais et Camargue merges with chief French competitor Froges to form AFC (Compagnie des Produits Chimiques et Électrométallurgiques d'Alais, Froges et Camargue).
1948: AFC reorganizes into four major divisions of aluminum, electrothermics, chemicals and mining products, then changes its name to Pechiney; begins international expansion program.
1971: Pechiney merges with Ugine-Kuhlmann, creating Pechiney-Ugine-Kuhlmann (PUK) and becoming France's largest industrial group.
1982: PUK is nationalized by French government, which transfers much of company's assets to other nationalized companies.
1983: Company is renamed Pechiney, and is once again focused on aluminum products.
1988: Pechiney acquires American National Can (ANC), based in the United States, becoming world's leading packaging company; company spins off its international operations into publicly listed Pechiney International.
1995: Pechiney is privatized and listed on the Paris and New York stock exchanges.
1996: Company begins Challenge restructuring program, refocuses on its activities as aluminum producer and specialty packager.
1999: Pechiney spins off ANC, keeping a 45 percent stake, then sells this off to Rexam PLC in 2000.
2000: Pechiney attempts to join merger between Alcan and Alagroup, but is forced to withdraw.
2001: Company begins new acquisition program with intention of doubling in size by 2005.
France's Pechiney SA is the world's fourth largest producer and converter of aluminum, and the world's third largest producer of specialty packaging for the food, healthcare, and cosmetics industries. Aluminum production and conversion accounts for some 45 percent of sales, while specialty packaging adds 20 percent of sales. The company also operates a small ferroalloy manufacturing unit. Pechiney operates on a global scale with more than 31,000 employees working at 320 manufacturing and sales facilities in 50 countries. France accounts for the largest portion of the company's EUR 10.7 billion in sales, at 44 percent, while the rest of Europe contributes an additional 15 percent toward revenues. The company is also present in the United States, where it generated 34 percent of its sales in 2000. Pechiney was disappointed in its attempt to merge with Canadian Alcan and Swiss Alagroup in 2000, a union which would have boosted the merged company to global industry leadership, ahead of U.S. giant Alcoa. Yet the company has since rebounded from the loss, acquiring JPS Packaging and announcing its intention to grow by as much as 100 percent by 2005. Pechiney, listed on both the Euronext Paris and New York stock exchanges, is led by Chairman and CEO Jean-Pierre Rodier.
From Chemicals to Aluminum in the 19th Century
In 1855, a young chemical engineer named Henri Merle founded his plant in Salindres, near Alais in the Gard region, with the permission of the French emperor, Napoleon III, in order to produce caustic soda from the coal, salt, pyrites, and limestone that were all available in the area. The company was known as the Compagnie des Produits Chimiques d'Alais et de la Camargue, run by Henri Merle and presided over by Jean-Baptiste Guimet. The year 1860 saw the first industrial production of aluminum metal, using the chemical process discovered six years earlier by Henri Sainte-Claire Deville, which allowed the company to cast 505 kilograms of metal the first year and retain a monopoly for it for about 30 years. Aluminum was then extremely expensive, and considered a luxury product. Napoleon III was actually offered aluminum cutlery as a wedding gift. The man who was to give the company its name, Alfred Rangod, known as A.R. Pechiney, the name of his stepfather, entered the company in 1874 and would begin a long term as managing director. Within three years, the company was being referred to in financial and trading circles by his name. Henri Roux was appointed president in 1879, to be replaced by Emile Guimet, founder of the famous Asian arts museum in Paris, in 1887.
In 1886 a new, much more efficient electrolytical process to cast aluminum was discovered by the French scientist Paul Héroult. Héroult offered to sell the process to A.R. Pechiney, but the latter did not believe in the future of aluminum and declined to buy it. Héroult subsequently sold his patent to another company, Société Électrométallurgique Française, which built its first aluminum factory in Froges. In 1889, faced with competition from Froges, A.R. Pechiney closed down his firm's aluminum department. In 1897, however, Pechiney bought a competing firm and entered the field of electrolysis. Up to World War I, the firm continued to construct new plants in the Alps and Pyrenees, becoming the second aluminum producer in France and the leading firm for sales through the establishment of L'Aluminium Français, a sales company uniting all the French aluminum producers. The company also had a Norwegian subsidiary that produced aluminum, but the most ambitious project of the period was the establishment in 1912 of a U.S. aluminum factory in South Carolina. The plant, one of the largest in the world at the time, was to develop into a town, Badinville. The town was named after Adrien Badin, who succeeded A.R. Pechiney at the head of the company as managing director, from 1914 to 1917, when he died. Badin was succeeded by a team comprised of Emile Boyoud and Louis Marlio. In 1918 Emile Guimet died, and Gabriel Cordier was appointed president.
Due to its southern location, the firm was not affected by World War I, apart from the fact that it had to sell its American plant to Aluminum Company of America. On the contrary, it worked hard to comply with the orders of the French war ministry. However, the firm faced new difficulties at the end of the war. The economic crisis of 1920 and 1921 led to an era of industrial concentration in France. In 1921, Alais et Camargue--referred to in financial circles as Pechiney--merged with the leading aluminum producer, Froges, to form Compagnie des Produits Chimiques et Électrométallurgiques d'Alais, Froges et Camargue known as AFC. The company was managed by Gabriel Cordier, president of Pechiney. The production of the new company continued to grow steadily until World War II under the leadership of Gabriel Cordier and, after the latter's death in 1934, Jacques Level, from Froges, who died in 1939.
The company's expansion continued between the wars. Aluminum production, which amounted to 11,000 tons in 1918, reached 50,000 tons in 1939. The firm developed its chemical production and, above all, concentrated during the 1920s and 1930s on the exploitation of hydroelectricity in the French Alps and Pyrenees. In 1946, when the energy sector was nationalized by the De Gaulle government, along with the transport sector and strategic industries, including arms and electricity, AFC-Pechiney alone supplied 15 percent of French electricity. In addition, the company took part--together with the only other French aluminum producer, Ugine--in the reformed international aluminum combine--which was established in 1901. International alliances regrouping the aluminum producers followed one another, up to World War II. In addition, French aluminum producers formed a sales consortium in 1912, which favored an efficient double-edged policy aiming at the development of the final uses of aluminum and at moderate pricing. This situation allowed the company to go through the 1930s Depression without major problems, unlike the copper combine which experienced a major crash during the same period. Once again, the company plants were spared from destruction in World War II because of their geographical location in the south of France. The firm survived the war without major problems. During the first few months it was under the tenure of Louis Marlio, who had succeeded Jacques Level in 1939 after assisting him for 20 years in the company, and from then onwards under President René Piaton, who was to preside over the company, with Raoul de Vitry as managing director, from 1940 to 1958. Although the firm saw aluminum production in 1945 fall to half the level of 1938 because of the energy shortage, it had completely recovered by 1947.
Post-World War II Expansion
The year 1950 marked the beginning of a new era in the company's history, with its change of name from AFC to Pechiney, under which it was already well-known in financial and commercial circles. In 1948 the firm had already been completely reorganized, with the creation of four major divisions: aluminum, electrothermics, chemicals, and mining products. During the 1950s and 1960s, during the tenures of René Piaton, then Raoul de Vitry, from 1958 to 1968, and finally Pierre Jouven, from 1968 to 1971, Pechiney's policy aimed at two major goals: finding new sources of energy and raw materials abroad, and better integration of the nonferrous metals transformation activities. The firm took stakes in aluminum fabrication companies in Argentina and Brazil as early as 1947 and 1948. In 1954, an aluminum plant was launched in Cameroon, and in 1960 another alumina factory opened in Guinea as well as an aluminum smelter at Noguènes in France that same year. In 1962, Pechiney acquired an important U.S. aluminum producer and transformer, Howe Sound Inc., which was eventually to split in 1975 into Howmet Aluminum Corporation and Howmet Turbine Components Corporation. Also in 1962, the firm took a stake in the Australian alumina factory of Gladstone. In 1964, the Spanish subsidiaries founded in the 1930s were reorganized with the creation of Aluminio de Galicia. In 1966 an alumina-aluminum integrated plant was opened in Greece and in 1971 another aluminum factory was launched in the Netherlands. Pechiney took total control of a French firm, Cegedur, in 1964. Cegedur was another transformer founded by Pechiney itself in association with Compagnie Générale d'Électricité in 1943. The firm then created Cebal, a subsidiary specializing in packaging, in 1966. In 1967, Pechiney merged with Tréfimétaux, another French firm in the sector specializing in copper. As a transformation result of this policy of integration and concentration, Pechiney adopted a holding structure in 1969. In the same year it sold its chemical activities to Rhône-Poulenc.
In 1971, a new period began with the merger of Pechiney and Ugine-Kuhlmann. Ugine had merged with the chemical producer Kuhlmann in 1965. The Pechiney Ugine Kuhlmann (PUK) share was introduced on the stock market immediately to replace the separate Pechiney and Ugine-Kuhlmann shares. After the short tenure of Pierre Grezel, Pierre Jouven, former president of Pechiney, took over the presidency of the new group in 1972 for three years. He was succeeded by Philippe Thomas, whose tenure lasted from 1975 to 1982. The industrial policy of the period was based on the belief that conglomerates with various complementary activities were the correct answer to U.S. competition and the European common market. Pechiney and Ugine had indeed shared common interests for years. The new entity, Pechiney Ugine Kuhlmann (PUK), became the first French industrial group. A holding company coordinated various activities: the aluminum division, the only one in France, was fully integrated, while the electro-metallurgic activities were gathered into a new subsidiary called Sofrem. The new group was also present in the nuclear sector, from the mining stage to the production of combustible elements, with the creation of specialized subsidiaries, FBFC in 1973 and Zircotube in 1976. Finally, PUK produced special steels, copper, rare metals, basic chemicals, and coloring and pharmaceutical products. During the 1970s the company concentrated on its marketing policy. The holding company emphasized the development of technical assistance contracts with the U.S.S.R. and third world countries such as Yugoslavia and India. It created an international sales network called MIA (Multibranch Integrated Agencies), with its first agency in Japan. Eventually, PUK acquired Brandeis, an international raw materials trading company, in 1981.
The 1970s economic crisis nevertheless hit PUK hard. The company accumulated financial losses of up to FFr 10 billion (about $2 billion) owing to difficulties in the steel and chemical sectors. In 1979, PUK had to sell its cable activities to Pirelli. Then, in 1982, like many of the major French industrial groups, PUK was nationalized by the socialist government of Pierre Mauroy.
Nationalized companies were originally meant to be used as tools of economic policy by the state. Quite rapidly, however, the government had to set up restructuring plans for most of the companies it nationalized, including PUK. A series of transfers took place during the early 1980s, under the presidency of Georges Besse, who remained at the head of the firm from 1982 to 1984, and then under Bernard Pache, whose tenure lasted until 1986. The coloring activities were sold to ICI and the special steels department to Sacilor in 1982. The chemical activities were transferred to Rhône-Poulenc, Elf Aquitaine, CdF-Chimie, and EMC in 1983. The considerably thinned company took back its original name, Pechiney, in 1983. In 1987, Trefimetaux was sold to Europa Metalli, with Pechiney taking a 20 percent stake in the firm. Pechiney thus returned to its basic activities as an aluminum producer, with half of its sales coming from aluminum metal and semifinished products in 1986. In 1983, a new aluminum plant was opened in Australia; another one was launched in Quebec, Canada, in 1986, while the French factories were extended and renovated. In 1985, Sofrem absorbed Bozel Électrométallurgie to become Pechiney Électrométallurgie. In order to finance a part of its investments, privileged investment certificates--shares without voting rights--were introduced on the Paris stock market in 1985 and 1986.
In 1988, during the tenure of President Jean Gandois, appointed in 1986, the firm embarked upon a new policy of external growth by taking control of American National Can (ANC), the world's leading packaging company, with 21,600 employees, 100 factories, and sales of about $5 billion in 1988. Pechiney itself achieved sales of $10 billion at the time of the acquisition. In taking over ANC, Pechiney first of all grew by 50 percent, then reached a new equilibrium between aluminum (30 percent of manufacturing sales), packaging (45 percent), and other divisional activities. The aim was for the company to become less dependent on the volatile world aluminum market. The state-owned firm, heavily indebted by the acquisition of ANC, needed to finance its development projects in a convenient way. In 1989, the firm created Pechiney International, its international interests being brought together into the 75 percent owned subsidiary. The remaining 25 percent of the subsidiary's shares traded on the stock market. At the same time, the company began exiting from a number of markets, including abrasives and refractories, ceramics, mining, and nuclear fuels.
Privatized and Prosperous in the 21st Century
Ten years later, the ANC acquisition was widely described as "imprudent," as both of the companies primary markets were hard hit by the economic recession of the early part of the 1990s. By 1993, Pechiney had slumped into losses, which neared FFr 1 billion on revenues of FFr 63 billion. In 1995, the company, led by Jean-Pierre Rodier since 1994, carried out a strategic analysis which led it to a restructuring effort to refocus its operations on two key sectors: Aluminum and Packaging. As part of the restructuring, Pechiney began shedding a number of its existing operations, including its North American Food Can and Specialty, and Beverage Glass divisions; its Turbine Components, subsidiary; and the sale of its Carbone Lorraine and Ugimag operations. The divestitures enabled the company to shave some FFr 10.4 billion from its debt.
The company's restructuring was capped by its privatization in December 1995, when the company was listed on both the Paris and New York stock exchanges. While the IPO proved a disappointment--downturns in the aluminum pricing cycle had forced the French government to lower the original share price target for the offer--the newly privatized company was freed to begin a more dramatic reorganization, dubbed Challenge. Begun in 1996, the reorganization drive called for the shedding of more than 4,500 jobs worldwide, something that would have been impossible to achieve under government ownership. The company also shed its European Food Cans operation, saving the company more than FFr 3.5 billion. More constructively, Pechiney began a massive investment program, pouring some FFr 3.8 billion in infrastructure improvements to modernize its manufacturing facilities and revitalize its research and development program. In 1997, the company merged Pechiney International back into its operations as a means to reduce overhead.
The immediate result of Challenge seemed disastrous--by the end of 1996, the company's revenues had shrunk by 4 percent, to FFr 64.3 million, while its net losses had soared to nearly FFr 2.9 billion. Yet, by the time Challenge reached its conclusion in 1999, Pechiney had achieved its goal of reducing costs by 20 percent and the company was once again in the black, posting FFr 1.7 billion in profits on FFr 62.4 billion in sales. The company had not, however, become complacent. Instead, in 1999, the company adopted a new pledge of "continuous improvement," putting into place an ongoing cost-cutting program.
By then, Rodier was preparing to take Pechiney to a new level, leading the company into the growing consolidation of the worldwide aluminum industry by seeking merger partners. As part of the preparation toward this aim, Pechiney spun off ANC in 1999, retaining a 45 percent stake in that company. That stake was sold off to the United Kingdom's Rexam Plc in 2000.
Early in 2000, Pechiney announced that it had agreed to join in a merger with Canada's Alcan and Switzerland's Alagroup to form a new globally operating aluminum producer, which, with sales worth nearly $30 billion, would easily capture the leading position in the industry, ahead of U.S.-based Alcoa. The deal, which called for the creation of the temporarily named company APA, based in Canada, appeared on its way to completion. But the merger bumped up against European Commission demands that Alcan sell its interests in a German aluminum producer, Norf. Alcan refused to sell, however, and Pechiney was forced to withdraw from the merger. (Alcan and Alagroup, unhampered by European Commission rules, went ahead with their merger that year.)
In 2001, Pechiney found itself in an awkward position. With the completion of the Alcan/Alagroup merger, and with the takeover by Alcoa of Reynolds Aluminum, Pechiney now found itself set back to fourth place among the world's aluminum producers. Nonetheless, Pechiney and Rodier had not lost their combative spirit, as Rodier pledged to continue making acquisitions "in the $100 to $500 million range" to boost the French company's position. The company followed through with purchases of the United States' JPS Packaging, Argentina's Envaril, the United Kingdom's British Aluminium Specialty Extrusions, and others. If Pechiney persisted in this vein, the company could expect to nearly double its revenues by 2004. In the meantime, the company carried out a new wave of cost-cutting efforts in the summer of 2001 as part of its continuous improvement effort.
Principal Subsidiaries: Affimet; Société Métallurgique de Gerzat; Pechiney Aluminium Presswerk GmbH (Germany); Pechiney Cast Plate, Inc. (U.S.A.); Aluminium de Grece (Greece; 60%); Pechiney Becancour Inc. (U.S.A.); Pechiney Consolidated Australia PTY Ltd.; Pechiney Nederland CV (The Netherlands; 85%); Almet France; Brandeis Brokers Limited (U.K.); Pechiney Deutschland GmbH (Germany); Pechiney Japon KK (Japan); Pechiney Trading Company SA (Switzerland); Cebal CR SA (Czech Republic); Cebal Entec SA (Spain); Cebal Italiana SA (84%); Cebal Printal Oy (Finland); Cebal Zhongshan Co. Ltd. (China; 60%); Financière Techpack (92%); Pechiney Lebensmittelverpackungen (Germany); Invensil; Silicon Smelters (South Africa).
Principal Competitors: Alcoa Inc.; Alcan Inc.; Kaiser Aluminum Corporation; Nippon Light Metal KK; Novar plc; Consolidated Container Company LLC; Crown Cork & Seal Company, Inc.; Norsk Hydro ASA.
Baker, Lucy, "Aluminium Giants Link up to Create Pounds 15bn Global Leader," Independent, August 11, 1999, p. 14.
"France's Pechiney to Sell American Natl Can Stake to Rexam," Reuters, April 3, 2000.
Gignoux, C.J., Histoire d'une Entreprise Française, Paris: Hachette, 1955.
Hawaleshka, Danylo, "A Bid for Global Supremacy," Maclean's, August 23, 1999, p. 34.
Mattei, Jacqueline, "Jean-Pierre Rodier, un mariage à trois, et l'enterrement de Pechiney," L'Expansion, February 17, 2000.
Mattei, Jacqueline, and Jean-Luc Barberi, "La vieille economie se rebiffe," L'Expansion, June 8, 2000, p. 56.
"Pechiney Abandons Three-Way Merger Plan," Reuters Business Report, April 13, 2000.
"Pechiney Cautious on 2001 Outlook," Reuters, March 29, 2001.
"Pechiney Cuts 2001 Operating Profit Forecast," Reuters, December 6, 2001.
Source: International Directory of Company Histories, Vol. 45. St. James Press, 2002.