Groupe Legris Industries

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Groupe Legris Industries

74, rue de Paris
BP 1105
35014 Rennes Cedex 7
France
(33) 2 99 25 55 00
Fax: (33) 2 99 25 55 82
Web site: http://www.legris.fr

Public Company
Incorporated: 1863
Employees: 5,239
Sales: FFr 3.479 billion (1996)
Stock Exchanges: Paris
SICs: 3498 Fabricated Pipe and Fittings

France’s Groupe Legris Industries is a diversified industrial group with leading domestic and worldwide positions in its four principal markets: fittings, couplings, valves, and instrumentation for industrial fluids applications; fittings, valves, and regulators for domestic (water and gas) fluids applications; tower cranes; and logistics, including automated order preparation and warehousing systems. Operating on a largely decentralized basis, the company’s activities are grouped under four main subsidiaries: Legris (Industrial Fluids, 23 percent of annual sales), which has captured the worldwide leadership in the industrial fittings and valves market; Comap (Domestic Fluids, 26 percent of annual sales), one of Europe’s top producers of fittings, valves, and other products for the household water and gas systems market; Potain (Tower Cranes, 42 percent of annual sales), the world leader in construction crane production; and Savoye Logistic Systems (Logistics, 8 percent of annual sales), France’s leader in order preparation and warehouse systems. Together, the members of the Legris group produced nearly FFr 3.5 billion in sales in 1996. Principal markets include France (37 percent of sales), Germany (11 percent), Italy (8 percent), and other European countries (25 percent), with sales to Asia accounting for 12 percent of sales, and North and South American just three percent of sales. A publicly traded company, Groupe Legris remains largely controlled by the founding Legris family.

Founded in the Mid-19th Century

Ambroise Legris was 26 years old when he purchased, for 70 francs, a small coppersmith, Maison Pillon Torneur sur Cuivre, in Paris in 1863. In the midst of the Industrial Revolution, Legris’s small shop prospered, particularly from the demand for brass taps for the spreading network of gas lines. Starting with three lathes, by 1865 Legris had doubled that number, and together with new equipment, had increased the shop’s value to more than 5,000 francs. Legris’s products soon found their way beyond Paris into the rest of France. One of Legris’ early achievements came with the lighting of the Champs-Elysées, where his taps controlled the flow of the extremely volatile coal gas used at the time.

At the end of the century Legris’s son Jules married Léontine Brenot, daughter of Théodore Brenot, a celebrated inventor and manufacturer of surgical instruments. In 1899 Ambroise Legris and Théodore Brenot extended the union of the two families when they agreed to merge their companies, forming Maison Brenot et Legris Réunies. The companies, which both used brass in their products, continued to produce the Legris line of taps and other brass fixtures as well as the famed Brenot line of surgical and medical instruments. At the same time, Ambroise transferred his interest in the company to Jules Legris, who shared leadership with Brenot until the latter’s retirement four years later.

The company’s prosperity continued into the new century. By 1908 the Brenot-Legris firm employed some 60 workers and had moved to larger facilities, still located in Paris. While the company’s surgical instruments remained at the forefront of ^medical innovation, a new invention had opened new avenues for Legris’s brass taps and fittings, which had long held a reputation for quality and precision. The invention of the internal combustion engine, and its application not only to the automobile industry, but also to the nascent airplane industry, created dramatic increases in demand for Legris’s products, which were often custom-designed to meet the specifications of the client. One of these customers was Louis Blériot, the famed French aviator, who turned to Legris to design the taps for the plane Blériot used to make his world-renowned English Channel crossing.

With the outbreak of the First World War, Legris turned its production toward supporting the war effort. In 1915 Jules Legris died after rescuing a niece from drowning. Legris’s widow stepped in to lead the company, assisted by the couple’s sons, Georges and Paul. Orders, both to produce equipment for the military and to supply other companies in France and allied countries, strained Legris’s capacity. In 1918, with the German advance on Paris, the company was forced to leave the city, moving its production to the Auvergne region. But following the war, the company returned to Paris.

Sliding into World War II

Léontine Legris continued to lead the company in the years following the war, while sons George and Paul soon took more active roles. In 1921, eyeing the inevitability of the company’s succession, Léontine formerly incorporated the company as the “Société Veuve Legris et Fils.” While Léaontine continued to provide overall leadership of the company until her death in 1928, Georges took control of the company’s production activities; Paul, still a minor at the time, would later lead the company’s commercial arm.

The period following World War I marked important advances in technology and in industrial production techniques. The demand of the war had spurred great advancements in both automobile and airplane design, and Legris adapted quickly to the increasing technical demands of its clients. Under the name “Etablissements Legris Fils,” the company invested in new machinery—much of which was designed and built under the direction of Georges—enabling vast increases in productivity. At the same time, the company’s surgical instruments continued to play an important role in that market, matching advances made in the field of medicine.

Yet neither Georges nor Paul proved to be particularly inspired businessmen, and seemed content to allow the business to run itself. Legris entered a steady decline during the years of the Great Depression. By the end of the 1930s, the company’s catalog had barely evolved. Changes in automobile design—particularly the replacement of the gas tank toward the rear of the vehicle, removing the need for a tap governing the fuel line—eliminated an important source of the company’s revenues. Legris’s inertia lasted through the Second World War.

With the German occupation, French industry was forced to work for the Nazi war effort. Legris, however, joined in a popular form of industrial resistance, slowing down production, introducing equipment breakdowns, and initiating other practices designed to frustrate fulfillment of the German commands. Indeed, less than two percent of the company’s production went to Germany during this period. Throughout the occupation, Legris’s sales, which had neared seven million francs on the eve of the war, remained largely stagnant, peaking at nine million francs only in the months prior to France’s defeat. The relative stability of Legris’s sales—in the face of the loss of its North and South American markets, and the markets of Allied countries—was due primarily to the company’s first move to bring in leadership from outside the family: in 1941, Georges and Paul Legris hired Robert Chopin as the company’s technical director. The following year, after Chopin left the company, the Legris hired Jean Panneau, who would play a pivotal role not only in maintaining the company’s operations during the war but in guiding its postwar development.

Immediately following the war, however, Legris faced accusations of economic collaboration with the German occupation. Hit hard by sanctions, Georges and Paul succeeded in clearing the company’s name only in 1949.

Postwar Modernization

By then, the company was in perilous shape. Despite the addition of Panneau—who was later joined by Jacques Pierrilée and Roland Simonot to complete the company’s leadership—Legris was still operating more or less according to 19th century industrial practices. The company’s aging factory, unruly inventory system, and ancient equipment, as well as its organization—with the average age of its employees in their 50s, many of whom were father and son, and a system of foremen operating their departments as private fiefdoms—seemed out of place in a new era of modernization. More troubling for the company was the loss of another major sales area, as first Paris and then other French cities replaced their ancient gas systems. Meanwhile, Legris surgical instruments had fallen behind the vast improvements made by their U.S. counterparts, who rose to market dominance.

The reviving French economy, shortly to enter the long boom period of the 1950s-1970s, and the leadership of Panneau, who had all but taken over direction of the company’s production from Georges, brought fresh hope for the company’s future.

Georges’s sons, Pierre and André, who had both studied at the famed engineering school L’Ecole des Arts et Métiers, joined the company in the late 1940s. Taking minor positions at first, the pair, joined by Panneau, began instituting a number of initiatives, from developing a modern inventory system to designing new machinery capable of vastly increasing production. Despite the growth in productivity and the booming sales, the company lurched from one financial crisis to the other through the 1950s.

The brothers offered to buy out their uncle’s share of the family business, and in 1958 Paul finally agreed to relinquish the company’s control. On January 1, 1959, the company reincorporated as Legris S.A.

Company Perspectives:

Our strategy is built on: acknowledged know-how and innovative flair; production organized to ensure maximum flexibility and responsiveness; the only international distribution network of its kind in the industry; mutually demanding relations with customers and trust; emphasis on the quality of relations within the group.

Under André and Pierre’s direction, the company underwent a restructuring that launched it on a long period of growth. With Pierre providing commercial direction and André exhibiting a genius for innovative product designs, Legris established itself once again at the heart of France’s booming industrial sector, with major clients including Citroen, Renault, Peugeot, Motebecane, and many others. At the start of the 1960s, Legris also moved to expand and modernize its production facilities, opening a small plant in Ozoir-la-Ferrière, outside Paris. Not long after that plant became operational, the aged Paris factory burned. The company was forced to transfer all production to the Ozoir plant—a feat accomplished in only four days, with the loss of only one workday—and Legris found itself entering a new era.

Post-1960s Expansion

One important result of the transfer of the company’s activities outside of Paris was its decision to drop its surgical instruments arm. Legris regrouped around its taps, valves, and related products, but now with a steady shift toward industrial fluids applications. Among the company’s hallmarks of the time was its innovative product designs and its readiness to respond to the emerging needs of its customers. During the 1960s, the company also began developing an international distribution network, signing on distributors in the Netherlands, England, and Belgium, and later establishing subsidiaries or acquiring its foreign distributors as subsidiaries. The first of these, Legris Commerciale et Financière, was formed in 1965, in Geneva, Switzerland. Not all of the company’s international moves were successful: initial contracts with distributors in Finland and Sweden in the mid-1960s proved a failure, partly out of the distributors’ relative disinterest in Legris’s fortunes, and led the company to engage in a policy of owning its foreign distribution activities. A subsidiary was established in Spain, and the company began taking its first steps to enter the U.S. market. In the early 1970s, the company began one of the first foreign businesses to set up a joint-venture subsidiary in the newly opening Japanese market. Another move by the company in the mid-1970s was its decision to decentralize the company, opening smaller production facilities in the French provinces.

While successful, Legris remained a small, family-run operation. The invention of the instant fitting in the early 1970s provided the company with a launching pad for its future growth. But by the mid-1970s Legris had nearly collapsed, as the effects of the 1973 OPEC Oil Embargo caught the company by surprise. Overnight, its orders dried up, and the company found itself facing massive losses. On monthly sales sliding to FFr 8 million, losses mounted from FFr 500,000 to FFr 1.5 million each month. Yet the company was unable to find relief in laying off its employees, having been denied the necessary approval from the French government’s labor bureau. By the end of 1975, the company’s losses had grown to FFr 13 million on sales of FFr 90 million. The company was forced to turn to the banks to remain afloat. Legris’s chief creditors soon lost faith in the company, demanding that the Legris family turn over theirs shares in the enterprise to the banks for one symbolic franc.

By the end of 1976, however, Legris’s fortunes had improved. Sales, buoyed by the success of the instant fitting, began to rise again, passing FFr 100 million, and the company’s profitability returned. Yet the company’s relationship with its creditors remained strained into the next decade. At the same time, the company’s leadership could envision no real prospect of growth. In 1981 Pierre and André Legris decided to turn the company over to younger leadership. While Legris remained in the family, with Pierre’s sons Pierre-Yves and Olivier joining the directorship, the company also recruited Yvon Jacobs, who later took over as the company’s president.

The new team rapidly set to work revitalizing the company, renewing its product line and automating much of its operations. By the mid-1980s, the company’s sales had grown to some FFr 350 million. In order to finance future growth, the company sought to go public. Yet the company was still too small to be quoted on the primary Paris exchange. At the same time, the ascendancy of Francois Mitterand’s Socialist government, and its commitment to nationalizing French industry, put an end to Legris’s hope of selling its shares to the public. Reluctantly, the company turned to the U.S.’s SCOVILL, which agreed to acquire the company.

The sale did not take place, however. In 1985 the French secondary market was created, just in time for the French government to deny the acquisition of Legris by a foreign corporation. Legris’s arrival on the secondary market quickly proved successful, raising much-needed capital for investment. The following year, Legris made the first acquisition that would give the company its future form. In 1986 Legris acquired the Pont-a-Mousson subsdiary Comap, based in Orleans and the leader of the French domestic fluids market. With this acquisition, Legris changed its name once again, to Legris Industries.

While the Comap acquisition easily complemented Legris’s existing products, its next acquisition would take it into another area of industry altogether. Partly because of pressure from the government, Legris agreed, in 1987, to acquire the struggling Lyons-based tower-crane manufacturer Potain—which, with FFr 800 million in sales was much larger than Legris itself.

By the start of the 1990s, having turned around Potain and successfully expanded Comap into the foreign market, Legris was posting remarkable sales figures: in less than five years the company had grown from a FFr 350 million company to sales of more than FFr 5.6 billion. Only the recession of the early 1990s—and its extended impact on the European market—would slow the company’s sudden expansion. For much of the first half of the 1990s, the company’s sales would slip. With the exception of 1993, however, the company remained profitable. As the economic crisis began to clear in the mid-1990s, Legris, still largely controlled by the founding family, could look forward to a still more fluid future.