Martin Bouygues
1952–

Chairman and chief executive officer, Bouygues

Nationality: French.

Born: April 1952.

Education: Attended University of Paris, Dauphine.

Family: Son of Francis Bouygues; married (wife's name unknown); children: none.

Career: Bouygues Group, 1974–1978, site supervisor, manager; Maison Bouygues, 1978–1986, manager; Saur, 1986–1989, chairman and chief executive officer; Bouygues, 1987–1989, vice chairman; 1989–, chairman and chief executive officer.

Address: Bouygues SA, 1, avenue Eugène Freyssinet, 78061 Saint-Quentin-en-Yvelines Cedex, France; http://www.bouygues.fr.

■ After he took over from his father, Martin Bouygues (pronounced "bweeg") developed the Bouygues Group into a giant corporation gathered into two primary arms—construction and services—that controlled more than 40 subsidiaries and affiliates in 80 countries. More than 22 percent of the huge corporation was controlled by the brothers Martin (the younger) and Olivier through the holding company SCDM. Martin, who shunned the public eye and was named among the richest people in the world beginning in 2000, earned his way to the top, beginning as a construction-site supervisor in 1974 after dropping out of the University of Paris.

The Bouygues company was founded by Francis Bouygues, the son of an engineer in Paris, the year Martin was born. Francis borrowed $1,700 and started an industrial works and construction business he named Entreprise Francis Bouygues. The company expanded into property development in 1956, entered the civil engineering and public works fields, and expanded from the Paris region throughout France. The company was listed on the Paris stock exchange in 1970. In 1974 Francis Bouygues created Bouygues Offshore and began building oil platforms. Martin Bouygues joined the business and supervised

construction of the vast Parisian Les Halles shopping complex. He entered the business's commercial arm in 1978 and established Maison Bouygues, which specialized in catalog sales of single-family homes. That same year the Bouygues Group won a contract to build Roissy Terminal at Charles de Gaulle Airport, Paris, and in 1981 embarked on a monumental four-year project to build the University of Riyadh in Saudi Arabia, at the time the world's largest building project. In 1984 Bouygues acquired ETDE, a power transmission and supply firm, and Saur, the third-largest water treatment and supply company in France. Martin Bouygues played a significant role in the latter deal and was appointed chairman and chief executive officer two years later.

In 1986 the Bouygues Group acquired the Screg Group. Colas, France's largest highway contractor, was part of that group. Also in 1986 Jacques Chirac, the prime minister of France, announced he would privatize Société Télévision Française 1 (TF1), the state-owned television network, and set a minimum price of FRF 4.5 billion ($750 million). Francis Bouygues saw this event as a major diversification opportunity and quickly organized a consortium, which won the bid the following year. Patrick Le Lay, a long-time construction engineer with Bouygues, became the chief executive of TF1 and immediately fired all but one of the network's 30 top executives. In their stead he placed Bouygues Group managers who had been trained at the construction company and who, like Le Lay, knew nothing about television. Under the watchful eye of Martin Bouygues, who became chairman and chief executive officer of the Bouygues Group in 1989, Le Lay grew the network into a highly diversified and successful media group. In an interview with John H. Christy of Forbes, it was apparent that the younger Bouygues had learned well from his father's example. He said, "It's much better to go into a new business with men who are extremely smart but don't know a damn thing about it. There are no prejudices that way. We start with a clean slate and build everything from the foundation. We're not pulling the deadweight of the past with us" (June 12, 2000).

In 1988 the Bouygues construction arm, by then one of the world's largest building and engineering companies, began building the Channel Tunnel between France and England, a project that lasted until 1994. In 1989 in failing health, Francis Bouygues, known as the "Emperor of Concrete," abdicated to Martin but remained on the board until his death in 1993. "Now the issue is," wrote a columnist for the The Economist, "whether the younger, and still unproven, Mr. Bouygues can hold together the empire built by his famously tough father" (September 9, 1989). The columnist went on to comment, however, that Bouygues already had built a competent team around him and that the company appeared to be bidproof, the Bouygues family holding 17 percent of the stock and friendly institutions holding another 25–27 percent.

No one need have worried about the company's survival, and few could have predicted its exponential growth in the ensuing decades. From a builder of buildings, the University of Paris dropout became a builder of businesses, and he wasted no time. Only one month after succeeding his father in 1989 Martin Bouygues acquired a majority interest in the largest flour mill in France, Grands Moulins de Paris (sold in 1998). This deal took the company into three entirely new areas: flour milling, frozen foods, and property development. The following year Bouygues purchased the Swiss construction group Losinger.

In 1993 Bouygues made the leap into the telecommunications industry. Skeptics wondered what cement and telecommunications had to do with each other. However, Bouygues Telecom was awarded France's third mobile license in 1994. In 1996 Bouygues began mobile telephone operations and formed a partnership with Telecom Italia. Coverage throughout France was achieved in record-breaking time. The company had more than 1 million customers by 1998 and continued on to unrivaled success across Europe. In 2001 Bouygues caused a huge controversy throughout Europe when he refused to bid for a universal mobile telecommunications system (UMTS)—also known as third-generation (3G) wireless—license because of the exorbitant minimum price the French government had placed on the license. This lack of a bid meant Bouygues Telecom was the only mobile services provider in all Europe without a major investment in 3G technology. Regardless, Bouygues Telecom's revenues had by that time reached EUR 2.7 billion, operating profits were EUR 52 million, and the company had 6.1 million active customers.

Bouygues had other businesses to run, and 1996 was a busy year. Bouygues Offshore listed 40 percent of its shares on the Paris and New York stock exchanges; Bouygues Construction was created when Bouygues spun off the company's construction arm; and Bouygues oversaw a partnership that launched the digital Télévision par Satellite package at TF1, which by 2003, had 1.2 million subscribers and was Europe's mostwatched general-interest channel. In 1999 Bouygues acquired the Norwegian engineering firm Kvaerner, and by 2003 the Bouygues construction arm had won huge and prestigious contracts around the globe. Contracts outside France contributed to more than half of the group's sales. The Bouygues Group by then employed 124,000 persons, sales were EUR 21.8 billion (EUR 6.1 billion outside France), and market capitalization was EUR 9 billion.

CARTELS AND CONTROVERSIES

In 1995, pursuant to France's 1993 anticorruption clampdown, French police raided the Bouygues Group headquarters and held Bouygues for investigation on huge frauds involving illegal deposits allegedly made to a Swiss bank account that investigators believed may have been used to fund the reelection campaign of the former mayor of Lyon, Michael Noir. In 1996 Bouygues, along with two other prominent French business executives, was again investigated on allegations that ranged from accounting fraud to bribery. A year later Bouygues, Le Lay, and Philippe Chalendon, the commercial director of an arm of Bouygues Offshore, were placed under investigation in a case of alleged false billing and misuse of corporate assets involving approximately 40 companies in and around Paris. David Owen of the Financial Times wrote, "Bouygues would last night make no comment … except to emphasise that the men would continue 'fully' to exercise their corporate functions" (February 28, 1997). Owen noted that Bouygues was among several companies fined the year before by the French competition council for "price-fixing and other anticompetitive behavior in public sectors. The council accused 36 French companies of creating cartels for contracts ranging from the TGV high-speed railway to the Normandy suspension bridge over the Seine. The company is appealing the decision."

In 1998 the Bouygues Group and two of France's other largest construction companies were subjected to a major investigation for an alleged agreed system for misappropriating public funds. An extensive article on the Public Services International Research Unit Web site read, "The companies participated in a corrupt cartel over building work for schools in the Ile-de-France region between 1989 and 1996. Contracts worth FF 28 billion (approximately $500 million) were shared out by the three groups, in meetings that took place in a hotel near the Champs-Elysees in Paris" (February 9, 1999).

Another major controversy erupted in 2000 when Bouygues refused to bid for a 3G technology license. The government was demanding a flat-rate fee of $4.5 billion. Bouygues balked, and Europe was stunned. "Martin Bouygues has taken a harsh line over recent months in denouncing the asking price for French UMTS licences," wrote a reporter for Tech Europe (February 2, 2001). Bouygues maintained that the exorbitant price demanded for the license, coupled with the expenses required to get up and running, would virtually bankrupt the entire European telecom industry, and he lodged a complaint with the European Commission. Although the company was under intense pressure, spending such a huge sum on unproven technology was, to Bouygues, sheer madness. On May 6, 2000, Bouygues wrote one of several highly critical letters warning the entire continent of the dangers of doing so. The letter appeared on the front page of Le Monde. In it Bouygues said that many telecom providers faced a no-win situation: Either they quit the business, as a result of not bidding for a license, or they buy the license and drown in a sea of debt. An article in BusinessWeek quoted from that letter: "What should I tell my employees?… That we have a choice between a sudden death and a slow one?" (June 3, 2002).

Bouygues's warnings went unheeded, but in 2002 his prediction came to fruition when 3G technology stumbled due to poor timing and a range of other issues. Investors became nervous, stocks plummeted, and financial losses hurt many of Europe's largest telecommunication companies. "Europe's phone giants—after spending half a trillion dollars on licenses, acquisitions, and networks—are treading madly to stay afloat in a sea of debt … Deutsche Telekom is sitting on $60 billion in liabilities and casting about frantically for assets to sell," wrote the author of the BusinessWeek article (June 3, 2002). All Bouygues had to do was wait. "To entice him to even bid for a license, the French government had to slash the fees from $4.4 billion to $557 million," noted the BusinessWeek reporter. In 2002 Bouygues pocketed a cut-price license and announced his intention to launch I-mode with technology licensed from the experienced and successful Japanese NTT DoCoMo. Bouygues promised the company not to disclose the cost. "Bouygues now plans to roll out his new network—slowly," commented the BusinessWeek reporter. According to an article on the ANANOVA Web Site, when questioned about his lengthy stonewalling, Bouygues merely said, "I regret nothing." He commented that without his standoff, the government would not have cut prices. By May 2004 the I-mode service had become hugely successful, amassing more than 666,000 customers. "The company remains true to its philosophy of offering high-quality services that are easy to use, practical and affordable," Bouygues wrote in his corporate profile on the Bouygues Web site.

MANAGEMENT STYLE

Bouygues arrived at the company's gigantic and palatial headquarters outside Versailles by dawn each day. True to his philosophy of beginning a new company with "people who are extremely smart but don't know a damn thing about it," when Bouygues made the leap from construction into the unknown realm of the telecom industry in 1994, he wrote down the names of 30 Bouygues managers he thought would do the best job. All were appointed by that evening. "Bouygues approached the telecom services rollout like any other construction project," commented Christy in Forbes, "paying close attention to costs and deadlines" (June 12, 2000). Bouygues believed the construction business was an excellent foundation on which to build both managers and businesses. As did Bouygues himself (he and his brother never received one share from their father), almost all managers at the Bouygues company started as entry-level employees on construction sites. "Construction is an extremely difficult business," Bouygues told Christy. "Competition is fierce, and margins are thin. It's a wonderful management training school. It breeds managers that love challenges and are very quick on their feet."

Bouygues kept his employees quick on their feet by continually rotating them through the company. "I judge my top managers on their ability to turn over their best people to other parts of the company. If you do that, you'll be seen as someone who helps people advance, and people will want to work for you" (June 12, 2000). Bouygues rewarded his employees well, however, awarding them stock options and including them in profit sharing—a rare form of compensation in France.

See also entry on Bouygues S.A. in International Directory of Company Histories.

sources for further information

"Bouygues Chairman Says Worst Still to Come for Overpaying UMTS Entrants." ANANOVA, http://www.ananova.com/business/story/sm_569062.html?menu=.

Christy, John H., "Clean Slate," Forbes, June 12, 2000, p. 184.

Owen, David, "News, Europe: French Businessmen in Probe—Chairman of Bouygues and TF1 Chief Alleged to Have Misused Corporate Assets," Financial Times, February 28, 1997.

"Royal Retirement," Economist, September 9, 1989, p. 78.

"SAUR and Bouygues," Public Services International Research Unit, February 9, 1999, http://www.labournet.org/1999/Feb/saur.html#_Toc443286717.

"Tale of a Bubble: How the 3G Fiasco Came Close to Wrecking Europe," BusinessWeek, June 3, 2002, p. 46.

"UMTS/France: Only Two Candidates for Four Licences, (Government Activity)," Tech Europe, February 2, 2001, p. 208.

—Marie L. Thompson