Bernard Kasriel: Realpolitic

Stephanie Tessier, Bernard Kasriel’s press minder. apologises for the plastic cups. Depite being chief executive of the biggest construction materials company in the world, Kasriel seems able to live without the ordinary trappings of corporate wealth.

Kasriel’s office in the smart 16th arrondissement of Paris is spacious, but again, not what you’d expect for the head of a company with a turnover of €14bn (£9.5bn). There are no bronze busts or Louis XIV antiques – only the essentials of office life.

Kasriel in person is as pleasantly unassuming as his surroundings. He apologises for being late for the interview (he’s five minutes early) and asks whether it would be okay to remove his jacket.

As head of a company that depends on acquisitions for 5% of its annual growth, Kasriel’s apparent lack of ego is a distinct advantage. And tact is a key skill for a company operating in environmentally and politically sensitive markets.

Take cement for instance. It generates over 75% of Lafarge’s operating income, and corporate growth will partly depend on Lafarge being able to build new cement plant. These aren’t always popular with the locals, particularly those living in densely populated areas in the European Union.

Kasriel says that the best way Lafarge can address the concerns of suspicious government officials is to be open about its intentions and demonstrate how communities can benefit from the firm’s investment. As an example, Kasriel cites the Czech Republic, where Lafarge was planning to build a plant in an industrial zone close to the German border. “We told the local authorities that there was an opportunity to use recycled fuels and offered them the chance to visit our French and American operations where they were already in use.”

Once the Czechs saw how clean plants could be, and that they could recycle waste otherwise destined for landfill, Kasriel says the case becomes fairly persuasive. “When they see we have environmental credentials they start thinking ‘if someone has to do it, then let it be Lafarge’.”

Environmental performance is a big issue for Lafarge. Kasriel knows that being sustainable can be the key to local and national acceptance. In 2000 Lafarge entered a partnership with the Worldwide Fund for Nature to enhance its environmental performance. Lafarge’s commitments to WWF included cutting CO2 emissions, and increasing the use of recycled raw materials. The partnership with WWF is helping to enhance Lafarge’s longstanding relationships with organisations such as the Wildlife Trusts in the UK, as well as its reputation in areas such as quarry restoration and alternative transport.

Kasriel says it was WWF’s global outlook that attracted Lafarge. “With quarrying, it’s easy for local campaign groups to say ‘Not here, thank you; put it somewhere else’, but WWF understands that unloading problems on other countries isn’t acceptable.”

The assistance of a respected body such as the WWF helps Lafarge to counter the increasing opposition around the world to new quarries. In some countries this is an issue – Lafarge operated 655 quarries in 2003. The problem is particularly acute in the UK, where the diminishing reserves in existing quarries and local opposition to new ones are contributing towards a likely aggregates shortage in about 20 years time.

The 58-year-old Frenchman, who has a staggeringly detailed grasp of any Lafarge market you care to mention, bemoans a recent case in Scotland, where an application for a quarry was unsuccessful. “We backed off after years of debate in Scotland because we couldn’t secure planning permission and there was no local acceptance,” he says, adding that importing aggregates is a last resort. “The issue of finding a long-term solution remains and we’ll be working on it. The idea that the UK government can expect, say, the Norwegians to resolve its construction problems in the long term … we don’t believe is feasible. I’m not sure it realises this.”

Kasriel says that politicians are not addressing the problem because it is too far into the political future. “When you talk to a government about the situation in 20 years, you might as well be talking about infinity,” he says. He is more positive about those EU regulations restricting CO2 emissions in cement production by 20% between 1990 and 2010. He believes Lafarge’s longstanding programme of reducing these will give it a competitive advantage in Europe.

Applying expertise gathered in one market and applying it elsewhere is the great benefit of being a global company, says Kasriel. It allows Lafarge to reap the benefits of a local idea on a global scale. Because of its size, Lafarge is able to spread its learning costs and develop ideas with a long gestation. “Being part of the dream has its benefits. It means that you don’t miss the opportunity when it becomes a real business,” says Kasriel.

The self-compacting concrete Agilia is a good example of a product that offers genuine time and money savings for contractors. It was developed in France by Lafarge and two large contractors who were prepared to share the costs of testing and developing it. It has now been exported to the UK, where it is starting to be specified in a variety of projects, from housing to landmark projects such as Spinnaker Tower in Portsmouth.

Kasriel says that when developing solutions, the willingness of local contractors to embrace the concept is the key variable. “To create a new market, you need to convince the architects and specifiers, but if the contractors are not on board it won’t work. The challenge is to find installers who can provide these solutions.”

The lack of a suitable contractor base has prevented Lafarge from developing more prefabricated solutions for the UK market, says Kasriel. With its huge portfolio of products across its four divisions, it would be technically straightforward for Lafarge to make larger prefabricated units, but Kasriel is reluctant. “If solutions have to go to the extreme of changing the contracting business, it will be a huge undertaking. I’m not saying never but we still have a lot of room to grow developing existing solutions.”

Kasriel says a resistance to change in the industry means that innovation can be slow. Photovoltaic roofing panels is one example. “PV has been a dream for 15 years, but my guess is that it will be another 10 years before it’s a big market,” says Kasriel.

With Kasriel’s careful hand on the tiller, it’s hard to imagine Lafarge losing its leading position in the materials market. Kasriel believes that Lafarge will grow by providing ever more sophisticated solutions. He says this approach will generate 5% organic growth on top of 5% growth driven by acquisitions. Lafarge’s interim sales growth of 10.1% and operating increase of 33% prove Kasriel’s methods are paying dividends.