Burelle S.A.

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Burelle S.A.

19, avenue Jules-Carteret
69007 Lyon
France
(33) 04.78.72.54.07
Fax: (33) 04.72.73.46.92

Public Company
Incorporated: 1957
Employees: 10,000
Sales: FFr 8 billion (1996)
Stock Exchanges: Paris
SICs: 3089 Plastics Products, Not Elsewhere Classified; 3714 Motor Vehicle Parts & Accessories; 3993 Signs & Advertising Displays; 6719 Holding Companies, Not Elsewhere Classified

Burelle S.A., based in Lyons, France, is a holding company for two principal businesses: Compagnie Plastic Omnium and Compagnie Signature. By far, Plastic Omnium—Burelle’s original business—represents the company’s most important holding, accounting for more than FFr 7.2 billion of Burelle’s 1996 sales. The group is also distinctly international, with more than 50 factories in 20 countries, and with more than half of the company’s consolidated revenues generated outside of France.

Plastic Omnium is one of Europe’s leading plastics groups and the oldest member of Burelle’s holdings. A publicly traded subsidiary, Plastic Omnium is active in four primary markets: Automotive; Municipal Environment and Leisure; Medical and Pharmaceutical; and High Performance Plastics. In the automotive market, Plastic Omnium is one of Europe’s leading suppliers of interior and exterior plastics components. The company’s interior products focus on door panels, capturing ten percent of the European market, side panels, with 20 percent of the European market, and dashboards and other interior fittings. Plastic Omnium’s exterior automobile products concentrate on its bumper systems, which have gained 25 percent of the European market. The company is also a leading maker of fuel and exhaust components and turnkey systems. In the mid-1990s Plastic Omnium extended its product lines to include components for automobile bodies, including trunks, and blow-molded and extruded products. Plastic Omnium has long been a privileged supplier to the three major French automotive manufacturers, Peugeot, Renault, and Citroen, and supplies many foreign brands, including BMW, Volvo, Volkswagen, Ford, General Motors–Opel, Seat, and Toyota.

While the automobile market accounts for more than 55 percent of Plastic Omnium’s and Burelle’s annual sales, Plastic Omnium’s Environment and Leisure division has gained a leading share of the French market for municipal waste and recycling container systems, and is a prominent player throughout the European market. The company has also pioneered and captured the French lead in outdoor plastics-based playground designs. Plastic Omnium’s Medical division has also played a leading role in bringing specialized sterile plastic products into the medical and pharmaceutical laboratory. In the high performance category, Plastic Omnium’s 3P subsidiary (Produits Plastiques Performants) has captured worldwide leadership of the fabrication of high performance polymer-based products for the chemical, pharmaceutical, automobile, aerospace, petrochemical, and other industries.

Burelle’s youngest holding is its Compagnie Signature subsidiary, created in 1991 to group Burelle’s interests in the production and placement of road sign, signaling, and security strategies for the urban, highway, and freeway markets. Primarily active in Europe, with a focus on France, Germany, Spain, Sweden, and the United Kingdom, Signature’s subsidiaries are leaders in their respective markets, providing directional signs and supports, signaling equipment, traffic detection and other traffic management systems, as well as fixtures such as bus stop shelters, and subway lighting fixtures and encasements. Signature’s contribution to Burelle’s annual sales reached FFr 1 billion in 1996.

Burelle continues to be led by founder and CEO Pierre Burelle. The company’s principal subsidiaries are led by Pierre Burelle’s sons: Jean Burelle is CEO of Plastic Omnium, and Laurent Burelle is CEO of Signature.

Plastics Pioneer in the 1940s

While most of the major types of plastics had been invented by the 1940s, the new material found little acceptance within the automobile industry. Indeed, plastics in general would long be held in disdain as inferior rivals to traditional wood and metal designs. Yet Pierre Burelle, who had been working as an engineer for the French conglomerate Saint Gobain, wagered that plastics could indeed find a place in the automobile. In 1946, Burelle, seeking to make his own fortune, left Saint Gobain and set up shop in a small Parisian cellar.

The French passion for automobiles—once again liberated after four years of German occupation during the Second World War—made the prospect of accepting the “vulgar” plastic as an automobile component decidedly dim. Burelle took the risk, however. Approaching Renault, which had just been nationalized, Burelle offered to fabricate from plastic a small piece of the steering column for the 4 CV—France’s answer to the German Volkswagen. To Burelle’s own surprise, Renault agreed, and Burelle entered the privileged ranks of the French auto giant’s official providers.

Burelle’s company—Plastic Omnium—soon added the other French car makers to its customer list, and could begin looking for customers among Europe’s leading brands. Burelle’s wager was paying off: where an automobile of the 1950s might contain just a few hundred grams of plastic, the material would soon establish itself among the important components of the average automobile. Weight concerns of both the automaker and car consumer—and particularly the effect of an automobile’s weight on its fuel consumption—helped boost plastic’s attractiveness. By the 1970s the average automobile contained some 38 kilos of plastic; by the 1980s a typical car would contain as much as 60 kilos of plastic, while a decade later, more than 100 kilos of plastic, representing more than ten percent of the total weight of many automobiles, were being used—and forecasts estimated that the automobiles of the year 2000 would contain up to 200 kilos or more of plastic components.

By the mid-1960s Burelle’s revenues had reached FFr 17 million. Automobile components would remain the company’s principal revenue generator. Yet Burelle looked to extend its range—and buffer its sales during downswings in the automotive market—with other plastics applications. For this, Burelle could remain in the family, buying up the assets of Pierre Burelle’s grandfather’s company, the Union Mutelle des Pro-priértaires Lyonnais, which supplied street-cleaning and other municipal refuse disposal services. Burelle introduced a new wrinkle to the market: the trash can on wheels. Once again wagering on an idea, Burelle offered the new product for free to the municipality, providing cleaning, maintenance, and replacement services as well, in exchange for a per-household rental fee. The plan caught on, slowly but surely—by the 1990s Plastic Omnium waste container services—which expanded to include central and household-based recycling bins—were featured in more than ten percent of France’s 36,000 municipalities, giving the company a wide lead in that market.

In the mid-1970s Burelle turned to a new material to enhance Plastic Omnium’s range of products. Developed in the mid-1960s by Du Pont in the United States, PTFE’s (polytetra-fluorethylene) best-known application was Teflon, used for coating cookware and other products. Burelle, however, recognized the new plastic form’s potential for the high technology industry. Instead of developing its own product line, however, Burelle acquired a small French company, SIREM, the only French company working with PTFE at the time. Once again, Burelle captured a French market, now for high performance plastics components for high technology and other products, in industries ranging from aerospace to household appliances.

The final piece of the Burelle puzzle came at the beginning of the 1980s. With its municipal trash collection and management services flourishing, Burelle identified a new market: providing equipment to its municipal customers’ public playgrounds. Once again, Burelle entered a market in which plastic had traditionally remained absent. Designing and producing a range of plastic-based, modular play sets and furnishings, Burelle set out to conquer this market as well, again offering a rental and servicing agreement. In addition, despite the project’s initial failure, Burelle succeeded in transforming the French and international playground. By the late 1980s the popularity of Burelle’s playground fixtures had grown to such an extent that demand outstripped supply. Burelle’s playground fixtures found eager municipal customers not only in such major French cities as Paris and Lyons, but in cities including Athens, Houston, Oslo, Dortmund, Lisbon, Albuquerque, and Seoul.

Acquiring Growth in the 1980s and 1990s

By 1985 Burelle’s revenues had reached FFr 800 million. Five years later, the company’s annual sales topped FFr 3.75 billion, and by 1996 Burelle’s consolidated revenues swelled to FFr 10 billion, making the company one of the world’s leading plastics companies. Pierre Burelle, joined by sons Jean and Laurent, had again wagered on an idea: growing the company through acquisitions. Indeed, between 1986 and 1996, the company acquired more than 30 companies, including rival automobile supplier Reydel in 1996. The first of these acquisitions was made in 1986, with the purchases of Landry Plastiques and Techni-Plaste Industrie. The following year—after taking the company public with a listing on the Lyons over-the-counter market—the Burelles acquired Doré, giving the company a foothold not only in the Netherlands, but in the United States as well. Furthering the company’s Dutch position, the company acquired Raka in 1988, while at the same time moving into Spain with the acquisition of that country’s Uldesa.

While sales of the company’s stock helped fuel its acquisition drive, many of the company’s purchases remained auto-financed, investing from FFr 300 million to FFr 450 million or more each year on acquisitions. Burelle was not shy about going into debt to drive its growth—by 1996 the company’s debt extended to FFr 3 billion. Nevertheless, the company remained consistently profitable, with the exception of 1995, the sole year of net losses in Burelle’s history. This profitability came in the face of the economic crisis that gripped France and much of Europe during the first half of the decade.

In 1989 Burelle began preparing the way for the creation of its Signature subsidiary, with the acquisition of 35 percent of France’s Neuhaus, a position boosted to 80 percent the following year, and shortly thereafter to full ownership. In 1990 Burelle acquired another French road sign maker, Sodilor; the following year, that division was enhanced by the acquisition of Webs in Switzerland and Segor in Germany. In 1991 Burelle reorganized the company, creating the Signature subsidiary for its growing holdings in directional and other roadside services. Through 1996 Burelle would continue adding to its Signature portfolio, expanding into the subsidiary’s five principal European markets with the acquisitions of companies including Sermo Electronique and TNS of France, Pathfinder and Road Signs Franco of Great Britain, Gerecke + Lauer of Germany, and Signal of Switzerland. By 1996 the Signature division had grown from FFr 337 million to nearly FFr 1 billion in sales.

Burelle’s largest growth remained, however, with its Plastic Omnium subsidiary. Between 1990 and 1996 the company acquired more than 12 plastics producers throughout the world. Janssens, S 3E, Scotra, Profutex, and Reydel Industries would consolidate Burelle’s French leadership. In the United States the company added Zarn, Epsco, and EGC, while adding Janssens in Belgium, Lander in Italy, B. PO in Turkey, Vasam in Spain, and Fransaf Ltd. in South Africa. The addition—by hostile takeover—of Reydel Industries in 1995 and 1996 not only brought Reydel’s complementary product line of automobile interiors, but also introduced Plastic Omnium to Reydel’s customers, including Fiat and Nissan.

By the mid-1990s, however, Burelle seemed to be ready to take a pause. For one, the recession had finally caught up with the company, causing a net loss of FFr 150 million in 1995, the first loss in the company’s history. However, the loss proved short-lived: by 1996, with its sales rising to FFr 10 billion, the company was back in profitability. Additionally, with France—and most of Europe—recovering from the long recession of the first half of the 1990s, Burelle could begin making plans to continue its growth towards the next century.