Louis Gallois
1944–

Chairman, Société Nationale des Chemins de Fer Français

Nationality: French.

Born: 1944, in Montauban, France.

Education: École des Hautes Études Commerciales; École Nationale d'Administration.

Family: Married (wife's name unknown); children: three.

Career: French Government, 1972–1989, various posts for the Ministry of Economy and Finance, the Ministry of Research and Industry, and the Ministry of Defense; Société Nationale d'Étude et de Construction de Moteurs d'Aviation, 1989–1992, chairman and CEO; Aérospatiale, 1992–1996, chairman and CEO; Société Nationale des Chemins de Fer Français, 1996–, chairman.

Address: Société Nationale des Chemins de Fer Français, 34 rue du Commandant Mouchotte, 75699 Paris Cedex 14, France; http://www.sncf.fr.

■ Louis Gallois was appointed chairman of the French national railway company Société Nationale des Chemins de Fer Français (SNCF) in 1996. As chairman, Gallois helped SNCF blaze a trail as France's primary provider of local and long-distance passenger and freight service. He also helped establish SNCF's Eurostar joint venture, shuttling passengers between Paris and London via the Channel Tunnel. Described by colleagues as slightly shy but disciplined, Gallois was among an elite corps of fast-track administrators who were trained to oversee France's state enterprises and business policies after World War II.

FROM OBSCURITY TO THE SPOTLIGHT

Born in Montauban in the southwest of France, Gallois graduated from the École des Hautes Études Commerciales and also attended the École Nationale d'Administration. Beginning in 1972 he worked in relative obscurity in various

posts for France's Ministries of Economy and Finance, Research and Industry, and Defense. In 1989 he emerged in the spotlight when he was named head of the Société Nationale d'Étude et de Construction de Moteurs d'Aviation (Snecma), a state-run enterprise involved in developing and manufacturing civil and military engines for Mirage jet fighters and Airbus airliners.

Gallois made a good first impression on colleagues. He visited the company's factories on the periphery of Paris and appeared to be more businesslike than his predecessor had been. Over time, however, critics noted that Gallois was unsuccessful in resolving many of Snecma's basic problems, including an overabundance of workers, inflexible work practices, protectionist pricing, and corporate extravagance.

In July 1992 Gallois was appointed chairman and CEO of Aérospatiale, the state-subsidized company involved in France's aerospace and defense industries. Although widely credited with extensive restructuring and cost cutting, Gallois could not keep the company from losing money on an epic scale. Many analysts noted that Gallois was hindered by the fact that the industry was precariously divided between state and private ownership. Nevertheless critics of Gallois, as noted by Ian Verchere in the European, complained that he "failed to transform" the business "into a profitable operation while continuing to call on the state for lavish injections of capital to stave off bankruptcy" (April 18, 1996). For his part Gallois accused the French government of endlessly vacillating over whether to provide the additional funding that he needed to institute privatization and a new economic order within the company.

FROM AERONAUTICS TO THE RAILWAYS

At the end of 1996 Gallois moved from space to the railways when he was appointed to head Société Nationale des Chemins de Fer Français, France's national railroad. Gallois stated that his goals were first to win back lost business and then to make SNCF the number-one public-service organization in Europe. His corporate plan included a new focus on developing strategies for maintaining traffic volume and a commitment to the company's clients. By 2000 he was able to tell the International Railway Journal, "The customer is clearly now at the heart of the enterprise, and everybody is fully aware that the customer is the real boss of SNCF" (June 2000).

In his second stage of planning Gallois aimed to achieve 11 percent growth in passenger traffic and 15 percent growth in freight between 2000 and 2002; he hoped to capture some of Europe's growing rail traffic through the implementation of continentwide initiatives. He oversaw the renovation of the train company's coaches, many of its oldest vehicles, and its one thousand train stations and also purchased a large number of additional railcars. He renewed and expanded the company's diesel and electric locomotive fleets and ordered more than 150 locomotives to prepare for a doubling of the company's freight traffic over the coming 10 years.

Gallois also began to ambitiously expand SNCF through out France and Europe by making acquisitions. He took over the Swiss wagon-hire company Ermewa and obtained a con trolling interest in Via-GTI, France's leading private operator of urban, suburban, and interurban rail services. He strengthened existing cooperation between SNCF and German rail ways, most notably by working with the Germans on joint specifications for the next-generation European high-speed train, which in France was referred to as TGV, or "Train à Grande Vitesse."

MANAGEMENT STYLE

Colleagues and industry analysts called Gallois a strong leader who firmly believed in forming consortia while working to raise the profiles of the companies for which he worked. Verchere, writing in the European, noted that Gallois gave "the impression of being a disciplined individual deeply imbued with Cartesian logic" (April 18, 1996).

Analysts noted that Gallois strongly emphasized managing development costs and aggressively reducing overall spending. As a result he was often forced to make tough decisions, such as to lay off workers, in the course of achieving the optimal balance between saving money and preserving the company's skill base. As he told Julian Moxon of Flight International, "When you save money, you have to take into account the jobs you are destroying, and the money you lose as a result. If you want independence, and if you want products completely fitted to your needs, you have to make compromises" (January 3, 1996).

Gallois was intent on managing French state-subsidized businesses such that they could compete with aggressive U.S. companies. As noted by Moxon, Gallois emphasized that in order to compete Europe needed to become united and cultivate "a domestic market with alliances in order to create common industrial interests" (January 3, 1996).

CRITICISM AND TROUBLES

Some industry analysts believed that Gallois's direction of SNCF was hampered by politics to the point where he was effectively unable to manage. They noted that he had failed to achieve one of his primary goals of jump-starting the company's disastrously weak freight business. As a result the company remained mired in financial difficulties.

After recording poor financial results in 2003, including a loss of EUR 300 million, Gallois presented the French government with a draft budget for 2004 that provided for pay raises of only 1 percent and eliminated 3,500 jobs. To protest, railway trade unions called a strike on January 21, 2004. Analysts noted that Gallois seemed to face an impossible task in attempting to put the company on track because he was obligated to deal with various governments of different political persuasions while also keeping the company's union workers appeased. In addition to his duties at SNCF, Gallois was a member of the boards of directors of Thales and of the École Centrale des Arts et Manufactures.

See also entries on The Aérospatiale Grou and Société Nationale des Chemins de Fer Français in International Directory of Company Histories.

sources for further information

Gallois, Louis, "SNCF Intends to Be a Leading Player in Europe," interview in International Railway Journal, June 2000, http://www.railjournal.com/2000-06/scnf.html.

Jackson, Derrick Z., "A French Lesson on Rail Transit," Boston Globe, July 5, 2002.

Moxon, Julian, "French Connections," Flight International, January 3, 1996, p. 22.

Verchere, Ian, "When Impish Charm Meets Gallic Logic," European, April 18, 1996, p. 32.

—David Petechuk