The Best in France Case Study Project

COTECommercialisation d’Ouvrage et de Techniques pour l’Environnement

Sixte CAMBRAAudrey FRANCPedro MAQUEDA

Framework

“To discover and document how foreign firms operating in France succeed in their chosen

marketplace by adapting to the French context.”

1. Activity : The product ( R&D ) ? corporate organization ? corporate strategy ? goals ? competitors ?

2. Historic overview: parent company? Why chosing the French marketplace? Any prejudices?

3. Settling : operationnal aspects 4. Settling / RH strategy: recruitement? expatriates? cultural background of the firm?

5. Key factors of success

…what would you recommend to a form wishing to operate in the French marketplace?

Our method

COTE main activity: Application of slurry surfacing, ECF (Enrobés Coulés à Froid)

53000 € capital company originally controlled by Générale Routière Today controlled by APPIA (Eiffage group) through the acquisition of

Générale Routière and consequently COTE

· Eiffage ranks n°5 among the five top European groups for Construction and Concessions.

· Turnover (2002) = 6.94 bn Euros

· 46000 employees within 500 subsidiaries, among them APPIA

· Appia is Eiffage’s road pole

· Comes from the merger of 3 large entities: SCR-Beugnet, Gerland et la Générale Routière.

· 15 000 employees in 260 centers, 57 quarries, 30 binder plants, 171 coating units.

· 1,9 bn euros turnover (2001)

COTE: general overview

What are the ECF? A mix of granule (eventually other materials) and

latex-modified hydrocarbon emulsion Very thin coats that are:

waterproof rugged, non-skid strongly resistant

Use: renovation / new sites, cities and country Can be colored : security (cycle tracks) & esthetics

Producing and implementing are done simultaneously by specific machines which mix the components in situ

Drying time: between 15 and 20 minutes

Departmental / national roadways. 25 millions m2 of building sites for 2002 6 millions m2 for 1993

strong and regular growth

ECF French market

m2 sites ECF COTE in France

0

500000

1000000

1500000

2000000

1997

1998

1999

2000

2001

2002

Localization of the activity:

Most of the sites located in the Northern part of France

ECF French market

Cheaper than classical products:

Less preparatory work Lower amount of raw materials like gravel and petrol Cold coating (35° instead of 170°C) does not require a large

energetic expense Easy to manufacture and transport

The technique improves acoustic environment

Easy to apply, rapid drying

Value added

Objectives:

To strengthen Générale Routière by acquiring a significant expertise in the ECF field

To penetrate the German market by buying assets of the RASCHIG Road Department

View to expand throughout the euro zone thanks to a strategically position (France as a pivot towards South / Germany towards Northern and eastern parts)

COTE: history

RASCHIEG GmbH1997

COTE

KUTTER

BOUGHT BY

Générale Routière

SPLIT

COTE: a newly French company with German origins and close relationships with KUTTER

COTE: history

First strategy:

To associate people from COTE and KUTTER, thus maximizing competencies and rotations:

Temporary workers hired by Cote + « available » people from Germany

French or German machines

Team leaders chosen for their ability and experience depending the type of work

Drawbacks:

Cultural clashes: communication, authority, language

What to do with the 35 hours?

French taxation not so unfavorable, but the cost of French workers hired in France is high « French competitiveness on personnel costs is low » G. Hostier

French workers: lack of expertise concerning the ECF application

Ensures marketing in France Conducts the projects (managers) Produces the Emulsion (France and Germany)

COTE

Brings trained supervisors Brings machines and technical meansKUTTER

COTE: final organization

PARTNERSHIP

1999:

CEO(Gérald Hostier)

COO(Vincent Ramousse)

Project Manager

(Frédéric Launay)

ProjectManager

(Jean Marie Brendle)

COTE/KUTTER: keys of success

Ensures marketing in France Conducts the projects Produces the Emulsion (France and Germany)

COTE

Organization chart

CEO(Gérald Hostier)

COO(Vincent Ramousse)

Project Manager

(Frédéric Launay)

Project Manager

(Jean Marie Brendle)

Ensures marketing in France Conducts the projects Produces the Emulsion (France and Germany)

COTE

COTE is legally responsible for the project lead in France (marketing and sales)

Technical aspects are treated by KUTTER (outsourcing)

The invoicing is based upon:

The hiring of machines

Employees cost

Royalties per projectOrganization chart

COTE/KUTTER: keys of success (I)

CEO(Gérald Hostier)

COO(Vincent Ramousse)

Project Manager

(Frédéric Launay)

Project Manager

(Jean Marie Brendle)

Ensures marketing in France Conducts the projects Produces the Emulsion (France and Germany)

COTE

Project Managers are in charge of:

Preparatory work / contact with the French clients

Leading and coordinating KUTTER teams, e.g. German workers

They must be perfectly bilingualOrganization chart

(the most valuable criteria to be recruited)

COTE/KUTTER: keys of success

· The main key of success for the ECF from COTE is the Emulsion used

· Emulsion produced in France by Générale Routière using the German technology (laboratories and factory located in Ciry Salsogne)

· Producing a high quality emulsion within the Group has several advantages:

· low production cost

· Optimization of distribution costs

· Quality granted

Ensures marketing in France Conducts the projects Produces the Emulsion (France and Germany)

COTE

COTE/KUTTER: keys of success

KUTTER is the leading company in the German market of ECF...

70 000 implemented Tons per year 3.5 millions m2 60 % market share

However, the market is clearly decreasing:

18 millions m2 (1993)

Partnership with COTE to:

Get some work for the teams

Get the ECF product (in France and Germany)

6 millions m2 (2002)

COTE/KUTTER: keys of success

Brings trained supervisors Brings machines and technical meansKUTTER

COTE/KUTTER: keys of success

The teams have the know-how of the German technique, which is a competitive advantage towards the French (coating at 35°C instead of 80°C)

Usually COTE hires a bilingual worker to facilitate communication with Kutter

Usually the teams are paid on m2 implemented, and not on hours worked...- Their work pace is much more intensive- They remain in France over the weekends if the construction site is far

from Germany to decrease travel costs

Brings trained supervisors Brings machines and technical meansKUTTER

· COTE reimburses Kutter based on the m2 implemented (cost known in advance with high accuracy)

· The offer price is fixed by mutual agreement with the management of KUTTER depending on:

- where the work is located- the characteristics and/or difficulties of the work- an estimation of the competitors' price- market interests

COTE has neither maintenance costs, nor depreciation related to the equipment

COTE/KUTTER: keys of success

Competitive advantages:

- The ECF mix (high quality and reliable product made in France using technology developed in Germany)

German teams: · High specialization

· High performanceGerman equipment: · No maintenance costs

· No depreciation costs

French and bilingual management staff :

- International partnership... international ambition:

· Awareness of the French market and how to move in it (ex. HEC diploma)· Managerial and engineering skills purely French

· Exporting the ECF mix· Promising future in third countries

COTE: keys of success

2002: APPIA bought Générale Routière (COTE’s mother company)…

2003: COTE takes in charge APPIA’s ECF activity, which means that…

APPIA implements the COTE management model for ECF

Consolidation and growth of market share for COTE in France

International expansion:

· Searching for partnerships to enter new emerging markets (Switzerland, Belgium, Poland, Macedonia…)

· And other countries with good climatic environment for implementing the product

(Italy, Greece, Spain, Portugal)

Future

Recognition of the quality and success of the COTE – KUTTER partnership

To conclude…

· France remains very attractive in terms of business:

A crucial market in volume and value

A pivotal role in the European expansion process

· The quality of the upstream workforce is never questioned: managers are French, but…

The first teams were French made but the cost was too expensive for COTE and the ECF technical lack was evident…

COTE preferred contracting with KUTTER (outsourcing)

That case illustrates some specific issues

On the long term / in France

Is that kind of partnership a threatening phenomenon in terms of jobs?

Why did not KUTTER penetrate the French market itself ?

General complexity of the system: no visibility of the French system of taxes

Cost of personnel

Irrational « fears » about general conditions of work (35 hours, power of unions and tradition of conflict…)

To conclude…

Should France push for an harmonization of fiscal policies at a European level?

How to find a way to eradicate negative stereotypes on the working conditions it offers?

THANK YOU…