Midway through a conversation that has verged
on the drily technical, Benoît Potier suddenly demonstrates why he once thought
seriously about an acting career.
Leaping up from his seat to fetch a report on
the potential of hydrogen as a fuel for electric cars powered by fuel cells, Mr
Potier then brandishes it in front of him before shoving it in my direction.
“It’s not just me saying this: there are 31
organisations behind this study and they all believe the market will be huge!”
he exclaims.
The
show of animation marks a lurch away from Mr Potier’s generally understated
style of speaking. “This is exciting, fact-based analysis,” exclaims the long-serving
chief executive of Air Liquide, the world’s biggest producer of industrial
gases.
We are
talking in Mr Potier’s seventh-floor office at the company’s headquarters in
Paris, overlooking the River Seine. For almost two hours, Mr Potier gives what
amounts to a tutorial on industrial chemistry, interspersed with his views on
why science and engineering are vital to 21st-century economic success.
Air
Liquide’s products include a number of exotic formulas, as well as the more
familiar carbon dioxide and oxygen. They are produced either on a just-in-time
basis in small plants close to where they are used, or sold in batch form
inside canisters.
The
company has customers in virtually every country, in sectors from microchip
manufacturing to dry cleaning. “We [at Air Liquide] have to understand not just
the molecules [in the gases] but the details of the thousands of processes
[used by customers] and where the products end up.”
With a
market capitalisation of €27bn, well above what might be expected for a
business with sales of €14.45bn and 45,000 employees, the company can boast
that since listing in 1913 it has never suffered a loss. Mr Potier points out
that in the 2008-09 crisis the company had to make just a few hundred job cuts
– in contrast to the thousands of redundancies during the period at many other
industrial groups of a similar size. In February, Air Liquide, in a typically
robust set of financial results, revealed a 9.4 per cent rise in net profits
for 2011 on sales up 7 per cent.
On the
current eurozone crisis, Mr Potier is phlegmatic. He says his company sees only
limited negative repercussions because it sells to such a broad spectrum of
industries. “If demand is weak in one sector we invariably find it is holding
up reasonably robustly elsewhere.”
Yet
perhaps partly because of its steadiness, the company rarely hits the headlines
– something Mr Potier finds frustrating. In another nod to the theatrical, he
gives vent to mild agitation. “We’re an important company – but how often does
the Financial Times write about what we do? We deserve to be a lot better
known.”
He
voices similar anxieties when pondering what he reckons is a big problem in
tempting more young people in Europe and the US to study science and
engineering and embark on careers in these areas – something he believes is
vital to securing these regions’ future economic competitiveness. He mentions
his three daughters. “They are all very bright – but none of them wants to be
an engineer.”
One
answer, he says, might be to encourage more television shows and drama about
science and technology. “When did you last watch a soap opera that had a
mathematician or a chemist as the central character?”
Mr Potier
demonstrated an enthusiasm for maths and science at school, having first
studied Einstein’s theories on relativity when he was just 14. The interest led
to him gaining a degree in engineering at the Ecole Centrale des Arts et
Manufactures in Paris, one of France’s top academic institutions.
Even
after this, however, he was still tempted by a career on the stage, and
embarked on a year-long stint as a professional actor in his early 20s, before
reverting to technical subjects in 1981 when he joined the central research and
development department of Air Liquide. He was promoted to chief executive in
2000, adding the post of chairman six years later.
His
short spell in research and development was followed by a move into operational
roles, working mainly from Paris but being put in charge of technical projects
in different parts of the world. This, he says, added up to an intense and
highly personal introduction to globalisation as he found out at close hand
about the practicalities of working with a diverse range of people in countries
around the world.
He
remembers, for instance, one of his first jobs, which was to establish within a
period of a few months a gas plant in South Africa, overseeing a small group of
varying technical capabilities in which virtually everyone spoke only English –
a language he barely understood. That the project succeeded taught him the
benefits of “making the most of the skills of a wide-ranging group and of the
overall benefits of teamwork”.
The way
Air Liquide operates, he says, underlines the way advances in science and
technology – even if they are barely understood by most people – gradually add
value to industrial processes and as a result improve people’s lives. The
company employs 500 scientists and engineers in technical centres around the
world whose job involves devising new chemicals or variants of existing ones to
increase the usefulness of a range of manufacturing disciplines or products.
Examples
include adding specific industrial gases to coal or oil to turn solid
carbon-based fuels into gaseous ones and so provide “cleaner” energy forms. In
the healthcare industry, Air Liquide is devising new types of gas-based
anaesthetics or therapeutic remedies.
Other
parts of what Air Liquide does might seem more mundane but, Mr Potier points
out, they are vital in terms of their overall impact on customer operations.
The plant-building and construction divisions of the company work on improving
the efficiency of production processes inside Air Liquide’s network of 1,000 plants.
“There’s
a tendency to think that physical assets don’t matter and that industrial
competitiveness is all about ideas,” says Mr Potier. “But our experience
indicates this view is wrong.” He explains that every year the company ploughs
roughly a sixth of its sales into capital investments.
As a
result, Mr Potier says operating costs have fallen relentlessly, enabling the
company to cut the average prices of the gases it makes by roughly 2 per cent a
year over the past 30 years.
Data
for energy use provides a further example of how this operating model works.
“In the 1980s it would have required 0.7 kilowatt hour of energy to produce 1
cubic metre of oxygen in an Air Liquide plant,” he explains. “Now the figure is
about 0.4 kWh – that’s thanks to the cumulative effect of improved technology
and more attention paid to customer needs.”
In
discussing Air Liquide’s plans, Mr Potier cannot resist another small burst of
rhetoric. The company intends to recruit 30,000 more employees by 2015, mainly
in emerging economies such as China and India, and build up to annual sales of
about €20bn by 2020. Even though Europe is still highly important, providing
about half the company’s revenues, Asia now accounts for approximately a
quarter.
“When I
joined Air Liquide 30 years ago there were really only about six countries that
were important in terms of building up revenues,” he says. Now, that figure is
about 85 – the number of countries in which the company has plants. “Every time
we devise a new gas or a new application [for the gas] the number of places
where we can use it to push up sales is almost 15 times higher than it used to
be – that’s a good indication of how globalisation makes a difference.”
Peter
Marsh
Business & Investment Opportunities
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