Yves Poivey – President, ERAS – France
The CEO of ERAS, a multidimensional engineering specialist, shares the challenges he had to overcome since taking over the company in 1991. He also provides insight into the company’s external growth strategy, which has contributed greatly to its success in recent years.
When you took over ERAS in 1991, the company was facing severe financial difficulties. What key decisions did you take at the time to get the company back on track?
My first decision was to adapt the company’s structure to the market. I unfortunately had to change the ownership structure to become more efficient, and therefore had to lay off several people. My second task was to determine the company’s positioning and promote the company’s vision to its clients. Lastly, I sought a new management team, new professionals and new teams that corresponded to this new project.
After revamping the company, what did your development strategy consist of?
After implementing structural changes, it was essential to develop the company. We had two solutions of course; organic and/or external growth. I used my network to find acquisition opportunities. In our industry, we need engineers who understand our clients’ needs and expectations and have worked for them in the past very closely. As a result if we want to work for a client, it is preferable to acquire a company which has already worked for them and understand their working environment, culture and methods. We have therefore completed several acquisitions to expand geographically and integrate new technologies. For instance, we purchased a company to position ourselves in Rouen and Avignon. In Strasbourg, we purchased an energy company to expand the breadth of our competencies.
You acquired 12 companies in a span of 15 years. How challenging was it to integrate these new companies?
Overall, I believe our external growth campaigns have usually been very successful. It is true that we acquired many SMEs over recent years and in SMEs, company cultures are usually deeply rooted and hard to change. It has been challenging for us to harmonize habits, customs and philosophies across all units, but we managed.
We did actually suffer one big loss. This failure shook us, and encouraged us to be more rigorous, more diligent and concentrate on industries where we are experts. I believe this helped our future integrations in being successful. One good example would be the fact that we acquired the French subsidiary of a Canadian pharmaceutical company two years ago; they had been losing market shares across Europe and we managed to reinvigorate the company.
What would be three important milestones in ERAS’ development since you took over?
The first milestone was obviously taking over the company in 1991! The second milestone was the transition from design office to production engineering. A design office usually acts as subcontractor whereas an engineering office works hand in hand with the client. The third milestone is the current internationalization process, which is a key priority to my eyes.
How has the company been performing in recent years?
2014 was unfortunately a difficult year for ERAS. However I would like to highlight that between 2007 and 2013, we doubled our revenues, which is rather outstanding. This remarkable achievement stemmed from our will to develop the company and from the disengagement of our international players. Our Canadian and American competitors no longer identify France as a country worthy of investment. We have thus seized this opportunity to win market share. As mentioned earlier, we have also benefited from our external growth strategy, in the pharmaceutical industry notably. Overall, I have always insisted on diversifying our portfolio to accommodate inevitable economic cycles occurring in each sector at different times.
What is your perception of the evolution of the industrial sector in France? And how are you planning on responding to its decline?
We are witnessing the deindustrialization of our country year after year. I deeply regret this. France’s former state-led capitalistic model had produced an industrial sector, which was unmatched. France was a world leader in nuclear energy, aerospace, metallurgy, automotive and much more. Unfortunately France missed out on the Internet and electronic revolution. Today we have drastically reduced manufacturing-related employment opportunities. Even in the oil and gas industry, we are closing chemical sites and refineries. Historically, French governments were committed to erect an unparalleled industrial force. In the 1980s we considered that the state no longer had a role to play in industry. As of today, the iron and steel sector has crumbled, the cement industry was sold to Switzerland. France made an error in enacting the expansion of the tertiary sector of our economy. Now, I hope that everything will be done to make industry start again and reach its previous level.
We however forgot that service companies could only thrive if they are in proximity to clients. There have been attempts by recent governments to re-industrialize our economy, but all have failed. However as mentioned earlier, downturns come with opportunities. Many companies now externalize their engineering services. France receives fewer investments every year, which negatively impacts our activity. I would like to raise the fact that our education system and engineering schools push the next generations of engineers to the financial world, essentially because the engineering world cannot offer as competitive financial packages. Most of our graduates therefore go into finance, and as a result, leading French energy companies are actually sourcing retired engineers to build power plants in France and Europe, as no “young” engineer has the capability and know-how of doing so.
How important is the oil and gas sector to ERAS’ activity, and what are your ambitions for the future?
We are actually more involved in gas than oil. We won an important project on behalf of GRTgaz, which is now completed. In Europe, we were hurt by the decision of several governments to shut down gas plants and replace them with coal plants. We therefore regret our decision to invest in the gas sector at the expense of the oil sector. We are progressively advancing our services in the west French area, where big investments are planned. We do our best to keep on working on international projects with Total or companies involved in mega-projects sanctioned by Total.
In Europe, we have two subsidiaries in Belgium and Switzerland, which have helped to booster our sales and win new projects. In Morocco we have established our subsidiary to carry out projects related to gas storage. Africa is undeniably the land of opportunity, despite risks associated to political unrest. Our objective is to strengthen our position in Morocco – our future African hub – to build closer ties with neighboring countries. For instance, Morocco currently invests significant funds in Congo and Senegal and we are planning on following these trends. There is currently one refinery in Morocco, and we are considered as a partner of choice.
Could external growth constitute the best approach to further expand in Africa?
On paper, external growth seems like the easiest way to entrench our presence in Africa; however, it has been difficult to find appropriate targets.
We are settled in Morocco for a year now, and this commercial structure is a hub to expand our activities in the energy, oil and gas sectors in Sub-Saharan Africa. We have references in Congo, and Ivory Cost.
You are very involved in a start-up accelerator Reseau Entreprendre. Why are you committed to helping young entrepreneurs and what lessons from the past and values do you share with them?
When I graduated from engineering school, I applied to seven positions, was granted seven interviews and got seven job offers! Younger generations today are facing increased competition and trying to make it in a depressed market. It is therefore the role of entrepreneurs to accompany younger generations and enable them to have confidence in their projects and ventures. I also try to instill teamwork as an essential value and teach them to accept failure. I have a humanist vision of company life. I strive to reproduce an enjoyable and stimulating working environment at ERAS. Finally, courage is the most valuable asset for an entrepreneur.