- The Washington Times - Monday, June 25, 2001

Philippe Rollier sits in the heart of Internet country, but his business building materials harks back to the Industrial Revolution.
These days, that's not such a bad thing.
Mr. Rollier, the newly installed president and chief executive officer of Lafarge Corp., surveys Northern Virginia's once-thriving technology cluster from his office on the sixth floor of a Herndon office tower. Though Lafarge's profits have dipped over the past year, the overall economic slowdown in the United States did not drive the American subsidiary of France-based Lafarge SA into the red.
"The construction market seems to be holding up well, certainly better than many other businesses," Mr. Rollier says, in a gentle reference to his neighbors, in an interview with The Washington Times.
Across the street from Lafarge sits E.spire, the upstart local telecommunications company that is now struggling to emerge from Chapter 11 bankruptcy proceedings, a vivid reminder that high-tech seldom means highly profitable these days.
Lafarge Corp., by contrast, is part of a profitable empire that reaches 85 countries around the world. It plays in the same league with Holcim of Switzerland and Cemex, a formidable competitor based in Mexico that has started to make inroads into the U.S. market.
In the United States, Lafarge, a public company that is 54 percent owned by its French parent, makes most of its money 53 percent on aggregates like gravel, sand and asphalt. It also produces cement products, which nets 41 percent of its money.
Wallboard, also known as drywall or sheet rock, accounts for 6 percent of its revenues.
Its sales in the United States and Canada increased slightly, to $2.8 billion in 2000, but profits also dropped by about 5 percent to $688 million compared to 1999.
Mr. Rollier, 58, takes over in the United States after a three-year stint with Lafarge in Britain. Before that he was in Canada for six years, where he acquired both Canadian citizenship to go along with his French passport, and a strong command of English, which he speaks with a slight accent.

First things first

The first priority for Mr. Rollier in the United States will be to guide Lafarge's wallboard business back to profitability. Wallboard has been the chink in Lafarge's financial armor.
"It has been an incredibly volatile area of the construction sector," says Trip Rodgers, an analyst with UBS Warburg in New York.
The price of natural gas, the only energy source that wallboard plants can use, has skyrocketed over the past year. In addition, demand for wallboard has fallen by 5 percent over the last year.
This confluence of factors has created what Mr. Rollier bluntly terms "a price war."
Lafarge, and other companies, planted the seeds of their current woes in 1999, when they boosted manufacturing capacity by 30 percent in response to a wallboard shortage.
Analysts believe relief is on the horizon. Only last week, Georgia-Pacific announced it would close three unprofitable wallboard plants and mothball another three. That should give Lafarge a leg up, because it has just opened two new, low-cost plants in Florida and Kentucky, Mr. Rodgers says.
The saving grace for Lafarge at a time of anemic economic growth has been the generosity of Congress. It has boosted highway construction funding by 44 percent over the next six years.
Public spending is getting on this year, Mr. Rollier says. "Certainly more than last."
Apart from government largess, Mr. Rollier believes the fundamentals for the construction sector are better than in past economic slowdowns, chiefly because there is "no overstock of real estate" to restrain the urge to build.

Harmony with nature

During his tenure in the United States, Mr. Rollier will also have to wrestle with environmental issues, a central business concern for an industry that relies on high energy consumption to catalyze the chemical process for producing cement.
Lafarge SA belongs to the World Business Council for Sustainable Development, an industry group that has broken with its peers to support environmental regulation.
The French parent has also teamed up with the World Wildlife Fund. The environmental group has lent its signature panda logo to a few companies that share "WWF's vision of stopping the degradation of the planet's natural environment and of building a future in which humans live in harmony with nature," as the group puts it.
The environmental project is driven in large part by the WWF's chief executive, Bertrand Collomb. Mr. Collomb, in an interview, says that restrictions on emissions of carbon dioxide, the chief culprit in global warming, are "inevitable," despite the Bush administration's rejection of a 1997 treaty curbing so-called greenhouse gases.
"We will have to have clean plants at some point," Mr. Collomb says. Given that a cement plant can cost hundreds of millions of dollars to build, Lafarge would rather adapt sooner than later. In the United States, Mr. Rollier says Lafarge's goal in the environmental arena is "to be ahead of the local regulations."
Lafarge's American headquarters landed in Northern Virginia 14 years ago, when Lafarge secured a U.S. beachhead with several acquisitions in the United States. Lafarge first settled down in Reston on account of its proximity to Washington Dulles International Airport. It also wanted to be near the nation's capital to see that those highway construction dollars continue to roll in, Mr. Rollier says.
Last year, the 200 employees a fraction of Lafarge's 14,000-strong U.S. work force moved to Herndon, where there are no production facilities, only the corporate staff and some of the sales force.
Mr. Rollier's tenure will also be marked by acquisitions, he says. The aggregates business is highly fragmented in the United States, with scores of smaller companies operating locally and regionally. At the same time, environmental restrictions can make it difficult to open new stone quarries. The only solution, Mr. Rollier says, is to buy more businesses.
"It's an area with a lot of potential for us," he says.

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