Cut through Chairman of the Executive Committee, Christian Jourquin, in any direction and you will find the name of his company running through the centre of his being. Born in 1948, he has spent his entire 38 year career with Solvay, and even received his undergraduate degree in commercial engineering studies from the business school set up in 1903 by company founder, Ernest Solvay.
Despite the lack of experience in other commercial enterprises, however, Jourquin is definitely a man of the world, speaking seven languages fluently and having a real flair for managing complex operations in far flung geographic locations. Since taking over the top job from predecessor Alois Michielsen, who moved up to become Chairman of the Board in 2006, he has been focussing his efforts on strengthening the company’s diverse holdings in the chemical and plastics sectors, whilst pursuing ambitious growth plans into Asia and eastern Europe.
Family business
First established in 1863, Solvay S.A. has survived through a combination of closely held cultural principles and the ability of successive chief executives to capitalise on market conditions through nimble investment and divestment programs. The company was based around Ernest Solvay’s discovery of a new industrial process for producing soda ash, a vital element used in the manufacture of glass. Despite several setbacks along the way, he persisted in his attempts to develop and commercialise his production process, which was cleaner and significantly cheaper than existing methods.
Although his business, once established, quickly took the market lead, Solvay believed in continuous innovation and diversification. Under his leadership, the business moved into other commodity chemicals and plastics, and expanded geographically into Europe, Russia and the US. Ernest Solvay’s interest in socio-economic issues lead him to implement many innovative workers’ benefits in his factories, and set up several facilities for education and the exchange of ideas in the sciences and humanities.
Management control of the business remained within the Solvay family until very recently – Alois Michielsen was the first chief executive who was not related by birth or marriage – and the family retains ownership of over 25 percent of the company shares to this day. Through this continuity of control, the founder’s values of innovation, environmental integrity and innovative human resource management practices have remained embedded in the business.
Having grown up at the heart of this cultural environment, Jourquin, unsurprisingly, looks set to continue in the same mould. He is fond of using naval imagery when discussing his business philosophy. At the time of his appointment to the top position, he said, “The CEO is the captain of the ship. He must keep his team welded together and motivated, and bound by strong values. He has to respect the interests of all stakeholders. He needs to sense which way the wind is blowing, that is perceive the general movements and directions, have a sense of history, if you like. Of course, he has to be able to read the charts in order to arrive safe in port, which is his ultimate destination, knowing that this can change during the voyage. He needs to avoid any reefs and maintain order, discipline and values in the team. And above all, he has to remain calm in a storm.”
The message makes easy listening to long term shareholders of a company that has weathered many storms in its 146 year history. Analysts are divided, however, on whether Jourquin’s reading of recent charts will help the company weather the latest storms.
Bold moves
As the recession was biting deeply in July, 2008 Solvay reported worse than expected results, blaming increased energy and raw material costs in the chemicals and plastics sectors, combined with falls in demand and the value of the US dollar. But while earnings were down 45 percent in its chemicals business and 23 percent in plastics, the Solvay pharmaceuticals business turned in a 37 percent rise in earnings.
Solvay was, at the time, one of the few remaining drug-chemicals hybrid businesses left, and it was widely recognised that the pharmaceutical business compensated for the cyclicality of the chemicals operations in its overall results. However, as one of the smaller players in a resource hungry industry, the company was unlikely to be able to undertake the large clinical trial programmes necessary to bring new products to market. Modern drugs, too, are moving away from chemical-based concoctions to rely more on biotechnologies and genetic manipulation.
In early 2009 Jourquin announced a root and branch review of company strategy, which resulted in the decision this summer to sell the pharmaceutical division. Solvay share prices rose over 35 percent on the news, but fell by 3.7 percent when a deal was announced with Illinois-based Abbott Laboratories. The Belgian press reportedly called the sale an “amputation” of the division that delivered 50 percent of the group’s first-half results in 2009, but in his own statement Jourquin sought to reassure investors that “the proceeds from the divestment will be reinvested in external and organic growth with a sharp focus on long term value creation.”
The sale is due to be completed in early 2010. Meanwhile, Juorquin remains characteristically calm, going about the business of managing Solvay’s growing international interests, and steering CEFIC (the European Chemical Industry Council) and the ICCA (International Council of Chemical Associations), of which he is currently president, through the challenges facing the industry and its stakeholders. His personal focus on addressing the problems of climate change and scarcity of raw materials for the chemicals sector has led the ICIS Chemical Business magazine to name him as ‘one to watch’ in its 2008 list of ‘Top 40 Power Players’ in the chemicals industry.
Whether the decision to divest the pharmaceutical division turns out to be the right one in the long term, what is certain is that the Solvay board will have a sizeable war chest to fund a buying spree next year. Asked what might be on the shopping list, Juorquin gives a typically prudent reply, “I won’t spend a penny until I have the money in my pocket.”