Papeteries de Lancey History

Address:

B.P. 62
38196 Brignoud Cedex
France

Telephone: (33) 04 76 13 11 11
Fax: (33) 04 76 13 11 22

Private Company
Incorporated: 1869 as Papeteries Bergès; 1921 as Papeteries de France
Employees: 310
Sales: FFr 420 million (US$80 million) (1997)
SICs: 2611 Pulp Mills; 2621 Paper Mills

Company History:

Papeteries de Lancey has entered a new era of its 120-year history. With a management-led buyout in October 1997, the producer and distributor of pulp and paper products, located in the French Alps near Grenoble, has regained its independence after more than 20 years as a subsidiary of France's Aussedat-Rey (itself a subsidiary of the U.S.-based International Paper). Papeteries de Lancey's principal products, under the brand name Nepal, include layered papers destined for magazine covers and interiors, catalogs, brochures, and other advertising materials. The company manufactured more than 90,000 tons of layered paper in 1997, making it one of the leading French independent producers of this product. Some 90 percent of Papeteries de Lancey's layered paper--ranging in weight from 80 grams per square meter to more than 165 grams per square meter--is sold in rolls; the remaining ten percent is further processed into paper sheets. The company also produces 20,000 tons per year of mechanical pulp, destined to strengthen chemically produced paper pulp products. France remains the primary destination for roughly 80 percent of Papeteries de Lancey's production. Sales and distribution activities are conducted both by the company's own sales force and through the distribution network of Aussedat-Rey. Papeteries de Lancey posted sales of FFr 420 million in 1997, a figure predicted to rise to FFr 450 million for 1998, its first full year as an independent.

A Place in France's 19th-Century Industrial History

Lancey, a village located in the Belladonne mountain chain in the Dauphiné region of southeast France, numbered little more than 150 souls in the 1860s. The site, however, would soon earn a prominence not only in France, but throughout the world, for the innovation it brought to paper production and to industry in general. It was in Lancey that Aristide Bergès introduced the concept of "Houille Blanche" (white coal), a method for channeling the mountain region's waterfalls to produce the first hydroelectrical power systems.

Bergès, born in 1833, was the son of a prominent paper manufacturer in northeastern France. After earning the title of chemical engineer at the age of 19, Bergès would begin a career distinguished by a number of innovations. One of his first projects was the invention of a steam-driven asphalt pulping machine, used to pave the area around the Arc de Triomphe in Paris. Bergès next traveled to Spain, to aid in the development of that country's railroad. There, he perfected a rack railway system enabling trains to climb steep slopes without slipping downhill. Returning to France at the beginning of the 1860s, Bergès first joined his father's paper mill, where he set to work improving the quality of wood pulp. Bergès introduced a new method for producing mechanical pulp, using a sandstone millstone. Bergès's father, however, was reluctant to abandon the traditional pulping methods, and Bergès decided to form his own paper mill to incorporate his ideas.

In 1864, Bergès, with his father's help, formed a paper mill in nearby Mazeres sur Salat. Two years later Bergès received an offer from a wealthy industrialist to construct a paper mill in the Isere region of southeast France. One of Bergès's first projects was improving the de-fibering method then in use, invented by the German Woelter. This method, which involved a mill spinning at high speeds, chafing logs to transform them into raw pulp material, required a constant flow of water to keep the logs from catching fire. The Woelter mill, however, used a manual adjustment screw to keep the mill in contact with the log--the result was frequent irregularities, leading to defective pulp and a great deal of waste. Bergès adapted the mill, replacing the manual adjustment with a hydraulic press that enabled the mill to recover more paper pulp and of a higher quality. The Bergès turbine quickly became popular and soon surpassed the number of Woelter mills in use at the time.

Bergès's visit in 1867 to Lancey, a hamlet of 150 nestled in the foothills of the Belledonne mountain chain on the Isere's left bank, was to lead to his next, and greatest, innovation. The use of the pressure of falling water in mills was already a common practice; yet the height of the falls tended to be modest--in Lancey, Bergès found a flour mill turned by a four-meter fall. Bergès's innovation, inspired by the 3,000-meter heights of the nearby mountains, was to design a fall of greater distances, thought to be impractical at the time. Attracted by Lancey and its surroundings, Bergès installed a new paper mill and set about building a 200-meter fall; by 1869 he had succeeded in driving two Bergès turbines, with a generated force of 20 kg/square centimeter. Soon after, Bergès extended the fall to 450 meters, producing a force of 50 kg/square centimeter.

Bergès made steady improvements to his method. By 1882 he had installed a second fall, at an altitude of 452 meters but with a total fall of 2,850 meters. By then he had already begun to look higher: gazing at the whitecaps of the Belledonne mountain chain, Bergès envisaged the possibility of tapping the immense potential energy that could be generated from such heights. This energy Bergès dubbed Houille Blanche, or "white coal." Introducing the concept for the first time at the 1889 Paris Exposition, Bergès took an unusual step. Rather than attempting to commercialize his idea (indeed, his exhibit did not even mention his paper mill), Bergès simply offered the design of his waterfall to the world. The phrase Houille Blanche quickly became commonplace and was eagerly adopted not only throughout the French Alps, but in mountainous regions throughout the world. The houille blanche concept was not limited to the paper mill industry, but was quickly adopted throughout heavy industry, giving rise to new and more productive steel, aluminum, and other mills. Bergès would succeed not merely in changing the industrial landscape of the Alps, but in helping France become one of the world's leading industrial and economic powers.

The Lancey mill prospered under Bergès. With a new 500-meter fall installed in 1891, the Lancey mill's energy resources rose from 1,000 horsepower to 6,000, with a production potential of two million kilograms of wood pulp per year. Bergès was not content simply to produce paper. Instead, he sought to turn his innovations to improving the quality of people's lives. For this, he envisaged reducing the cost of paper to an extent that the price of reading materials could come into the reach of anyone. On a more practical level, Bergès saw a means of tapping the excess power generated by his falls for use in providing inexpensive electricity to the entire valley area. In 1898 Bergès founded the Société d'Eclairage du Grésauvdan, with a 15,000-horsepower electrical plant providing power to 150,000 16-candle lamps.

Bergès, meanwhile, continued to climb&mdashø tap the Lake Crozet, situated at an altitude of 1,968 meters. Despite skepticism, Bergès succeeded in constructing a viaduct system to channel the lake's water. Bergès met with strong resistance, however, from the local community, who accused him of diverting the water for his own profit. Taken to court, Bergès lost the battle and was ordered to dismantle the viaduct. On appeal, however, Bergès succeeded in keeping his viaduct and instead was ordered to pay an indemnity to the local population. The experience was said to have broken Bergès's spirit; receiving honors in 1903 from the Congress for the Advancement of Science, Bergès died the following year.

The Paper Mills of France in the 1920s

Bergès's son, who had earlier joined his father, took over the paper mill's operations after his father's death. In 1907, however, the younger Bergès appointed Auguste Biclet to direct the company's operations. Under Biclet, the paper mill would grow to become one of France's five leading producers of wood pulp and paper products. Biclet, who arrived in Lancey at the age of 36, had begun his career as a worker in a paper mill in his native Vendée region. After becoming foreman, Biclet then moved to Vosges, where he became director of a paper mill.

Biclet would quickly transform the Lancey mill. By the time of the First World War, the mill had expanded its operations, adding a plant for producing chemically processed pulp, adding a machine to produce grease-proof paper, and, after acquiring the Papeteries d'Alfortville, entering the production of carton-grade paper. During the war, Biclet extended Lancey's production to include rag paper and recycled paper as well. Production rose to some 50 tons per day. The war effort, however, made it difficult for the company to procure the fuel needed to operate its steam-powered machinery. At the end of the war, Lancey found a solution to this problem, in the form of its own coal mine in the nearby Belledonne mountains.

Meanwhile, Biclet would prove to be socially progressive: in 1911 the company built low-cost housing for its workers, eventually constructing more than 500 homes by 1920. Papeteries Bergès, which had become a major landholder in the region, also offered its workers individual garden lots, while the company itself operated two milk farms to provide milk inexpensively to the company's cooperative food stores. By the 1920s the company's workers would also enjoy library facilities, sports and games facilities, low-cost bathing houses, and a day-care center, as well as the company's institution of a 12-week maternity leave (and the offering to its workers a bonus of FFr 150 for each birth).

The postwar period proved difficult for France's paper industry, faced with dumping practices from foreign pulp producers. By the beginning of the 1920s Lancey was forced to close its chemical pulp operations. Other paper and pulp producers nearby were also struggling. In 1921 Biclet and Papeteries Bergès joined with another large Isere-based producer, Papeteries Fredet, to found the Papeteries de France. The new company quickly added several smaller concerns, bringing the company's holdings beyond its own region into the nearby Savoy, Seine-et-Oise, and Seine regions. Biclet himself was named director of the new concern.

Papeteries de France, which included 18 paper machines capable of producing up to 130 tons of paper per day, as well as 50 tons of carton per day, offered an extensive range of paper and pulp types. The company would soon establish itself as one of France's top five producers, a position confirmed by the acquisition of two more paper works in the 1930s. Biclet also sought a means to improve its commercial competitiveness. In 1922 he began developing the company's own distribution network, considered a revolutionary move at a time when paper sales were conducted through a range of middlemen. The network put in place featured 16 warehouses and agencies located throughout France and its North African colonies and enabled the company to counter the aggressive pricing practices of its foreign competitors.

The Depression would place Papeteries de France under new pressures. Lacking resources, the company was unable to invest in its infrastructure. By the dawn of the Second World War, the technological advances made by American and Scandinavian paper and pulp producers once again created a trade imbalance: in 1939 fully 75 percent of the pulp used in France and by the Papeteries de France was of foreign origin. The company struggled to stay in business--by then the village of Lancey had grown to a population of 3,500 and the company's paper works had become the principal employer, with some 1,000 workers. The descent into the Second World War, however, would make it impossible for the company to invest in modernizing its infrastructure. Finding fuel to operate its equipment also proved difficult; this shortage was solved, however, with the opening of a new mine at Saint Mury in 1941.

From "Liberation" to Independence

Emerging from the war years, Papeteries de France was confronted with an aging machine park that could not rival the technologies developed by the neutral Scandinavians and by the United States during the war. The company also mourned the loss of Auguste Biclet, who died in 1946. In that year Pierre Rigaut took over as the company's general manager and led Papeteries de France into an aggressive modernization program that would last through the 1950s. Papeteries de France determined to put in place a two-prong strategy: the first, to develop domestic raw pulp resources to counteract the dominance of foreign imports; the second, to modernize the company's paper-producing technologies to compete on a worldwide scale.

In 1950 the company established a research department, which set to work on developing a technology to replace the more common coniferous-based pulp with a pulp prepared from the region's rich deciduous forests. The effort would represent a heavy financial investment for the company, but resulted, in 1955, in the introduction of a deciduous-based, semi-chemically produced pulp. The first such pulp produced in France, the new technology enabled the company to begin supplying some 15 tons per day, a number that would double by the end of the decade, as the company reopened its chemical pulp operations, closed since the 1920s. The company also began acquiring other France-based pulp producers. By 1960 the company had turned the balance; the proportion of domestic pulp used in the company's production had risen beyond 77 percent.

At the same time, Papeteries de France also began investing heavily in upgrading its equipment infrastructure. The carton production facility at Alfortville was modernized in two steps, from 1950-1951 and from 1955-1956, while the company also modernized its existing paper production machinery, expanded its logging and lumber operations, constructed a new power plant for its factories, and began construction of an entirely new paper processing machine, dubbed Machine Number 8, which was completed in 1960. The new machine enabled the company to expand into a new and growing market, that of layered papers for the magazine covers and inserts. Papeteries de France's early entry enabled the company quickly to capture some 25 percent of the French market. By the mid-1960s, with a total output of more than 300,000 tons per year, including 150,000 tons of layered paper and carton, Papeteries de Lancey had grown to represent 7.5 percent of the total paper production in France.

Papeteries de France's independence would come to an end, however, when it was acquired by French leader Aussedat-Rey in 1971. The company, reorganized and renamed Société des Papeteries de Lancey as a subsidiary of Aussedat-Rey in 1984, with a capitalization of FFr 102 million, would ultimately come under the sway of International Paper, after that company's acquisition of Aussedat-Rey in the late 1980s. In the mid-1990s, however, Aussedat-Rey decided to focus its activities on its European leadership position as a supplier of office-grade papers and began looking to sell off its layered paper operations.

In October 1997 Aussedat-Rey agreed to sell off the Lancey operations to a group of Papeteries de Lancey's management, including CEO Jean-Luc Dominici. The transaction, performed for an undisclosed sum, included the absorption of Lancey's debt by Aussedat-Rey. Restored to independence, Papeteries de Lancey focused its attention on its layered paper production, shutting down its carton production operations, which reduced its payroll from 610 to 305 employees. Between 1996 and 1997 the newly private company began an investment program of some FFr 50 million to upgrade its facilities, with an additional FFr 30 million earmarked for 1998. Ending the 1997 year with sales of approximately FFr 420 million, Lancey predicted a rise in sales to more than FFr 450 million by the end of 1998, with a production increase from five to ten percent.

Papeteries de Lancey History

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