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| Lafarge Cement Plant |
With an illustrious history dating back to France in 1833, Lafarge is
currently the world’s largest cement manufacturer on a mission to deliver
shareholder value by providing innovative solutions for one of mankind’s big
worries this century – sustainable housing. As the world’s largest company
within the building materials industry, Lafarge focuses on four major products:
cement, construction aggregates, concrete and gypsum wallboard. Lafarge
conducts its operations through over 1,000 subsidiaries, of which 82% are
consolidated. Over the past 10 years, sales have remained strong UR16
billion whilst their number of employees has decreased from 83,000 in 2001 to
65,000 currently, highlighting Lafarge’s successful push to increase worker
productivity. Last year saw revenues of EUR15.816 billion and profits of EUR432
million. The company has marketed themselves as contributing to “building
better cities” by addressing some of the key challenges of urbanization by
helping to make more compact cities, more durable cities, more connected
cities, and more beautiful cities. Lafarge have also had a knack for knowing
when to sell struggling businesses in order to concentrate on its core
businesses of cement, aggregates and concrete; in 2007 it divested its roofing
division to a private equity group and also recently sold its European, South
American and Asian gypsum operations. This ability will only enable the company
to accelerate growth and innovation.
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| Lafarge Project: Two Towers in Marseille, France |
Innovation runs through the company’s veins – its first international
contract was for the delivery of 110,000 tonnes of lime to help construct the
Suez Canal and it was an early pioneer of white Portland cement. Innovation
remains at the core of Lafarge’s businesses as they see it enabling them to
turn into a supplier of solutions and value-added products and services as well
as building materials for the construction industry. The manifestation of this
principle of innovation is the Lafarge Research Center, the world’s leading
research facility in building materials, which utilizes EUR115 million per year.
In the building sphere, the Lafarge Research Center have invented Agilia (a
self-placing and self-levelling concrete which is fast to implement, very fluid
and spreads effortlessly – it significantly improves working conditions on
building sites), Chronolia (used in the same way as a conventional ready-mix
concrete but it rapidly develops very high mechanical strength meaning that
formwork can be removed just four hours after manufacture, allowing
considerable productivity gains on the worksite), extensia (concrete specially
designed for laying slabs and industrial floors subject to heavy loads due to
traffic or storage – faster to implement and makes it possible to achieve high
resistance to wear without adding a surface hardener), earth cement (a new
binder for construction of earth houses which significantly extends their lifespan while retaining
thermal comfort properties). The Research Center has also developed a new class of
cements producing using less limestone manufactured at lower temperatures and
requiring less energy than traditional Portland cement – means a 30% reduction
in CO2 emissions during manufacture, developed thermedia range of concretes
designed to reduce heat loss in buildings while retaining the same mechanical
strength as standard concrete, and examined the main component of cement –
clinker – to see if new binders with a different chemical composition can
reduce CO2 emissions linked to cement manufacturing. On the preservation side,
Lafarge Research Center has innovated by recycling old roads to recover the
bitumen and aggregated in order to make new asphalt surfacing materials with
better performance than traditional asphalt, creating hydromedia concrete to
absorb rainwater and facilitate its natural runoff into the soil to allow
natural groundwater to recharge and avoid saturation of stormwater management
systems to reduce flooding risk, creating Ductal ultra-high performance
concrete with a compressive strength eight times greater than that of standard
concrete which gives it high resistance to external attack from abrasion and
pollution and harsh weather conditions, and creating manufactured sand produced
from crushing rocks as an alternative solution to natural alluvial sand which
is becoming an increasingly rare and difficult-to-access resource. With a
portfolio of over 1,000 patents, which has doubled since 2005, the Lafarge Research
Center is an illustration of Lafarge’s focus on innovation as a competitive
advantage.
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| Building Houses in One Day in Yaounde, Cameroon |
Looking more closely at Lafarge’s major businesses, they are organised
by product type. Lafarge orients the development of its businesses towards
fast-growing markets, particularly in Asia the Middle-East. Fast-growing
emerging markets account for 59% of Lafarge Group sales in 2012, compared to
32% in 2005. Moreover the geographic spread ensures limited risk as no emerging
country represents more than 5% of total sales. Lafarge see innovation and
performance as their two major drivers of growth. In total, they estimate that
innovation contributed EUR150 million of EBITDA to their profit in 2012. On the
performance side, Lafarge have reduced their expenditure by EUR1.5 billion
between 2006 and 2012 and are aiming to produce the same quality at a cheaper
price by using more alternative fuels in order to reduce their energy bill,
producing an additional 15 million tonnes by 2015 with a minimum level of
investment in their existing plants, and further developing a performance
culture and accelerating transfer of know-how.
Lafarge Cement has 161 plants in 58 countries and is the world’s number
one cement supplier. The
cement business produces a wide range of cements, hydraulic binders and limes
for construction and renovation. The cement business has 161 production sites
including 116 cement plants and accounted for 66% of Lafarge’s 2012 turnover. 22%
of cement sales in 2012 were in Asia, 34% from the Middle-East and Africa, 15%
from Western Europe, 12% from North America, 9% from Central and Eastern
Europe, and 8% in Latin America. Cement is key to development in emerging
countries – for 20 years the annual average growth for global cement demand has
been 5%, the equivalent of 100 million additional tons of cement consumed per
year. Despite the global financial crisis, global cement demand grew by 8% last
year, supported by demand from large emerging markets such as China, Brazil,
India and Sub-Saharan Africa where demography, urbanization and economic growth
are propelling the need for housing and infrastructure. The building materials
industry is a non-cyclical industry, which bodes well for the world’s largest
operator, Lafarge.
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| Building on Sand in Vietnam |
Lafarge is the world’s second largest
aggregates supplier. Aggregates are fragments of rock measuring from 0.08 to 80
millimeters in diameter. They can be mixed with a binder – either cement to
make concrete or tar to make asphalt – and used in the manufacture of houses,
structures and bridges. They have three main functions: aggregates make a vital
contribution as support to the strength of materials such as concrete, filling
- aggregates make mixtures more compact and facilitate specific applications
including drainage and heat retention, embellishment – aggregates have aesthetic
qualities too. The aggregates business is essential for the manufacture of
concrete, meaning that the two businesses are quite closely linked. Aggregates
are also the most consumed natural substance in the world. For Lafarge’s
aggregates business, they currently posseess 386 quarries and sold 188 million
tons of aggregates worldwide in 2012. 54% of aggregates sales in 2012 were in
North America, 31% from Western Europe, 10% from Central & Eastern Europe,
3.4% from Middle-East and Africa, 1.5% from Asia, and 1.1% from Latin America. Lafarge
is seeking to consolidate its strengths in the aggregates business by
developing business in emerging countries and pursuing sustainable quarry
management. The aggregates market remains very fragmented with many independent
operators and local producers. Lafarge therefore possesses several strong
competitive advantages that could enable it to outcompete and acquire several
of these independent operators including expertise throughout the value chain,
cost reduction through economies of scale, experience and knowledge of local
markets, proven quarry rehabilitation practices, and a global presence allowing
sharing of best practices. Lafarge is also the only building materials company
to conduct research into aggregates.
Both the Lafarge Aggregates and
Concrete businesses together have more than 1,400 production facilities and
sales offices in 36 countries. Just the concrete business has 1,011 concrete
plants, fitting for the world’s fourth largest concrete supplier. In 2012,
Lafarge manufactured 31.8 million metric tons of concrete products. In the same
year, 35% of concrete sales were from Western Europe, 31.4% from North America,
16.4% from the Middle-East and Africa, 10.2% from Asia, 3.9% from Latin America
and 3.1% from Central and Eastern Europe. Here there is also clearly room to
grow emerging market sales.
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| Casablanca's New Tram |
The world’s socioeconomic dynamics are making Lafarge an excellent
investment as they have a key role to play in meeting the world’s future
construction needs and also have the means to meet these needs in emerging
markets by leveraging their existing cement sales networks. The world
population will exceed 9 billion people by 2050, which will challenge the world
to provide efficient and sustainable housing and infrastructure for everyone. Today an
estimated one billion people live in slums and two billion people lack access
to electrical power. Lafarge has national initiatives providing affordable and
efficient housing in India, Indonesia, Honduras and France. By 2025, half the
world’s population will live in cities of between 100,000 and 500,000
inhabitants. Moreover by 2025, 50% of the world’s megacities will be located in
Asia and two new ones will have developed in Africa. Over 4 billion people
(including 150 million in developed countries) also currently do not have
access to decent housing – therefore there is a need for affordable housing
solutions which can be adapted to a variety of different geographies and that
can be built quickly. Lafarge see a variety of action areas as able to
facilitate affordable housing including microcredit programs, rehabilitation of
slums in situ, a new generation social housing project in developed countries,
and programs with real-estate developers. Lafarge projects include improving
housing in the slum of Dharavi in central Mumbai by building solid and
watertight concrete houses, with the concrete delivered in buckets by motorized
tricycles. Previously a million people lived in Dharavi in shacks made of
corrugated metal and other recovered materials. By 2030, India will need 10
million new homes every year and the solution used in Dharavi means there is a
prospect of being able to replicate affordable and quick housing to meet this
need. Another Lafarge project is building houses in Yaounde in just one day by
using innovative stay-in-place formwork in combination with concrete. Every
year 100,000 people arrive in Yaounde and Douala looking for housing.
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| Dharavi Slum in Mumbai |
A twin concern is the need to improve
the world’s energy efficiency as aresponse to greater population demanding
energy and global warming. Also, buildings represent nearly 38% of global
energy consumed, more than transport or industry. This is a twofold issue
concerning both reducing the energy consumed during the manufacturing of its
products, and developing products which can improve the energy efficiency of
buildings over their entire lifecycle. The buildings’ construction and material
manufacturing stages are responsible for 10% of the total CO2 emissions over
the buildings’ entire lifespan – Lafarge’s solutions are reduced carbon cements
and concretes and high-performance concretes requiring less volume to be used.
In addition, occupancy of a building is responsible for 80% of its total energy
consumption over its lifespan – Lafarge has designed concrete-based building
solutions. The constructions’ end of life represents 7% of its total energy
impact over its lifespan and here Lafarge offers high value second life
solutions for concrete wastes such as being re-used in sub-layers for roads.
Linked is environmental preservation
which requires reduction of the carbon footprint during cement manufacturing,
optimizing the use of natural resources, and reducing water consumption during
production. The building and the building sector’s final energy demand equals
31% of the world’s man-made energy related CO2 emissions. Additionally, the
cement industry generates around 5% of the world’s CO2 emissions. Lafarge have
committed to reducing the emissions from its cement business by improving the
performance of its cement kilns, substituting some of the clinker with
industrial residues, and controlled use of non fossil fuels.
With the rise of global warming and more
extreme weather, more durable cities with longer-lasting buildings and
infrastructure are needed. Lafarge solutions include ultra-high performance
concrete Ductal and Thermedia as well as Hydromedia. Lafarge have solved a
problem in Vietnam of building on the loose ground of river deltas and along
coastlines by using a special cement called Soilcrete which incorporates 60% slag
(steel mill waste with properties of a hydraulic binder) which is injected
directly into the sand to ensure stability. As a strip of land along the South
China Sea, Vietnam has many rivers and deltas which makes the ground loose and
unstable and therefore constructions are fragile. Soilcrete reduces cracks in
massive structures and helps Vietnam build stronger housing, a necessity as
each year they gain another million inhabitants.
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| Lafarge helping renovate Erbil in Iraqi Kurdistan |
The world is also seeing a shift towards
more compact cities, particularly in developing countries. To help limit urban
sprawl, vertical buildings are more commonplace now and older buildings are
being renovated to save ground space, keep cities compact, preserve quality of
life and provide fluid transportation. There will be a 70% urbanisation rate
globally by 2050. Different concrete is needed for different parts of vertical
construction: very high strength concrete for foundations and lower parts, lightweight
concrete for the upper parts, and insulating concrete for partitions at each
level. Lafarge supplies these needs.
Urban dwellers increasingly expect to
travel easily and swiftly around their own cities and between cities. By 2025,
there will be a 52% increase in city travel worldwide. Lafarge’s cements,
aggregates and concretes help make cities better connected as they are used for
building train and metro lines, highways and railways, bridges and tunnels,
ports, stations, and airports. Lafarge has helped build a new tram line in
Casablanca in 2012 which is enabling better transportation for its 3.6 million
inhabitants. Lafarge are also involved in building Cairo’s third metro line, to
open in 2019.
There will be around 2 billion new urban
dwellers by 2050, which increases the importance of beautiful cities. Lafarge
have played a role in renovating and preserving one of the world’s oldest continuously
inhabited settlements, the citadel of Erbil in Iraqi Kurdistan, which was
constructed 8,000 years ago. Lafarge was also involved in building terminal 4
at Madrid-Barajas airport, which uses concrete shaped into particularly bold
forms and bright colours in order to provide a mirror of the city of Madrid and
attract travellers stopping over to venture into the city. Madrid’s new
terminal doubles the capacity of the airport from 35 million to 70 million
passengers per year, positioning it as the main hub for traffic between Europe
and South America.
Delta Electronics was founded in 1971. They now
have sales offices worldwide and manufacturing plants in Taiwan, China,
Thailand, India, Mexico and Europe. Additionally, the company maintains design and
engineering teams in R&D laboratories in Taiwan, Hong Kong, North Carolina
in the USA, China, and Europe. In 2012, Delta Electronics generated a net
profit of TW$19.1 billion (US$643 million). Delta Electronics has been part of
the Forbes Asia Fabulous 50 Award for the 50 best-run companies in Asia for
many years. They have also been included in a Global Top 100 Low-Carbon Pioneer
list compiled by CNBC European Business magazine. As far as energy efficiency
is concerned, Delta Electronics started their push as far back as 1979 during
the global oil crisis and when it became commonplace for even the lower-middle
class to have fridges and air conditioners at home. It was also then that the
company shifted from using a linear power supply to what was then Taiwan’s
first switching power supply, which was much more efficient. Their company development
has focused their mission on providing innovative, clean and energy-efficient
solutions for a better tomorrow.
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