SNC-Lavalin Group Inc.

1911–1991

SNC-Lavalin Group Inc. is a leading international engineering and construction firm with offices in more than 30 countries. Services offered include engineering, construction, project management, procurement, and financing. In 1991, SNC Group acquired its main rival, Lavalin Inc., which had collapsed after an overambitious diversification plan. The combined company has continued to grow ever since. It has focused its growth-by-acquisition strategy on international companies since the mid-1990s. More than half of revenues come from outside Canada.

SNC Is Formed in 1911

SNC-Lavalin Group Inc.'s origins date back to 1911, when Dr. Arthur Surveyer opened an engineering office in Montreal. Surveyer specialized in civil engineering and later diversified into industrial plant design.

In 1937, Emil Nenniger and Georges Chênevert became Surveyer's partners. The partnership was renamed Surveyer, Nenniger & Chênevert (SNC) in 1947.

Engineer Camille Dagenais joined Surveyer, Nenniger & Chênevert in 1953, when it had 130 employees, and became partner six years later. In 1965, he was named chairman and general manager. SNC was incorporated as a limited company in 1966.

SNC worked on a number of noteworthy projects in the early 1960s, including Manic 5 Dam in northern Quebec. According to company literature, its first international job was building the Idukki power station in Kerala, India, in 1963.

The policy of Quebec's government of relying on private sector engineers helped foster the development of the province's engineering firms, noted Britain's Financial Times. In the late 1960s, Dagenais later told the Canadian Business Review, Canada's engineering firms such as SNC began incorporating procurement and construction services to better serve their overseas customers. They also became proficient at arranging financing for major infrastructure projects.

SNC Group grew aggressively by acquisition in the 1970s. It had revenues of C$180 million in 1981. The company had ventured into the defense segment the previous year by acquiring IVI Inc., which made smaller caliber ammunition.

It had revenues of C$180 million in 1981.

1936–1986

SNC Goes Public in 1986

SNC became a public company in 1986. By this time, the group's defense business (made up of IVI, Canadian Arsenals, and Securiplex Systems Inc.) was rivaling the traditional engineering and construction activities in importance.

Half of SNC's revenues were now coming from abroad. Both SNC and Lavalin thrived in francophone Africa (particularly Algeria in the case of Lavalin). These projects were generally funded by international development agencies.

To cope with the early 1980s slowdown in engineering services, SNC Group pursued growth in the defense market. It acquired artillery ammunition producer Canadian Arsenals Ltd. for C$92 million in 1986. This added more than C$100 million to SNC's annual revenues. SNC also invested in diverse joint ventures, including a compact disc plant (Americ Disc) and a natural gas supplier.

Lavalin Formed in 1936

Jean-Paul Lalonde and Romeo Valois of Montreal formed the Lavalin civil engineering firm in 1936. This would become SNC's chief rival under the direction of Bernard Lamarre, who joined Lavalin in 1952 after marrying Louise Lalonde, daughter of one of the company's founders. He had first learned the construction business while working for his father, a contractor in rural Quebec. Lamarre became head of Lavalin in 1962. Under Lamarre, Lavalin extended its global reach, then greatly diversified its range of activities.

The firm started by Lalonde and Valois became known as Lavalin Inc. by the early 1970s. Major projects for Lavalin during the decade included the James Bay hydroelectric plant (in collaboration with Bechtel of the United States) and the roof of Montreal's Olympic Stadium.

Lavalin took over a number of firms, including Canada's Shawinigan Engineering and Warnock Hersey and Europe's Lafarge Coppee. Lavalin was the largest engineering firm in Canada by the mid-1980s, with revenues of C$500 million in 1983. It had 5,700 employees at this point.

1947–1996

Lavalin Overreaches in the 1980s

However, as the international business became more competitive, Lavalin looked to build petrochemical and manufacturing segments. In 1986, it acquired an 85 percent interest in Urban Transportation Development Corp. (UTDC) from the government of Ontario for C$50 million. UTDC was eventually sold to Bombardier Inc. The group also bought a money-losing petrochemical plant called Kemtec that was sold off as well.

Lavalin was already exporting C$300 million worth of manufactured goods a year, according to Toronto's Financial Post. Lavalin even acquired Montreal's Bellechasse hospital and attempted to enter the aircraft leasing business. Other disparate new purchases included Quebec's MeteoMedia television weather channel, the book publisher Mondia, and real estate, including a new 55-floor headquarters building. At the dawn of the 1990s, Lavalin was a C$1.2 billion conglomerate of more than 70 companies, but it was on the verge of collapse due to its overly ambitious expansion into loss-making side ventures. In 1991, Lavalin's bankers put it under pressure to be acquired by its chief rival, SNC.

SNC Acquires Lavalin in 1991

SNC Group Inc. bought Lavalin Inc., the Lavalin Group's C$400 million ($348 million) engineering business, in August 1991. The combined group, dubbed SNC-Lavalin Group Inc., was led by SNC chairman Guy Saint-Pierre, who had steered the group through a turnaround in the previous two years. (SNC posted a profit of C$23 million on revenues of C$447 million in 1990.)

SNC-Lavalin was the fifth-largest engineering firm in the world, according to one estimate. It had more than 7,000 employees after the merger but cut 2,000 jobs in the next two years. The two had markedly different cultures, with Lalonde's autocratic style contrasting with the publicly traded and largely employee-owned SNC.

In the mid-1990s, Saint-Pierre pursued growth abroad via acquisitions, hiring more local talent than had traditionally been the case among Canada's international engineering firms, noted the Financial Post. Saint-Pierre stepped down as CEO of SNC-Lavalin Group in 1996, a couple of years after being named CEO of the Year by Toronto's Financial Post. He continued to work part-time as chairman. His successor as CEO was Jacques Lamarre, brother of former Lavalin CEO Bernard Lamarre.

SNC-Lavalin acquired Kilborn Holdings Inc. in 1996. Based in Toronto, Kilborn dated back to 1947 and specialized in engineering for uranium and potash mining projects. It employed 1,200 people and had annual sales of C$125 million.

1967–2005

In the 1990s, SNC-Lavalin partnered with Bombardier, Inc., the new owner of the UTDC division, to develop transportation projects in Mayalsia (Kuala Lumpur) and Turkey (Ankara) based on the automated SkyTrain system that had proven successful in Vancouver.

The company bought a 27 percent share in Ontario's Highway 407 toll road in 1999 for C$175 million. Part of this was sold off in 2002 at a substantial profit. Other bright spots for 2002 included signing C$1 billion in thermal power-related contracts in the United States.

Still Acquisitive After 2000

SNC-Lavalin bought GDS Engineers, Inc., of Texas, a petrochemical industry specialist, in early 2003. In 2003 and 2004, the group bolstered its operations in France through a number of diversified acquisitions (Trouvin S.A.S., Fimatec, Chovet Engineering S.A., Sogequip Groupe S.A.S.).

In 2003, SNC-Lavalin's revenues were more than C$3.3 billion ($2.5 billion); two-thirds was from outside Canada. Net income was C$86.5 million ($66.8 million). The company had 10,500 employees. In 2004, sales rose to C$3.5 billion ($2.9 billion), 56 percent from outside Canada, as net income reached C$104 million ($87.8 million).

In 2004, SNC-Lavalin bought out its partner in the Canatom NPM Inc. nuclear engineering venture, which dated back to 1967. SNC-Lavalin continued to look abroad for growth opportunities. In 2005, the company acquired engineering and construction firm RJ Associates (Engineers) Pvt. Ltd. of Mumbai, India.