Neil Bruce’s speech - SNC-Lavalin · It is a vivid memory I carry with me every day as a reminder of the importance of the work our engineers do, ... SNC-Lavalin Neil Bruce’s

Neil Bruce’s speech CORIM November 10 2015

SNC-Lavalin Neil Bruce’s speech - CORIM

TOPIC

SNC-Lavalin: the beginning of a new chapter

SYNOPSIS Turning around a company in a fast consolidating industry that has faced ethical concerns raises the stakes and presents multiple challenges. Decisions and direction taken today shape a company’s future. So what are the components that not only meet long term objectives, but also ensure sustainable growth for the long term? Neil Bruce will outline the ingredients of success that will see SNC-Lavalin meet its potential to become the leader in the engineering and construction industry.


Bonjour, je m’appelle Neil Bruce et je suis très heureux d’être ici.

It’s a pleasure to be here. I felt it was important that I make my first address here, because the CORIM is an organization that, in my view, promotes international relations and has welcomed leaders from around the world to share their visions and experiences.

This makes my address today all the more noteworthy, because

SNC-Lavalin can celebrate both its roots here in Montreal and also its internationally recognized capabilities. We’re a business that today has roots in many countries and communities around the world.

Seeing that I am not well known in this city, I thought a brief introduction would be in order.

I know that the media articles have already declared me “British”. While this is true, I am also proudly Scottish.

I have lived in many cities during my career to date and, like many Scots before me, have encountered many cultural similarities here in Montreal with my native country.

A PROFOUND PROFESSIONAL EXPERIENCE

I’d like to start by telling you a personal story.

Two weeks after starting my very first job in the oil and gas industry, I was asked to go to the Brent-Charlie offshore oil platform. About a 3-hour journey by helicopter from land in the northern North Sea.

This was my first time on a helicopter and my first time on an offshore oil platform.


I want you to imagine a platform that holds 64 storage tanks, each with a capacity of 4 Olympic-size pools. It sits on a concrete substructure 150 meters above the ocean surface, in a water depth of 140 meters, and is designed to withstand storms with the ultimate 100 foot waves.

The weather is just about as harsh as last year’s Montreal winter! I remember putting on protective equipment with layers of clothing underneath, and I am thinking “how can people do this all the time”.

One of the guys came over to me and asked if he could help me with my equipment, because it is awkward to put on and I definitely looked like I need help. He put me at ease.

I’m in the helicopter seat and I am the only one not reading a paper or sleeping, thinking about what is about to come next.

The closer we get to the platform, the bigger it gets. And a sense of nervousness sets in.

We land and I feel relieved. I get off the helicopter and realize just how massive this oil platform really is, because I find it difficult to orientate myself. And there are over 600 people on this platform and the offshore floating hotel moored alongside.

I find my room that I am sharing with three other colleagues.


At that point, I realize the importance of my role as one person out of many.

Each one of us doing our job. Doing so to deliver this important project to our client, Shell, and also to our country, the UK.

This platform is where the Brent International Oil price got its name. At the time it supplied 13% of the UK’s oil and 10% of its gas needs.

I go to my supervisor and he asks if I could help with “structural punchlisting”. So I pretend to know what that is, as any young engineer would…

Until I asked someone, who explained that the topside of the platform is put together from 40-50 component parts – totaling over 30,000 metric tonnes. That’s equivalent to about 180 Boeing triple sevens.

Structural Punchlisting means going to each of these parts – that was built on land and sent to the offshore platform – to see what “has not” been done, documenting everything so that the right trades can complete the work with the materials required.

What I learned from this experience was how each person counts on the next one. How vital it is to work as a team.

To help one another and look out for one another’s health and safety.

To be efficient and effective, because people count on you to do your job right and on time.

This is what it takes to achieve fantastic goals, like an oil platform in the middle of the ocean, built to withstand 100 foot waves, and to deliver this important, iconic project.

This experience marked me. It was “une expérience formatrice”.

It is a vivid memory I carry with me every day as a reminder of the importance of the work our engineers do, and the importance of collective success.

This is essentially what SNC-Lavalin is all about and what we do every day, what we have done for over 100 years.


And what we will continue to do for a long time in the future – deliver the most important iconic projects to our clients and communities, because at the end of the day, we build what matters.

PURPOSE AND IMPACT OF ENGINEERING

So what part do engineers have in shaping this future?

Engineers have been advancing society with new ideas, with tireless trial and error since recorded history, doing what others said could not be done.

And they have left us both knowledge and physical structures that still stand the test of time.

All my life I’ve been involved in education, particularly in what relates to engineering and people development.

The reason I am so passionate about our industry and our future is because the true role of an engineer is to design and build what matters for society and for society’s betterment.

At SNC-Lavalin, this includes:

Mines and smelters to extract metals that hold up our buildings and operate our cell phones.

For example, the EMAL mega smelter in Abu Dhabi, which uses Canadian expertise developed in Quebec, produces 750,000 tonnes of aluminum a year, and has a 1.6 kilometre potline, the longest in the world.


Our client counted on our world renowned experience to build this smelter on time and on budget. And we did! With an excellent safety record of 45 million man-hours worked without a lost time incident.

Another example is the Ambatovy mine in Madagascar, one of the largest in the world that produces 60,000 tonnes of nickel and 5,600 tonnes of cobalt a year.

Due to its size, scope and remote location, it required elaborate safety systems and highly specialized mechanical expertise.

To support the local community, we trained more than 6,000 Malagasies in bricklaying, formwork, painting and welding.

A second area where we build what matters is in oil and gas, which fuels our homes, transportation and a whole range of things that are important to our daily lives.

For example, we are helping to build Gorgon in Australia, the world’s largest natural gas project. It will produce over 15 million tonnes of liquid natural gas a year, will add $64 billion dollars to Australia’s GDP, and has generated 10,000 jobs in Australia.

A third area includes infrastructure that connects and takes care of citizens, like buildings, hospitals, bridges and transit systems.

For example, the Shriner’s Hospital here in Montreal, a 20,000-square-metre, eight-floor hospital that will be twice the size of the current aging facility.

It will be a true centre of excellence in pediatric orthopedics. Specialists will be able to treat a greater number of children, conduct breakthrough research and teach in a state-of-the-art facility.


Another project that embodies excellence is the award-winning Maison Symphonique in Montreal. It is a technically complex feat of engineering and superior acoustics that is among the finest symphony halls in the world. Being inside was a great experience for me, and I am proud of this SNC-Lavalin accomplishment.

We are also the experts in light rail transit across Canada, from Vancouver’s Skytrain and Canada Line, to Calgary’s and Edmonton’s LRTs, to Ottawa’s Confederation Line, soon in Toronto with the Eglinton line, and we hope soon in Montreal in the near future.


To date, we have built 180 kilometres of transit with 130 stations, with a weekly ridership of 3 million people.

A fourth area where our experts improve people’s lives is in power stations and grids that light our lives and heat our homes.

For example, we built the dam of the Daniel-Johnson hydro power generating station in Baie-Comeau. The entire Place Ville-Marie could fit under its main arch. Its reservoir is the 6th largest of its kind in the world.


So when you use any of these resources or think of these mega projects, think of the expert engineers who helped make them happen.

Think about the time they spend in our education establishments and learning on job sites. And how critical it is to teach the next generation of engineers to improve on everything we do today.

For me, teaching, learning and development is a critical part of our job.

Going forward, we will work closely with universities around the world to create partnerships for mentoring programs and internships.

We want the young engineers of tomorrow to develop their skills with some of SNC-Lavalin’s best engineers, and we’re determined to be the employer of choice going forward, renowned for attracting the best talent. We want them and their families to see us as the premier engineers and project delivery experts.

I just have to look at our daughter who is absorbing French at a phenomenal rate because she is immersed with the right teachers, and I have no hope of catching up with her.

It is her generation that will lead and shape the world of tomorrow.

Our responsibility as leaders today is to figure out the components that will hand over a successful society to her generation. And education is the foundation.

We are a people business, and 98% of our real assets are our 40,000 employees, because they are the people our clients and communities rely on every day.


This is why SNC-Lavalin’s new head of human resources is a proven leader who previously led one of our business units. For me, it’s all about focusing on giving our businesses the expertise and resources they need to succeed every day.

This brings me back to the platform in the North Sea. Every person has an important job. Every person has to excel at what they do. Every person has to understand the consequences of what they do. That is why it is critical to put the right people in the right positions.

And that is why I talk so much about operational efficiency. It is critical to what we do. Our clients and communities depend on us doing things right, on time and within the budget.

THE COMPANY TODAY AND DEALING WITH ISSUES

So where is SNC-Lavalin today?

We are a company that has seen significant change and broad improvement over the past three years.

I am an example of this change.

Today, our ethics and compliance program is a benchmark in our industry.

It is an integral part of our business. We have invested heavily and remain committed to continuous improvement in our processes, procedures and policies to ensure we remain world class.

Our health and safety record has improved over the years. Our goal is always to have zero incidents, because the health and safety of our employees, our partners and those who enter our worksites anywhere in the world are fundamental rights.

These two concepts – health and safety, and ethics and compliance – do not live in isolation from the efficient and profitable operation of our company though.


Just like you do not choose between your children’s safety, health, education and future success, we do not make choices between ethics & compliance, health & safety, client satisfaction and profitable operations.

We choose to do them all at the same time, always, and deliver in a world class manner.

My vision is for SNC-Lavalin to be recognized as a globally diverse Tier-1 E&C firm. Proud of our heritage but modern and forward looking. Our top priorities are to win new contracts, improve project execution, and deliver improved results and returns for all our stakeholders.

Later I will speak about what will help us reach our goal.

But first, I’d like to talk about the current legacy issues of the past that we continue to deal with.

We remain absolutely committed to move forward on allegations concerning former employees, and have said consistently that we are willing to reach a reasonable and fair solution on issues of the past. One that promotes accountability, while permitting us to continue to do business and protect the livelihood of our 40,000 employees, our clients, our investors and our other stakeholders.

With the great strides we have made in our goal to be both a Quebec and Canadian player on the global stage, nevertheless we still have to deal with the reality of the current business environment in Canada which presents real challenges to a company like ours.

The federal charges laid by the Public Prosecution Service of Canada against a few of our legal entities unfortunately point the finger more broadly at 40,000 employees who did nothing wrong, and who are frankly among the best and brightest in Canada and around the world.

This action limits our competitiveness versus our peers in many of the G7 countries, which are our core target market.


These countries use a different approach that has served the public interest effectively to resolve similar matters. It enables them to balance accountability while securing the employment of tens of thousands of employees, and ensure the continued contribution of the Company to the economy.

This approach is generally known as a Deferred Prosecution Agreement – also called a DPA. It is an efficient and pragmatic settlement mechanism that identifies and penalizes more corporate offenders, protects the public and provides more restitution for its victims.

If adopted in Canada, it would ensure that Canadian businesses are no longer at a disadvantage to their counterparts in countries with a DPA, such as the United Kingdom and the United States.

This solution would not only be good for SNC-Lavalin. It would be good for all Canadian companies that work internationally.

Some key benefits would include:

1. Enhancing self-reporting and compliance.

2. Producing effective and proportionate penalties for wrongdoing.

3. Ensuring quicker and more cost-effective outcomes.

4. Holding commercial organizations to account without unfairly affecting their employees, pensioners, suppliers or investors who were not involved.

THE SNC-LAVALIN OF THE FUTURE AND HOW TO GET THERE

The SNC-Lavalin that I see in the future is a company that our large global clients turn to for all their needs in engineering and construction.


It is a company that is flexible enough to provide its clients with targeted services and expertise, as well as manage their large, complex mega-projects.

A company that local communities consider as their trusted partner to build what matters for the benefit of people.

A company that young engineers turn to as their first choice to start their careers.

A company that is respected for its unrivaled expertise and thought leadership.

And a company each and every employee speaks of with pride.

We already have many of the components to make this happen.

A new executive team, and new leaders throughout the company.

A one-company approach that will align the whole business under one name and one banner.

A clear strategy that will see us double our size compared to 2013 levels – and we are well on our way with the acquisition of Kentz last year.

Kentz transformed our oil and gas business from a niche 3,000 employee operation into a 20,000-strong, world class organization.

We still have lots to do to improve our financial performance, and our ability to deliver consistently what our clients expect, every time.

My priorities are:

A streamlined structure: We have actively been simplifying the way we work over the last 6 months and will continue to do so. We need to be easy to do business with.


Growth: Both organically and through acquisitions. We are working at winning new contracts such as the Eglinton light rail transit project in Toronto, and the Champlain bridge replacement project here in Montreal. We will continue to add capabilities and greater depth where we have a market edge. Our balance sheet strength provides real support for our ambitions.

Focus on delivery: SNC-Lavalin has lived through many distractions and our employees have coped admirably for a sustained period of time. Now we must direct all that focus and energy towards consistent delivery – it’s what our clients and stakeholders expect. We will continue to invest in our client facing teams and world class execution capability – we want all our customers and partners to have full confidence in our ability to deliver on projects.

A performance-driven culture: The team has delivered strong results this quarter, and we now need to build from here. I have set some clear targets, including delivering an E&C EBITDA margin of 7% in 2017, and we are not going to deviate from our priorities. Everyone has a part to play. We have excellent prospects for growth, a strategic plan to deliver them, a balance sheet to support our ambitions and most importantly, a highly dedicated, mobile and multicultural workforce to whom we are committed and behind whom we will invest.


CLOSING

SNC-Lavalin has been a cornerstone and part of the fabric of the Canadian and Quebec economies for more than one hundred years.

We are proud to have been such an important part in building this great country.

As Canada’s largest engineering and construction firm, we contribute to job creation and economic growth beyond our own activities and those of our suppliers.

Our involvement in major projects across the country is a catalyst for Canadian enterprises through innovative, world-class processes, technologies and expertise.

SNC-Lavalin plays a strategic role in developing the engineering profession, promoting quality jobs with great, long-term career opportunities.

And on every continent, we provide internationally recognized expertise and contribute to local economies.

Today, many people around the world know the expertise of

SNC-Lavalin that is headquartered here in Montreal.

Everything that we have done and the daily efforts of our 40,000 employees will ensure that we continue to build what matters in Canada and overseas for the next 100 years.

Merci.

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Neil Bruce’s speech - SNC-Lavalin · It is a vivid memory I carry with me every day as a reminder of the importance of the work our engineers do, ... SNC-Lavalin Neil Bruce’s