Du savetier au financier: la famille Borel, de Neuchâtel à San Francisco

The Borel Family From Neuchâtel to San Francisco : From shoemaker to banker Did you know that the Cable Car was owned by Swiss citizens? BACKTRACKING : PRIVATE FINANCING OF PUBLIC METROPOLITAN INFRASTRUCTURES Executive Summary: Did you know that one of San Francisco most famous fixtures, the Cable car, was owned by Swiss citizens? Through this detailed study of the Borel family, and its business and investment plans we will observe an example of private financing of public metropolitan infrastructures in the 19th Century and see if it can teach us lessons for tomorrow’s needs? TOPICS Looking at today’s infrastructures, one does not always remember how much work contracting firms had to accomplish in order to produce our contemporary standard of urban comfort . What is to be said of yesterday’s planners or engineers and the credit they deserve? We often hear stories of local events brought to epic proportions, but who are the responsible players who really proved the feasibility of regional infrastructures? Who actually did support, sponsor or finance such achievements? The present study is a trial to propose a new view over such apparently hidden business phenomenons. This research shows us an inspiring case-study of local entrepreneurs who gather key success-factors. The author concentrates on the economic aspect of infrastructure financing to which modern metropolitan society owes its specific urban growth. Contemporary challenges such as job creation, globalisation, technology transfer and local economic development are all interconnected to metropolitan development. XIXTH CENTURY METROPOLITAN INFRASTRUCTURES FINANCING Le Temps, 30th July 1998, D. Masmejan : «Alfred Borel, Auguste’s elder son, enters the finance world. He meets an extraordinary businessman fate. His understanding of the economic impact of the Californian Gold Rush allows him to seize the opportunity of the westward American expansionism. He sails to San Francisco in 1855 where he is the founder of the «Alfred Borel & Company», followed in 1856 by a Mortgage fund (the “Caisse Hypothécaire” bank). The same year sees the foundation of Credit Suisse in Zurich. Alfred Borel investment bank participates in very important infrastructure projects in California and elsewhere in the second half of the XIXth century. At first, its investment into the worldwide famous San Francisco Cable Car is marginal and then becomes overwhelming. Other investments include the “Los Angeles Railway Company” or the “United Railroad Company”, the San Francisco Waterworks, other banks and real estate.» DETAILED RESEARCH ALLOWING TO UNDERSTAND FINANCIAL DECISION MAKING The author reviews financial decision-making through personal correspondence and private accounting in some of those completely documented yearly archives. The «sixth Switzerland» well-connected to the Presbyterian «Huguenot International» cosmopolitan network leads us to detailed research and discoveries. The accounting of 1866 to 1884 goes through the 3rd and 4th San Francisco City real estate crises that the mortgage bankers Borel brothers had to endure. Alfred Borel faced the 2nd Californian real estate crisis (which resulted from the first loss of public interest in gold mines in the years 1854-1858). Then he went back to Switzerland after the death of his father and uncles in order to reconstitute the Swiss end of the pipe connecting his bank’s investors to the Borel family network. He left duty of the day-to-day San Francisco business to his younger brother Antoine after having set up asset management rules. Together both brothers explored new ways of diversifying the investment of the funds they are managing and place them into infrastructures networks. Taking shares «upstream» into equipment industries (for instance the wire works delivering the precise traction rope of cable cars) or other real estate assets, allowed them to guarantee superior interests payments to European investors or creditors in comparison with other financial markets. This anticyclical economic strategy set up their financial success that occurred during the 5th local economic recession, which coincides with the beginning of the big worldwide Victorian economic crisis (1880-1895). UNIQUE SPECIFICITY OF THIS RESEARCH This research process is rarely accomplished in engineering and architecture schools, construction and infrastructures institutes or research centers. The integrity of construction professionals precludes their questioning « where does the whole process originate from?». Builders ultimately considered themselves as «honest craftsmen» that have to dedicate their energy and resources to the proper technical execution of the clients wishes and orders. Customers duty is then to write the project’s specifications and thus to initiate its process. The author of this case-study demonstrates the feasibility of comparisons between similar structural change periods in the XIXth century and the years 1990-2000. Hence, a new theme of interdisciplinary studies for engineers could be implemented by promoting this systemic approach between urban infrastructure financiers, suppliers and users. Last but not least, the insider observations and outsider revelations which are featured in this work are seldom considered in an engineering historical approach. It is not often that an author with a contemporary outsider vision has access to family archives that entirely document bicentennial confidential banker correspondence.

The link between innovation and finance

Cristiano Zazzara

This thesis comprises three essays on the relationship between innovation and finance. Although previous research has acknowledged the multi-faceted nature of innovation, this thesis unpacks its constituent elements, compares alternative drivers of innovation — focusing on the role of financial variables —, and explores when each of these drivers is important relative to the others. Evidence is based on survey data on Italian manufacturing firms over the years 1995-2003. The main contribution of this dissertation is to show how innovation at the firm level varies across different dimensions, documenting several robust empirical regularities, which must be accounted for. The first essay explores the determinants of various characteristics on the propensity to innovate in the Italian manufacturing sector. First, we concentrate on firms characteristics, and include in the study age of firm, size of firm, export shares of revenues and group membership. Second, we examine industry characteristics, such as type of industry in terms of technology level and market concentration. We also test the impact of characteristics of the firm's geographical area, including an indicator of financial development for the firm region. We finally extend our model including financial variables at the firm level in order to evaluate the association between profitability & risk and innovation. The second essay further examines the determinants of innovation, focusing on why firms develop product innovations rather than process innovation, or product and process innovations simultaneously. Empirical studies have highlighted the different impact of product and process innovation on various factors (such as, for example, international competitiveness, the level of employment and the types of skills used, and on the profit rate of firms). However, little is known from either a theoretical or an empirical point of view about the determinants of these different types of innovation. The third essay examines the question of whether access to credit is empirically more difficult for innovative firms than for those undertaking traditional investment projects. The idea that market financing of innovative projects is likely to encounter severe obstacles is not new. Indeed, it dates back at least to Schumpeter's defence of monopoly power since it not only guarantees that innovative firms can internalise the benefits of their innovations, but also provides funding for future innovative projects. Testing this proposition requires information on the innovative content of a given firm and on the limits to borrowing it encounters. Using the above mentioned survey data, we are able to identify credit constrained firms and use this information to make inferences on bank's lending strategies towards firms whose investment projects differ according to expected return and riskiness.

EPFL2008

Alexandre Sarrasin (1895-1976) et l'esthétique de l'ingénieur

Philippe Mivelaz

Alexandre Sarrasin (1895-1976) studied at Zürich Federal Swiss Institute of Technology (ETH) from 1913 to 1918. Despite First World War's conflicts surrounding the neutral Switzerland, the intellectual climate inside ETH was cosmopolitan and liberal. As unique educational institution directly depending from the Federal government, the ETH played an important role in shaping modern Switzerland where country planning and infrastructure building were the central power's main tasks. Engineers were important figures of this process of modernization. They embodied the values of the industrial revolution: rationality, efficiency and the huge power of transformation of the country and its society. Sarrasin opened an engineer's office in Lausanne in 1921 and in Brussell two years later. He established himself in the capital of Belgium in 1927 while ruling at the same time his office in Lausanne. He came back to Switzerland when the German army invaded Belgium. The office in Bruxells was maintained up to the early 1960's. Branches were opened in Sion and Geneva during the 1950's. Sarrasin's work concerned foundations, buildings, bridges and some dams also. Nearly all these constructions works were made of reinforced concrete, his favorite material. This thesis is dedicated to the construction works, especially the bridges in Valais, Sarrasin's native district, and the aesthetic question in engineer's design. Of the bridge of Branson (1924- 1925) near Fully, his first important commission, he wrote that "The elegance of the design is due to its simplicity. The quietness of its lines is fully harmonized with the landscape. Nothing was planned for the decoration. The bridge is the simple realization of a mathematical truth". This quotation highlights the issue of form for engineers and especially in Sarrasin's works: the affirmation of simplicity and "mathematical truth", that is to say the expression of the structural mechanics, as the engineer's aesthetic's fundamental the relation with the landscape The question of form was not only thought of in terms of efficiency and economy, or lack of decoration. The development of structural mechanics as engineer's science gave new conceptual tools allowing new designs. The first professor of civil engineering at the ETH, Karl Culmann (1821-1881), was the graphical static's father. This applied science was inspired by descriptive geometry and graphical calculation methods developed in France during the 18th and 19th century. To the construction's classical point of view distinguishing between elements bearing weight (for example pillars) and others being supported (for example lintels), graphical static opposed a spatial vision of forces interactions into the structure. New materials allowed bringing these forces into play with tensed cables, compressed or extended frames. At the beginning of the 20th century, reinforced concrete appeared as modern material along side with iron and steel. Created by builders in the 19th century, its construction method was investigated by engineers making it a universal material used by everyone, independent of patents. This assimilation was made by elaborating construction norms that had sometimes inhibitive effects on the creativity of engineers. Other engineer looked for new forms fitting the material's caracteristics. Robert Maillart (1872-1940) was one of them. He had a great influence on Sarrasin's work. The first half-century of modern engineers which started with the creation of the ETH in 1855, was a period of great innovations in science and technology. Most construction works were made of metal and were built for the railways and designed with the graphical static, creating a new architecture, but the question of aesthetic became an issue only at the beginning of the 20th century. The first reaction rose against the overwhelming presence of technology in surroundings : its impact on the landscape or on the city's image was depicted as negative. At the same time, other observers – architects, art historians – recognized in industrial constructions an aesthetical value. Some engineers wanted a come back to traditional forms as stone vaults. During the first quarter of century, several metallic bridges had been considered as fragile and replaced by stone works. Bridges were designed as monuments. On the other side, some engineers argued for the beauty of modern materials and technology, opposed to the picturesque point of view, represented by those who wanted preserving the landscape. The First World War was not only the beginning of the 20th century. It seemed also to be the moment where engineers lost their innocence. Aesthetical questions and the impact on the landscape were matters of public debates. During the same period engineering became a profession free of contractors. That had probably the effect that engineers developed their own language. Sarrasin exactly spent his study years during this period of changes. Matters of aesthetic belonged to the themes treated by his professor of structural mechanics, Arthur Rohn (1878- 1956), who considered that a bridge should not only be built rationally, but should also express his structural system. François Schüle (1860-1925), who was involved in developing constructive norms for reinforced concrete, was his professor of material's technology. He represented the scientific side of the profession of engineer. The works of Sarrasin embodied this double requirement for rationality in using materials and the will to integrate the construction works into the landscape and into the environmental context. Valais was the landscape taken into account. This mountainous district entailed contradictory representations of the need of modernization and the preservation of landscape and traditions. On one side, this region was shown as a society preserved from modernity with unchanged traditions, on the other side, the Valais quickly took part in the national economy. The landscape changed deeply with the draining of the main valley of the Rhône river, the construction of rail and road nets, industry and hydroelectric plants. Sarrasin's works were the products of this economic revolution which transformed the Valais region; they wanted at the same time to be a testimony of this story. One of the interesting aspects of the attitude of this engineer is the way he used references to ancient constructions. Beamers and arches reconsidered in respect with modern technology by use of reinforced concrete, created a dialogue with the landscape or with stoned vaults thrown upon the Alps deep abysses.

EPFL2007

Optimalisation des formes d'organisation dans l'industrie de la construction

Philippe Pot

A piece of work carried out by the construction industry, whether a building or a civil engineering project, is not a mass-produced item. It is always a unique piece of work, by dint of its response to the specific needs of the owner and its potential users, its integration or otherwise into a built environment, and its construction on ground whose geo-technical properties are always specific. This unique piece of work, carried out outside on a site subject to numerous hazards, must nevertheless meet the programme's fixed objectives first time round. Unfortunately, unlike most industrial products, it is usually, even nowadays, the outcome of a fragmented approach: designers and builders of the shell of the building and those engaged in the finishings are in fact involved in a segmented and sequential process, without any real interaction between the various disciplines, to the detriment of overall quality and the cost of the end-product. The author of this thesis has had the opportunity, in his professional career in the management of major construction companies, of testing most organisational forms in the sector. He has observed that, depending on the model chosen, they exercise a more or less beneficial effect on quality, costs and time-frames for completing the works, as well as on the capacity for innovation of the participants themselves. The first objective of the thesis was to analyse the strengths and weaknesses of the most common organisational models in the construction industry and to identify factors in the success of the construction process. The second objective was to suggest an original organisational model which would make optimum use of these factors, taking into account modern organisational theory and project management. The first section of the thesis is an historical study of organisational forms of construction from antiquity to the modern times, and examines in particular the relationships between those actively and directly involved (owner, designers and builders) and their relationships in turn with those involved indirectly (users, public administration, finance providers, environmental and heritage protection organisations, laws and standards, etc.). This historical perspective makes a useful contribution because, although much has been written on architecture and architects, especially the most famous among them, and sometimes on engineers, work looking systematically at the organisational forms used in the construction industry over the centuries is rare. This study demonstrates that the fragmented organisation of construction characteristic of the 20th century is merely an accident in the long history of construction; the twenty-five preceding centuries almost always favoured close collaboration between designers and builders and the wonderful works they left behind demonstrate the wisdom of this approach. Study of the history also provides us with a list of the main success factors and the demands to which the successful organisation of construction must respond. The second part endeavours to verify the relevance of the needs drawn, in the light of modern organisational theory, from project management and creativity, and to complete the list. It goes on to analyse on that basis the strengths and weaknesses of the organisational models most commonly used in the modern construction industry and demonstrates that organisation as a design and build, is in the best position at this stage in the research to meet the needs of owners. The third section verifies, through case studies of five pieces of work recently completed or under construction, whether this organisational model effectively satisfies the expectations of those involved in the construction project, simultaneously examining potential improvements. To that end, a series of interviews was conducted in each case study, with a view to eliciting the views of representative participants: owner, operator, user, project manager, architect, engineer and sub-contracting trades. The process was completed with an analysis of the attitude of some public sector owners to the design and build organisational model. Finally, the lessons drawn from these case studies were used to complete the list of success factors already identified. A final section sets out an original organisational model named Integrated Construction Management (ICM), which recommends an inter-disciplinary approach to construction and responds to the success factors identified in the first three sections. It involves a new division of the production process, which provides the owner with a broader and more cost-effective range of innovative architectural and construction options. It also delivers a series of practical recommendations to assist in the application of the proposed model. In conclusion, Integrated Construction Management places the owner at the centre of a transparent and progressive production process, simultaneously removing the majority of the risks involved in construction. Through its inter-disciplinary approach, it offers innovative solutions together with improvements to the overall quality of the piece of work itself on favourable economic terms. Finally, it enables the owner to take informed decisions and to use his or her financial resources as and when the feasibility of the project is confirmed. It is hoped that, as a result, these advantages will be demonstrated through pilot projects carried out using the ICM model, which will without doubt make possible further improvements in performance.

EPFL2005