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A thick summer haze dulls the view of Montreal outside the 21st-floor office of Jacques Lamarre, but the chief executive officer of SNC-Lavalin Group Inc. still manages to hone in on an endless source of pride.

"You see that? Exactly. You don't because it's buried below the ground. We're very proud of that." That is the stretch of Autoroute Ville-Marie that runs underground through Montreal, sparing Canada's second city the blight that is Toronto's Gardiner Expressway. The 5-kilometre tunnel was one of the 62-year-old Mr. Lamarre's first big projects as a young engineer in the early 1970s. It's been an integral part of Montrealers' daily commute ever since, without major incident.

Mr. Lamarre's satisfaction is understandable, considering the heat SNC-Lavalin rival Bechtel Group Inc. is taking over its work on Boston's Big Dig, the $14.6-billion (U.S.) project to bury a downtown freeway that cost more than five times the original estimate, and was partly closed in July after a concrete ceiling panel fell and killed a person.

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Not that Mr. Lamarre has never known a project from hell. He led the work on Montreal's infamous Olympic Stadium, inaugurated 30 years ago. Though the stadium was a feat erected during the brutal winter preceding the games, labour strife and design complications blew the budget for the "Big Owe" into the stratosphere -- from a projected $106-million (Canadian) to more than $1.3-billion.

Still, at least in those days, business in Quebec was booming for engineers like Mr. Lamarre. From the Olympics to the massive James Bay project, from aluminum smelters to expressways, there was no shortage of contracts. That's not the case today. When it comes to new infrastructure, Quebec is a desert.

Luckily for SNC-Lavalin shareholders, Mr. Lamarre has turned Canada's premier engineering firm into such a planetary powerhouse -- with projects in more than 100 countries -- it hardly seems to matter. In Mr. Lamarre's 10 years as CEO, sales have grown fourfold to the more than $4-billion expected in 2006. From oil fields in Saudi Arabia and Siberia to a gas-fired power station in the Algerian desert, from feasibility work on the world's biggest aluminum smelter in Dubai (and undoubtedly more contracts, if the $7-billion project is green-lighted) to Inco Ltd.'s Goro nickel mine in New Caledonia, SNC-Lavalin has racked up an $8.3-billion backlog of contracts that will keep its 12,000 employees at the forefront of a global building boom for years.

In Canada, SNC-Lavalin has hundreds of engineers working in Alberta's oil sands. It is building Vancouver's $2-billion Canada Line rapid transit system and owns a third of the consortium that will own and operate the line for 35 years when it opens for the 2010 Winter Olympics. Mr. Lamarre is also anticipating a big windfall for SNC-Lavalin, a partner in the Candu nuclear reactor team, from Ontario's decision to plow $40-billion into new and existing nuclear power stations. And it's a no-brainer SNC-Lavalin will be first in line if Quebec proceeds to undertake $25-billion of new hydroelectric developments by 2015.

"We're in an engineering super-cycle that will last at least another six or seven years," said Scotia Capital Inc. analyst Anthony Zicha, an SNC-Lavalin enthusiast even though much of the boom is underwritten by high commodity prices. "SNC-Lavalin is quite risk-averse and that has been reflected by the quality of earnings they've been delivering over an extended period of time. History often repeats itself." Well, for Mr. Lamarre's sake, hopefully not all history.

Fifteen years ago, in the summer of 1991, Mr. Lamarre and his big brother Bernard, the latter best known as a flamboyant bon vivant and art collector, were at the centre of one of the most spectacular corporate reversals of the early-1990s recession. Bernard Lamarre, 12 years older than his brother, went from Quebec Inc. hero to zero as the Groupe Lavalin empire he controlled nearly collapsed under debt accumulated from an ill-fated diversification into aircraft leasing, manufacturing and petrochemicals. Most non-engineering businesses were sold off or put into bankruptcy while Quebec's government intervened to save Lavalin's engineering arm -- a jewel in the province's crown. It backstopped a merger between Lavalin and its crosstown rival, SNC Group Inc.

"SNC was prevailed upon by the Quebec government to take it," said Stephen Jarislowsky, an SNC director at the time. "I don't think we had a choice. But it was an enormous risk. SNC was too democratic and Lavalin was too autocratic. The only way we could make it work was to forget SNC had taken over Lavalin and keep the best people, no matter where they came from." Bernard Lamarre was not one of them; his quiet-mannered younger brother and junior partner in Lavalin was. When the time came, five years later, to choose a successor to SNC-Lavalin CEO Guy Saint-Pierre, Jacques Lamarre was an executive vice-president and one of four in line for the top job. As part of the screening, each was sent to a three-month executive training course at a top-ranked U.S. business school.

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"Jacques Lamarre was the only one who didn't want to go," explained Mr. Jarislowsky, chairman of Montreal money manager Jarislowsky Fraser Ltd., which holds by far the largest chunk of SNC-Lavalin shares, an amount representing 19.5 per cent of outstanding stock. "At the time, Jacques was working on the [SNC-Lavalin-built]Kuala Lumpur rapid transit line and he felt that was more important. But he was informed by yours truly that if he didn't go [back to school] he had no chance of being CEO. He called me a few weeks later and thanked me." Perhaps the most important skills Mr. Lamarre possesses, though, are not taught in engineering or business courses. It takes a fine diplomatic touch to move from negotiating with Moammar Gadhafi on Libya's Great Man-made River project one day, to talking up officials of Russian state-controlled oil firm OAO Rosneft the next.

"Jacques is the most culturally adaptive guy I've ever met," said SNC-Lavalin director Hugh Segal, a senator and senior fellow at Queen's University's School of Policy Studies. "If it's in shareholders' interest to be in the big tent with Gadhafi, then he's comfortable with that. He seems to have a remarkable capacity to get into the mindset of the client. And if you think about what globalization really means, then that kind of adaptive capacity has to be at the top of the list."

Many of the countries where SNC-Lavalin is active, from Libya and Algeria to Saudi Arabia and India, score dismally on Transparency International's Corruption Perceptions Index, the leading indicator when it comes to public sector ethics. But Mr. Lamarre, without sacrificing his or SNC-Lavalin's integrity, believes it essential to engage developing countries, democratic or not. It is a key step to "normalizing" internal politics, and in the end, benefits business and citizens alike.

"We like win-win situations," Mr. Lamarre explained. "We've been involved in international markets for over 40 years and have helped many countries to become normal. With us, they see the Canadian way -- the freedom we have, the relationship we have with our government." Indeed, SNC-Lavalin's relationship with Canada's government is close, since many of its contracts -- both domestic and international -- are funded by public agencies. The firm often counts on Export Development Canada and the Canadian International Development Agency, as well as the World Bank, to underwrite work in developing countries.

SNC-Lavalin's Canadian calling card, more than ever, gives it an advantage in competing abroad with deep-pocketed U.S. competitors, including Bechtel of San Francisco, Fluor Corp. of Irving, Tex., and Jacobs Engineering Group Inc. of Pasadena, Calif. Fluor and Bechtel have annual sales of four and five times those of SNC-Lavalin, respectively, and have been first in line for contracts in post-Saddam Iraq. But in many countries, unpopular U.S. foreign policy has made American firms unwelcome.

At home, too, SNC-Lavalin seems to enjoy a privileged status. It may even have replaced still-troubled Bombardier Inc. as the most successful symbol of Quebec Inc.'s entrepreneurship and favoured child of governments. At the very least, it seems to have a knack for showing up when it's time to hand out the really juicy government contracts. In addition to Vancouver's Canada Line, it owns three-quarters of Alberta's electricity grid, it is building (and will own) the William R. Bennett Bridge in Kelowna, B.C., and it's working on widening a vast stretch of the Trans-Canada Highway in New Brunswick.

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Back in 1991, SNC-Lavalin was chosen for the construction of Ontario's Highway 407, the world's first all-electronic, open-access toll road. It still owns 16.8 per cent of the private highway, and values its stake at an eye-popping $936-million, a figure likely to grow now the Ontario government has backed off an attempt to block toll hikes. As it stands, analysts estimate the Highway 407 stake accounts for about $6.24 of SNC-Lavalin's share price, while $525-million in freehold cash (cash net of advances) accounts for another $3.50 a share. The shares closed yesterday at $29.39 on the Toronto Stock Exchange.

Next up: the bounty that promises to flow from Ontario's decision to get back into the business of building nuclear power stations. That $40-billion proposition will mean huge contracts for SNC-Lavalin, provided Candu reactors built by Atomic Energy of Canada Ltd. are chosen over technology from foreign players, such as France's Areva.

"It has to be Candu," Mr. Lamarre insisted. "That is very good technology and it is something the Canadian government should support. There is very high local content and we have everything it takes to be strong in that field: uranium, university researchers and engineering skills." This is where Mr. Lamarre starts to get animated.

"If you want us to get excited, talk to us about those kinds of projects," said Mr. Lamarre, whose son Patrick, 35, is CEO of Mississauga-based SNC-Lavalin Nuclear Inc.

But what about the massive cost overruns on previous nuclear stations, or the $20-billion in stranded nuclear debt Ontario's electricity consumers are still paying off, or the environmental risk of storing nuclear waste for thousands of years?

"First, if you want to manage costs, you cannot find better people. It's our life. Second, every [type of power]has an impact on the environment. Even wind energy," Mr. Lamarre said. "If you ask me, nuclear is the best choice for Ontario. We wonder why the decision was not made sooner."

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Obviously, even after a decade as CEO, the bright-eyed young engineer still can't wait to get to work on the next big design puzzle.

The markets

Canada remains the key source of clients for SNC-Lavalin, but the company has managed to attract clients in more than 120 countries and all continents. Of the larger markets, the fastest growing is Europe, where sales are up more than 60 per cent in the past two years. Domestic sales still account for more than half of the company's total. Major recent projects include James Bay power, diamond mine construction in the Northwest Territories, the Vancouver Sky Train and dozens of regional power authorities. The firm's international roster of clients includes Johnson & Johnson, Exxon, and Procter & Gamble, as well as less well-known firms such as Panda Energy, for which it built the world's largest natural gas power plant in Texas.

2005 revenue
Region (millions)
Canada $2,030.29
Africa 503.82
U.S. 364.56
Europe 302.26
Other 271.21
Asia 197.53
Latin America 118.15

The products

SNC-Lavalin has its finger in so many different pies that it's a challenge to pin down what drives the firm's results. The company touts operations and services in as many as 18 different market segments, ranging from aboriginal affairs to pulp and paper. In terms of sales, the two largest and fastest-growing markets are power (from nuclear plants to dams) and infrastructure (airports, railways, ports and bridges). The company touts four other divisions that garnered over $200-million in revenue last year, so it enjoys diversity and isn't overly vulnerable to any sector's fortunes. The smallest of the top seven market segments is the Highway 407 private toll highway in Ontario, where revenue was up to $70.5-million last year from $57-million a year earlier.

2005 revenue
Product (millions)
Power $879.31
Infrastructure 826.65
Facilities management 685.61
Chemicals/petroleum 579.18
Defence--manufacturing 336.88
Mining/metallurgy 222.96
Highway 407 70.5

SOURCE: BLOOMBERG, SNC-LAVALIN

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CORRECTION

Canadian Highways International Corp. built the first 69-kilometre stretch of Highway 407 north of Toronto, not SNC-Lavalin Group Inc. SNC is a member of the group that bought the highway from the Ontario government in 1999. Incorrect information was published on Saturday.

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