The Story of Moulinex

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The story of Moulinex is a textbook example of the pitfalls that can lie in the path of even the most promising businesses. Founded in the midst of the economic renaissance of postwar France, the company soon found itself confronted with a host of formidable challenges.

In particular, the market for home electric appliances had grown to be a crowded one: by the early 1980s, 95 percent of French households already owned an iron and 87 percent a vacuum cleaner, reflecting the same situation throughout much of Europe. Furthermore, Jean Mantelet, the paternalistic founder who had always maintained a tight grip on the firm, was now approaching retirement age and leaving no heir.

Even more daunting, Moulinex's employee-ownership arrangement was proving to be a trap. In order to escape the trap, the company would need to implement radical cost-cutting measures and close down several plants. But with tensions among the top managers and principal owners reaching crisis level, the employees were paralyzed, afraid to take such necessary steps.

In the end, a quartet of financiers rode to the rescue. The holding giant Euris, the Suez Bank subsidiary Soffo, the private equity firm IDI and Francarep of Groupe Rothschild bought out the remaining shares and took over management control. Under their guidance, the company would begin to turn around. But the process was not as quick or painless as might have been expected, and it was only in 1996 that Moulinex returned to meager profitability.