Tyre industry pioneers, Michelin has a long history. Having begun in 1889, Michelin is now the second-largest tyre manufacturer in the world after Bridgestone and larger than both Goodyear and Contineantal.
Michelin has released sales and market details for the year 2000. Consolidated net sales rose 11.9% to 15.396 bn Euro (1999: 13.763 bn). Growth in the 4th quarter was slower than the previous nine months. For the year, European V/Z car tyre sales rose 41.6% in a market which grew by 13.3%. European truck tyre sales rose 1.7% in a flat market. In the USA, 4×4 and light truck sales rose 27.7%. Financial results will be made public on 27 February.
Michelin and IBM have announced that the tyre manufacturer has installed for all Europe a new Web-based system – based on a Web-enabled IBM eServer zSeries mainframe – that improves service to its network of 50,000 European distributors by allowing them to place orders for Michelin products directly over the Web any time of the day or night. The system is initially being deployed for use by Michelin’s large European distributors in the United Kingdom, Germany and France and will be made available to the most of the company’s European network tyre distributors. Full deployment will be by 2004.
The worldwide market for tractors has seen many mergers over recent years but, with four big groups, this now seems to be coming to an end. Consolidation among tractor producers was regarded by their suppliers as a negative move, because the tyre manufacturers knew very well that the pressure on oe prices would intensify. In the European original equipment market for tractors, the three market leaders Michelin (including Kléber), Pirelli and Goodyear have a combined market share of 85 percent. This dominance was threatened in 1994, because the big tyre companies all trusted the (completely wrong)forecasts of their oe customers. Instead of the market contracting, the tractor producers found they could increase their sales. This was the hour of smaller tyre market competitors in the field, such as Continental or Firestone, “oe exotics” like Taurus or Galaxy – and even the hour of some specialist wholesalers: when before had vehicle producers been forced to go to dealers asking for tyres? However, the attack of the smaller tyre competitors was stopped, as the better service of the larger companies asserted itself, and the customer also helped things to return to the status quo. Unlike with car tyres, many buyers order their new tractor fitted with a certain brand of tyre. Because few farmers ask for Titan, Vredestein or Stomil, Pirelli, Goodyear and Michelin/Kléber regained their shares and the market returned to normal, once they had built up enough capacity to satisfy the oe business. Within recent years, market settlement also occurred because the number of independent tyre producers (but not the brands) has dwindled. Specialist producer Taurus (Hungary) and Stomil (Poland) became part of the Michelin group; Barum is a Continental brand. Others were looking for alliances and so the Romanian brand Danubiana (Tofan Grup) was on the wish list of Goodyear, because the US tyre concern found out that it lacked a brand at the economy level. (Later Goodyear managers considered Sava could fit the bill.) The US brand Titan has had a lot of problems in its North American home market and had to sell some niche segments. Israel’s Alliance closed one of two factories, Vredestein suffers under the high prices for raw-materials, Finland’s Nokian even gave the order to Michelin’s Poland plant (Stomil) to produce agricultural tyres because it did not seem sensible to produce this kind of tyre in the Finnish factory. Consolidation in the segment of agricultural tyres has not yet come to an end.
In a precautionary move, Michelin is recalling 55,000 truck tyres manufactured in Italy and sold in Japan between October 1999 and March this year. There have been no accidents but a change in design to the steel cord used in the sidewall has reduced the tyres’ resistance to over-inflation that could lead to rupturing of the sidewall.
It has been announced that the former Kleber tyre factory at St. Ingbert in Germany will close at the end of June next year. The factory began making tyres in 1970 and ceased tyre production in 1994. Since then it has manufactured tyre components such as textile fabrics and rubber mixings. 200 jobs will be lost and the closure is part of the Michelin Group’s on-going restructuring programme to improve competitiveness.
Firestone would be relieved to know that the company’s tyres were not to blame for three bus fires in San Diego, but will be despairing to know that the company failed to meet their contractual obligation to maintain the tyres under a leasing arrangement and will still face action from the San Diego Transit company. San Diego Transit is now in negotiation with Michelin and Goodyear to replace the 2000 bus tyres and supply a maintenance contract.
Ford has announced that it will replace up to 13 million Firestone tyres fitted to Ford Explorer SUVs. This is double the number of tyres recalled last year and the cost to Ford will be around $3 billion, with the exercise taking nine months. It was this decision which precipitated the announcement from Bridgestone/Firestone that it would sever all ties with Ford; an announcement which caused Bridgestone shares in Tokyo to fall by over 9 per cent.
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Robert Bosch GmbH (Stuttgart) and Michelin (Clermont-Ferrand) have announced a long-term strategical partnership in the development and distribution of integrated driving dynamic management systems. The co-operation covers the fields of research and development as well as the introduction of product to the market. Both companies have identified working areas for the basis of common developments and synergies.
Michelin has introduced two new tyres for the 4×4 market, the Synchrone and Diamaris. The new tyres are aimed at the majority of 4×4 vehicles which rarely, if ever, venture off-road. The Synchrone replaces the Michelin XPC and is aimed at family orientated 4x4s such as Land Rover, Mitsubishi Shogun and Toyota Land Cruiser. The Diamaris is W rated and above and has been designed for super luxury high performance 4x4s like the BMW X5.
Each year the motorcycle exhibition in Dortmund attracts many visitors, even though Munich has established a bigger show (every other year) for two-wheel fans in the meantime. More than 400 exhibitors took part in the 17th show from 28 February to 4 March and around 1,000 motorbikes could be seen in Dortmund. And on the tyre side? Only Dunlop presented a new tyre: the tyre manufacturer says that the D208 GP (front tyre 120/70 ZR 17, rear tyre 180/55 ZR 17) was developed based on experiences in motorsport. But apart from this, no more information was available. Dunlop couldn’t even tell NEUE REIFENZEITUNG a date for the official launch of the new product in Germany. And at all other tyre manufacturers‘ stands – Bridgestone, Cooper-Avon, Metzeler/Pirelli, Michelin – one could only see exactly the same product range as presented at Intermot last autumn – very disappointing so far. The only excitement for this year’s motorbike season will arise from the question if Bridgestone will be able to pass Metzeler and can climb to number one of the German market for motorbike tyres.
Despite the difficult environment which is not likely to lead to improvements in the coming half year Deutsche Bank is recommending Michelin shares as a “Buy”. The analysts believe that the focus on high performance tyres will pay off and they believe also that, due to the anticipated sale of the Pirelli truck division, competition will be lower in the future for Michelin, which is very strong in that market.
Under the new French employment laws Michelin are to hold a referendum of its 27,000 French employees on the establishment of a 35 hour working week. The proposals include a reduction of the working year by 15 days, a 5% pay increase for the coming year and inflation linked increases for the following two years, more flexible working patterns and includes the employment of another 1,000 workers. According to Michelin the offer is more generous than that dictated by the recently introduced regulations for a 35 hour working week. The referendum will take place on the 25th January and is part of French government proposals to reduce unemployment.
Michelin’s German subsidiary has improved its results for 2000 in every aspect. Expectations have been more than fulfilled with an increase in turnover of 6.4 per cent to 1.75 billion Euro and a 70.2 per cent increase in profit to 57.8 million Euro. The Michelin Group as a whole has increased net earnings by 35 per cent to 438 million Euro (1999: 325 million Euro). The turnover of 15.4 billion Euro is around 11 per cent higher than the previous year’s figure of 13.88 billion Euro.
The latest study by J.D. Power & Associates, measuring OE tyre satisfaction, puts Dunlop at the head of light truck OE tyres for the first time and Michelin tops for passenger vehicles, for the fourth year running. The study sought the views of more than 39,000 consumers in their first three years of vehicle ownership.
For the first time, the Michelin Group is to release figures covering sales, profits and assets per division. The first report is expected on February 23rd.
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