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April 11, 2001 02:00 AM

Michelin wants half of OE market for high-performance tires

David Shaw, Crain News Service
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    PARIS (April 11, 2001) — Group Michelin wants to capture half of the world´s original equipment fitments for high-performance tires as a cornerstone of its strategy to increase its share of the higher- value-added performance and SUV tire categories.

    To reach its goal, Michelin is counting on the continued development of its C3M automated manufacturing system, which now is in place at seven plants around the world and accounts for about 20 percent of the company´s V- and higher speed-rated tires, company spokesmen told financial analysts attending a strategy briefing in Spain recently.

    Michelin explained that the C3M process represents a solid niche in the company´s manufacturing strategy, making short runs of high-performance tires for both OE and replacement sales.

    "It is no longer a prototype, but a working system," said a spokesman. "It's experimental phase is fully completed," he added, saying the company is making 7 million tires a year using the C3M process and this volume is growing.

    Another Michelin spokesman said, "C3M is not the heart of our strategy,. it is a tool to support our overall strategy. The development of C3M is linked to the success of the general strategy of the company. In that view, we are very pragmatic. We do not have any specific deployment policy about C3M."

    To demonstrate the flexibility of C3M, senior Michelin executives answered questions in a deserted warehouse one evening, and the next morning, a fully functioning C3M manufacturing cell was installed in the same warehouse for a demonstration run for the analysts.

    As for the company´s strategic objectives, spokesmen said Michelin is focusing on the most profitable segments of the market — i.e., ultra-high-performance and SUV tires — which represent 10 percent in terms of volumes but more than 20 percent in terms of value.

    ``We gained over 4 percent in terms of market shares on the European replacement market in 2000 in the V/Z segment," added a spokesman. The company is aiming for a worldwide market share of 50 percent of the OE V/Z market.

    According to Michelin, "We have tested 95 percent of our passenger car products on C3M and 15 million tires have been produced and sold all over the world. In Brazil, for instance, we have OE homologations with Citroen, Audi, VW, Renault."

    Analysts attending the conference came away with the impression that Michelin was planning to set up a C3M unit adjacent to a BMW A.G. plant where BMW is making its X5 sports car, but Michelin denied this. The company does, however, have the exclusive fitment contract for the X5.

    Michelin also has clear and ambitious objectives in emerging markets: in Asia, where the recently announced Shanghai Michelin Warrior Tire Co. joint venture underscores growth objectives; and in South America, where market share has grown 10-fold in two years to 10 percent.

    In the commercial vehicle business, Michelin is concentrating on becoming a supplier of global solutions and service to reduce the operating costs of the transportation companies, including: tire longevity thanks to improvements in technology; mileage contracts; and on the road assistance.

    Michelin has seven C3M plants operating around the world, and an eighth which is portable. Underlining this point, a spokesman said, "At the moment, we have seven factories. Nevertheless, the number of factories is not really meaningful, as machines can be moved very easily and do not need the facilities required by the `traditional´ process (steam, calenders etc.)."

    Michelin C3M plants and the years they opened are as follows: Clermont Ferrand (1996), Saint Priest, France (1996) , Kungaiv, Sweden (1997, specializes in winter tires), Greenville, S.C. (1997), . Reno, Nev. (1997), Rescende, Brazil (1999, primarily for OE ), Lille, France (actually considered the company´s engineering works).

    Mr. Shaw writes for European Rubber Journal, a sister publication of Tire Business.

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