GREENVILE, S.C. (July 24, 2002) — Michelin North America Inc. has decided to outsource its distribution in the U.S. and Canada, signing a six-year, multi-million dollar agreement with TNT Logistics North America. Starting in early August, TNT will take over operation of Michelin's 18 tire distribution centers — occupying 7 million square feet of space — in the two countries.
The decision to outsource is expected to yield undisclosed savings for Michelin while offering improved services to customers, said Jim Micali, chairman and president of Michelin North America. “Through this agreement, we will be better able to focus on our core tire business by having TNT provide its world-class logistics services to us.”
Michelin declined to specify potential savings of the deal, but said any financial gains would be in addition to the $200 million in annual operating cost reductions the company disclosed in September 2001.
Michelin did say it could realize a capital gain of about $26 million on the sale of certain distribution centers to a joint venture managed by Lexington Corporate Properties Trust. The agreement calls for TNT Logistics to acquire certain operating assets and offer employment to 600 qualified Michelin distribution network employees — 450 in the U.S. and 150 in Canada.
The agreement with Michelin is TNT's largest in North America outside of the automotive industry, said Dave Kulik, president and CEO of TNT Logistics North America. The agreement in North America builds on a relationship Michelin began in 1995 with TNT Logistics in the United Kingdom.
Michelin's distribution in Mexico is already outsourced to different providers.
Michelin did not specify in its release what sort of improvements dealers might anticipate from the change.