SINGAPORE — Group Michelin is seeking to reduce its operating overhead by roughly $1.3 billion through to 2020, company officials said at a recent investor's day presentation in Singapore.
The savings would include $555 million to $615 million in selling, general and administrative expenses, $500 million to $555 million in manufacturing and logistics costs, and $165 million to $220 million in spending on materials, the French tire maker said.
The company also reiterated its targets, announced in June, to reduce production costs by 30 percent at all new greenfield passenger car tire plants, compared to levels at its existing facilities.
Valérie Magloire, Michelin's head of investor relations, said on June 13 that the reduction would be achieved through the "purchase of less customized machinery, streamlined flows, more flexible building blocks, co-designing products and processes as well as optimized engineering processes."
Additionally, the French group will upgrade its existing plants in alignment with these solutions, to reduce unit capex cost by 15 percent.
The "differentiation of products" will remain unchanged, Michelin noted.
The Clermont-Ferrand-based group is also expecting to reduce costs by least $275 million by 2020 through the use of its digital initiative, the OPE, a user-oriented, supply-chain facility for both customers and Michelin network operators globally.
OPE is designed to track raw materials and semi-finished-products inventories in real time and redefine how Michelin interacts with customers.