When the coronavirus pandemic hit, Pirelli Tire North America Inc. took action quickly to respond to the pandemic, optimize investments and prepare the company for a strong future, according to Pietro Berardi, Pirelli North America CEO, who said the company expects "a progressive recovery of sales in the second part of 2020."
Q. How would you best sum up the first half of the year for the company?
A. This first half of the year has been enormously challenging for everyone. We nevertheless approached it as an opportunity to further consolidate our position in the market, to work even more closely with our customers, and to optimize investments in people, technology and processes to pave the road for a successful second half of the year.
Q. Do you expect any supply difficulties in the second half of the year?
A. Pirelli took several actions to avoid any type of disruption in our supply-chain operations due to COVID-19, in particular reviewing production schedules and focusing on improved forecasting accuracy and incentives for the make-to-order.
We engage closely with our business partners to monitor demand and uncertainties in the market. This close collaboration allows Pirelli to maintain expected service levels in every step of the supply chain, from demand planning and production planning to final delivery to customers.
Q. What type of practices has Pirelli implemented in light of COVID-19?
A. In response to the COVID-19 health emergency, Pirelli implemented a series of actions aimed at safeguarding the health of our employees and the wider community. Pirelli set up a global task force and monitored developments with local authorities, in all the countries where the company has facilities.
In the U.S., in a first phase, in an effort to protect the health and safety of workers amid the spread of COVID-19, Pirelli shut down operations at our tire plant in Rome, Ga., and began ramping up again at the end of April.
The factory was fully sanitized following strict COVID-19 protocols based on our experience in China and Europe. Pirelli has also promoted initiatives to support the wider community, particularly in the Milan, Italy, area where Pirelli's global headquarters are located. For example, after canceling the 2021 edition of the Pirelli Calendar, the calendar budget was used instead to make a donation to coronavirus research.
Q. What are some of the pleasant surprises you are seeing in the industry right now?
A. The second half of May has shown a good pace in market recovery, following the reopening of most states and the return of many vehicles to the road. At the same time, the necessity to review retail operations with new standards of sanitation, touchless service and investments in digital tools has brought a fresh approach with many retailers for the benefit of all consumers.
Q. The USW has petitioned for anti-dumping and countervailing duties on passenger and light truck tires made in Thailand, South Korea, Taiwan, Thailand and Vietnam. What is your company's reaction to that?
A. Pirelli, generally, is in favor of free trade. We don't comment on specific petitions or investigations.
Q. Where do you see the industry markets heading during the last half of 2020?
A. The market dynamics are highly uncertain and every estimate requires a lot of caution. Based on the most recent signs from the market, we are expecting a progressive recovery of sales in the second part of 2020.
Q. What kind of trends are you seeing in the marketplace?
A. The past few weeks have seen consumer demand shifting towards value products as a result of the spike in unemployment rates and the drop in consumer confidence. This seems to be affecting mostly the generic replacement market, while specialties and OE specific homologations have shown more resilience to the current conditions. Therefore, we continue with our focus on trade and consumer educational activities about the overall advantages of specialty products and marked tires, specifically engineered with each OEM to maximize performance and safety of premium vehicles.
At the same time, it is even more important to be able to offer market-specific products, specifically developed for the US consumer, in particular with enhanced mileage performance.
Therefore, we have further accelerated our product plans in this direction with new initiatives.
Q. What sectors look to be strong?
A. The light-truck segment has been the most resilient in the current scenario, especially on the higher rim bands above 18 inches.
It is a combined effect of the specific composition of the car parc in the U.S. and the geographical areas that have been less affected by the recent lockdown. This market segment will continue to play an important role in the future as well.