GREENVILLE, S.C.—Michelin North America Inc. bucked the trend of the tire industry during Jim Micali's watch.
While competitors reacted to comparatively high labor and production costs by slicing tire-making capacity in North America, Michelin under Micali—who retires this month—mostly took the opposite course. Micali championed the viability of producing tires in the region.
Michelin North America did close plants and cut 2,000 jobs, but French parent Michelin delivered billions in investment dollars to improve operations and upgrade research and development in the U.S., Canada and Mexico.
The payoff was increased sales and profits.
The 60-year-old Micali, who spent 31 years with the Greenville-based firm, plans to continue to consult for the company. Dick Wilkerson, 60, executive vice president of personnel, is succeeding him, and foresees little change in the transition.
Micali said the key to the region's market is operational excellence, and Michelin said it has some improvements to make. “One thing I can assure you of and that is Jim Micali leaving is not going to change the direction of Michelin in North America one bit,” he said. “We've got a global plan. We've got a North American plan. And we're going to execute and deliver on that plan.”
The company budgeted more than $500 million on capital improvements through this year at its North American plants and plans investments of $1.2 billion in North America through 2014. This follows more than $800 million in expansions of its South Carolina factories in the late 1990s to boost capacity.
Micali recognizes that Michelin's expansions differ from other manufacturers' moves.
“First, we've seen a number of consolidations in the late '80s, early '90s, and that certainly reduced the number of historical competitors in this marketplace,” he said. “More recently, we've seen a real surge in foreign imports, especially from Asia.”
The executive said the tire sector isn't an easy business, but the industry now must improve its overall level of operational performance to compete successfully with this latest surge in imports.
“And I would submit to you that it is absolutely doable. You can design, make and sell products in this market successfully. But you've just got to be willing to really be disciplined enough, have the capital and R&D wherewithal to do it. But then you've got to be able to execute it and deliver on it,” he said.
Micali said he's most proud of the success the company has had in North America, which he said is a tribute to the firm's 22,000-plus employees. “And I'd like to think I had, hopefully, a little bit of a part in that,” he said. “And to the extent I did, I feel good about that.”
Also during his tenure, Michelin entered retailing by buying the Tire Centers Inc. commercial/retail chain, moved into retreading via its Michelin Retread Technologies unit and expanded that division by acquiring Oliver Rubber Co.
Micali said Michelin continues to strug- gle to improve margins. He said the market has been difficult the last five to six years because of raw material price increases, Asian imports and recessions in 2001-2002 and today.
“We've been able to persevere through all that, and I think it's something I feel very, very good about,” he said.
Besides economic pressures during his tenure, Micali saw the demise of the unique Pax run-flat tire system that struggled for years to gain market acceptance.
“What we have learned is that sometimes a very excellent product from a technology standpoint comes with some challenges when you take into consideration the complexity of mounting it on special equipment or you've got four pieces with a rim and the gel, as well as the tire,” he said. “Sometimes it's hard to change an industry by yourself overnight.”
Micali called Pax a good product, but said Michelin has to make it a little bit simpler for the original equipment manufacturer or the independent tire dealer to be able to maximize the otherwise superior technology the product brings.
“To the extent there was a lesson to be learned, we learned it and we'll profit from it. We'll grow from it,” he said.