PARIS (Oct. 3, 2008) — Michelin will increase passenger tire capacity at a Brazilian plant and is negotiating to buy land for a truck and earthmover tire factory in India, Managing Partner Michel Rollier told investors at a conference in Paris.
Rollier didn't disclose the scope of or investment in the expansion of the Itatiaia, Brazil, plant, other than to say it is being undertaken to meet replacement and original equipment demand in Brazil and throughout South America. The 9-year-old Itatiaia plant is rated at 5,000 units a day.
Rollier didn't elaborate on the proposed plant in India.
In his presentation—which coincided with the Paris Motor Show—Rollier said Michelin has reduced its op- erating costs during the previous 18 months by more than $700 million by efficiency improvements in industrial operations, overhead, logistics, research and development and raw materials.
The cost-cutting measures are part of Michelin's Horizon 2010 strategic plan, which called for spending cuts of up to $2.4 billion by 2010 compared with 2006. Meeting the Horizon 2010 goals will allow Michelin to improve profitability by then, he said, “entirely through internal initiatives.” Michelin's stated goal is a 10-percent operating margin.
Besides cutting costs as already outlined, Michelin projects reducing its work force by as many as 30,000 jobs by 2012 through natural attrition and turnover.
Rollier also outlined Michelin's growth plans through 2012 for emerging markets, saying the company intends to double manufacturing capacity for passenger, light truck and specialty (earthmover, agricultural, aircraft, motorcycle, etc.) tires and boost capacity for truck tires 40 percent.
Michelin defines emerging markets as Brazil, Russia, India and China.