GREENVILLE, S.C.—Michelin's legacy has a natural momentum to it. And right now, the company is leveraging it like a lead foot to hit the gas pedal and accelerate—despite the pandemic—because a "revolution" is here.
Demand for tires is strong, and in the second half of 2021, Michelin sees continued pandemic recovery and the opportunity to grow, Alexis Garcin, chairman and president of Michelin North America Inc., told Tire Business in a recent interview.
"We are experiencing a moment now, where the automotive (industry) is probably on the cusp of its largest revolution, ever," he said. "And we have a lot of opportunities here, because we think we have a role to play in its revolution."
Michelin is ranked No. 1 in tire sales, according to the 2020 Rubber & Plastics News Global Tire Report. In March, it was named the most valuable tire brand, narrowly edging Bridgestone again, in Brand Finance's annual rankings.
Supply and demand
When the pandemic started, Garcin said his first reaction was to stay humble and find ways to stay connected to the people Michelin serves and its employees.
The bright spot as a business, he said, is that Michelin developed a "connectivity" within its culture to survive "any future head winds we may face."
Michelin is using both 2020 and 2019 benchmarks to track progress this year. The pandemic skewed 2020 results, so 2019 numbers still are valuable. Comparing the two, Garcin said, allows the company to gauge pandemic recovery.
Garcin talked about the "local to local" aspect of Michelin, where, because of sustainability efforts, the company aims to sell products in the same regions it produces them.
He said it maximizes service to customers, because the supply chain is shorter, and it also has the least impact on the environment.
"We have been on that journey for many, many years," he said.
Garcin said keeping up with demand is "like hitting a moving target," because as soon as the company meets the demand, it increases.
"The inventories across the entire chain are pretty low, and I think we are all in the same situation that we are trying to replenish inventory as fast as possible, because demand is getting higher every day," he said.
The domino effect of ocean shipping delays has caused issues across the supply chain, and a lack of raw materials and other products has caused delays in production for many industries. Garcin said he believes the company's regional approach to production has helped mitigate some issues but not all.
"We had to take some extraordinary measures to air freight materials so that we are able to keep our factories up and running," Garcin said, noting the premium cost they paid is less important than having supply for their customers.
And, he added, the company has not had to halt any production because of raw materials shortages.
"We are still running behind because demand is really surging more than the best scenario, but we are still really doing great," he said.
The commercial segment continues to be strong for Michelin, and so does construction and agriculture. The two-wheeler sector has been "extraordinary," Garcin said.
"When it comes to passenger cars, we see a strong momentum for every (tire) category."
Michelin in Motion
Garcin, the North American head since 2019, has worked for Michelin for 19 years. Right now is the defining moment of the company, he said.
The company wants to use its tire experience to offer its customers something more.
Michelin in Motion is a campaign—or ideology—focused on three "inseparable criteria," according to Garcin: People, profits and planet.
"If you know Michelin, you know we are passionate about people. … People come always first," Garcin said. "We focus a lot on our customers, we are close with them—our dealers, our partners."
When it comes to profits, Garcin said the focus is on three main areas: Tires, artificial intelligence and technologies beyond tires.
"We want to accelerate the growth we are delivering," he said.
He said Michelin's AI will grow around its tires as the firm has been developing digital capabilities during the last decade to understand what is happening on the cars from the tires—the point where it is touching the ground.
"Leveraging this, plus the incredible network we have across the U.S. and Canada, it opens the door to a new business model around services and solutions that we are already starting to deploy," he said.
Garcin said Michelin is "investing massively in high-tech materials" to open the company up to new growth territories, like in aerospace or the medical sector, for example.
"At the same time, it will feed our ambition to bring—by 2050—to market a tire that is made out of 100 percent renewable and recyclable material," Garcin said.
Garcin said Michelin is starting to see the fruits of its labors when it comes to investments in hydrogen—"one solution for the future"—and in 3-D printing.
A decade ago, Garcin said Michelin started developing 3D printers for use in its factories.
"Little by little we realized the potential was far bigger than that," he said.
As an example, Garcin said several years ago, the company used its 3D printing technology to design new tread structures where sipes open as the tire wears to allow a constant grip throughout the life of the tire.
AddUp, a joint venture created by Michelin and Fives Group in 2016 that specializes in metal 3D printing, announced on May 28 the launch of its next-gen Formup 350 3-D metal printer.
Sustainability is an important factor in all aspects of how Michelin operates.
Garcin said when much of the world was locked down due to the pandemic a year ago, he took note of how "on one hand, you had nature flourishing … and in parallel, you saw unemployment rising.
"Since that day, I thought to myself, 'This is why we have to combine growth, profit development—motion, if you will—with the protection of the environment.'
"It's not 'or,' it's 'together.' "
He said without balance the product will suffer and ultimately can't be sustainable.
"Motion is life, but it should not be at the expense of the environment. Nor should the protection of the environment be at the expense of our lives, our mobility."
The company, he said, is always in a state of acceleration—building upon the technologies it has designed throughout its history. And the goal toward sustainable manufacturing has long been a project.
Garcin said while many in the industry may see electric vehicles as a challenge, Michelin sees it as an opportunity, because it has been leveraging this technology in some way for 30 years.
In 1992, he noted, Michelin released what he called the first "green" tire, optimized for wet handling and rolling resistance.
"We were the first tire manufacturer bringing to the market a tire optimized in rolling resistance—meaning that with our technology we were able to limit the friction of the tire on the road, which could save gallons of diesel or fuel."
Since then, Michelin has built upon optimizing rolling resistance, and it is "critical" as the industry shifts toward electric vehicles.
"A tire that is really optimized for rolling resistance has a direct impact on the range of an electric vehicle," Garcin said.
Michelin more recently has launched an "eco-responsible, CO2-neutral" tire, the Pilot Sport EV, designed to address the specific demands made by higher-torque, electric-powered sports cars. The tire hit the North American market in April with sizes covering 18- to 22-inch rim diameters.
On average, Garcin said, the Pilot Sport EV will add up to 37 miles per charge.
Michelin also recently launched the e.Primacy in Europe, a tire the company claims provides an additional 7 percent range for electric vehicles. The tire is designed for SUVs and light truck EVs, and Garcin indicated the tire would be released in North America this year.
"We are a strong company with high values and a very strong and clear vision—that we have had for a very long time," Garcin said. "And we are very excited for the future."