MICHELIN - 2008 ANNUAL REPORT

A new approach to costs
Buying better, consuming less: Michelin
is implementing a number of initiatives
to streamline costs while meeting
its customers’ expectations.
Value to Design and Design to Cost
combine marketing, development and
industrialization to define fair product
performance, optimize components
and manufacturing and thus lower
production costs while maintaining
delivered product performance.
Triangle brings together internal
customers, specifiers and buyers around
specific projects to analyze them in order
to achieve optimum cost efficiency.
Process and component standardization
as well as global purchasing lower the
cost of investments without impacting
industrial performance.
The diversification of procurement
sources using purchasing platforms
in Eastern Europe and China contribute
to a competitive offering.
In addition, Michelin is turning to
third-party sourcing and subcontracting
in non-core areas where justified by
a good quality/price ratio.
1988-2008:
with an industrial presence in Asia for
the last 20 years, Michelin is the leader
of the Passenger Car and Light Truck
tire replacement market in China,
the world’s second largest market.
Investing in high-growth regions
Michelin accelerates its development in
Central and Eastern Europe, South America,
and Asia in order to serve tire demand with
local production and to increase its share
of sales in those dynamic economies, in line
with the geographic breakdown and trends
of world tire markets. Michelin’s investments
in these regions represented EUR 450 million
in 2008.
In Central and Eastern Europe, Michelin
strengthens the High Performance Passenger
Car tire production capacity of its Hungarian
facilities.
In South America, the Campo Grande
(Brazil) Earthmover tire plant, commissioned
in November 2007, has ramped up according
to plan. The Group has announced
construction of a new plant in Brazil to cater
to the Mercosur’s demand for passenger car
and light truck tires.
On the other hand, its project to build
a new plant in Mexico, whose production
was to serve the North American market,
has been cancelled.
In Asia, Michelin increases its Passenger car
and Light truck and Truck tire production
capacities in China. It has decided to build
a truck and earthmover tire plant in India,
Asia’s 2 nd largest truck tire market with
a large potential for radial tires.
Under a cooperation agreement concluded
in 2003, Michelin also raised its stake
in the Korean tiremaker Hankook Tire
(No.8 in the world) to close to 10%.
A highly consistent industrial strategy
In the developed markets, the production
of many Michelin sites now enjoys competitive
edge compared with products imported
from plants relocated to low cost countries.
6%
Group sales
volume increase
in the emerging
countries.
Michelin’s
production
capacity
in emerging countries should
grow an estimated 40% for
Truck tires and 100% for
Passenger Car and Light Truck
and Specialty tires by 2012.
30 2008 Michelin Annual Report