Ladoux, France – Michelin is ramping up its “competitiveness plan”, targeting cost savings of €1.2-billion between 2017 and 2020, the French group announced 6 June.
The plan, said Michelin, translated to a cost-reduction of €300 million per year, which the company expects to achieve through a number of channels. This compares with annual savings of €200 million between 2012 and 2016.
The tire maker said that it intended to use several levers to cut overheads by €500 million to €550 million. This will include not replacing retirees and training to re-align skill-sets within the workforce.
Further savings are to be delivered via the deployment of new business processes and information systems to reduce inventories and “annual expenses”, Michelin’s statement continued.
Also, the company expects the cost of raw materials to decline by between €150 million and €200 million over the same period driven by “the ongoing optimisation of raw material content and the engineering of lighter tires”.
In manufacturing efficiency, the group expects to reduce production costs by between €450 million and €500 million between 2017 and 2020.
The company will also seek to improve capacity utilisation, with plants that produce over 100,000 tonnes a year to account for a growing proportion of total output.