Michelin looking to save €1.2bn by 2020

Singapore – Groupe Michelin is seeking to save roughly €1.2 billion through to 2020, company officials said at a 19 Sept investor’s day presentation in Singapore.

The savings would include €500-550 million in selling, general and administrative expenses, €450-500 million in manufacturing and logistics costs, and €150-200 million in spend on materials, the French tire-maker said.

The company also reiterated its targets, announced earlier in June, to reduce production costs by 30% at all new greenfield passenger car tire plants, compared to levels at its existing facilities.

Michelin’s head of investor relations Valérie Magloire said on 13 June that the reduction would be achieved through the “purchase of less customised machinery, streamlined flows, more flexible building blocks, co-designing products and processes as well as optimised engineering processes.”

Additionally, the French group will upgrade its existing plants in alignment with these solutions, to reduce unit capex cost by 15%.

The “differentiation of products” will remain unchanged, Michelin noted.

The Clermont-Ferrand-based group is also expecting to reduce costs by least €250m by 2020 through the use of its digital initiative, the OPE.

Launched in late 2012, the OPE programme is a user-oriented, supply-chain facility for both customers and Michelin network operators globally.

OPE is designed to track raw materials and semi-finished-products inventories in real time and redefine how Michelin interacts with customers.