www.director.co.uk/MAGAZINE/2008/9%20September/michelin -
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Published on: 1/1/2008
Last Visited: 9/15/2008
"We're product driven—we've always operated at the premium end of the tyre market," says Jim Rickard, managing director of Michelin in the UK.The company's continuous innovation—the detachable steel wheel in 1913, prefiguring the spare wheel, the radial tyre in 1946 and in 1992 the low-resistance tyre—has helped Michelin remain one of three main players (with Goodyear and Bridgestone) in a global market that has tripled in 20 years to be worth an estimated $110bn (£59bn), according to US magazine Tire Business (August 2007).
The brand helps.In 2000 Bibendum—better known as the Michelin man—was chosen as the world's best logo by an international panel from the art and design world."The Michelin name and Michelin man symbol, as well as the work that the maps and guides do, keep our profile alive,"explains Rickard.
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"We don't make tractor tyres in the UK but we sell them," explains Rickard.But Michelin UK is still a net exporter, manufacturing more tyres than are sold."This is unusual these days since manufacturing has declined substantially," says Rickard.
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Rickard also believes that with the hikes in the price of raw materials (between 2006 and 2007 natural rubber increased by 10 per cent while synthetic rubber went up 18 per cent), along with oil and other commodities, the pendulum is swinging back in favour of manufacturing in western Europe.As the labour bill becomes a smaller percentage of manufacturing costs, so the benefits that a factory in the Far East over a western one decrease.
"In the UK, our relatively high labour costs also become a smaller percentage of the total cost, so the notion of shipping tyres all the way from China to sell in the UK becomes a less lucrative one," he explains. On a world scale, Michelin's strategy is to develop its activities in the BRIC countries—Brazil, Russia, India and China—since that's where the growth is."The Russian tyre market is expected to double between 2003 and 2010," explains Rickard."We're not going to see growth like that in western Europe."
But the company is continuing to invest in its activities in the west.One initiative it has launched in the last couple of years is the Michelin Manufacturing Way (MMW)."One of the tenets is to spread best practice.So, if one factory finds the optimum way to carry out a particular part of the process, then we make damn sure that we do it that way everywhere," explains Rickard.
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"At the time everybody said, 'You'll never do that,' but we're halfway through and we're on track," says Rickard.
Training is key—and the company has benefited from the UK government's Train to Gain programme.Despite this, it still struggles to recruit and retain skilled maintenance craftsmen."The UK system no longer produces these people in the way it used to.We don't seem to be as good on technical and vocational training and education as some of our competitor countries," says Rickard.He acknowledges that some of the onus is on the manufacturing industry but also believes employers need encouragement from the government to work with young people and teachers.
"One thing we have to struggle with is the popular image of a tyre factory as something dirty, old-fashioned and boring.We need to show people it's not like that, that there are good prospects for progress, lifelong learning, and that the salary isn't bad either."He would like to see the government providing the right infrastructure to encourage young people into science, technology, engineering and maths subjects (STEM).
"When you go to France, Germany or Poland, there seems to be more respect for people with a technical discipline," says Rickard."Whether it's cause or effect, there are therefore more of them."
Another challenge in the UK is that the selling market for tyres is very competitive—particularly at a time like the present when, according to Rickard, demand is tending to drop in mature countries."People are driving less," he explains.
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"We are working to reduce our consumption, because energy is going to be a big hit," says Rickard.
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In April this year it announced a £14m investment programme in Ballymena, which employs 1,000 people, and Rickard is hopeful of securing a big project to modernise the Stoke plant.And there's no question of the company walking away from its sales base in the UK, either."This is one of the largest economies on the planet," says Rickard, "and people tend to drive relatively upmarket cars that have big wheels, high speed ratings and therefore push the UK into the premium end of the tyre market."
The company also wants to increase its activities in the Republic of Ireland, which has been overlooked."Nowadays it's a rich market and we are aware we need to do things there."
If the UK is to keep its hand in manufacturing, Rickard believes it's all about continuous investment in the right equipment and the right people, getting as much productivity per person as is possible."I don't mean by slave labour, but by people working smarter and having smart equipment to work with.The goalposts keep on shifting," he says.
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