In Noticias

IRF director general, Susanna Zammataro spoke with Florent Menegaux, CEO of Michelin at the first IRF Executives Talks.

Q: In the last few weeks, Michelin has shown it is back at the top of the global tyre companies ranking. This is good news especially at a moment when all sectors and industries are being shaken up by COVID-19.

A: It is an honour and a pleasure. It is a great reward for our teams around the world, especially in these unprecedented times. Be sure that we don’t take anything for granted, and that we work hard to stay on top!

Q: But Michelin is more than just a tyre company… What is the scope of Michelin’s activities today?

A: Michelin’s strategic model is built on four areas of growth:

Tyres: Michelin is the world leader in durable tyres, which reduce fuel consumption while maintaining their performance over time. It is still our core business, and a major source of expertise and skills.

Mobility experiences: Maps, guides, and associated digital services. Over the last few years we have enhanced our family of guides with major acquisitions such as Le Fooding (2017), Tablet (2018) and Robert Parker Wine Advocate (2019).

Services & solutions: Michelin is a major global player in fleet management. One million vehicles use Michelin-owned services and solutions worldwide, to enhance drivers’ safety and reduce fuel consumption.

High-tech materials: Thanks to its expertise in tyres, Michelin has an exceptional know-how in high-tech materials and their industrial application. Hydrogen fuel cell, 3D printing, bio-sourced technical materials. Michelin is present in these industries of the future. We have a major focus on developing hydrogen-powered mobility solutions through SYMBIO, our joint venture with Faurecia.

Q: What is the strategic vision behind this?

A: We believe that growth should be based on a balance between three pillars: Profit / People / Planet. It’s our “All Sustainable” strategic vision: We believe that everything must be sustainable within the Michelin Group.

Profit: so that Michelin remains independent, free to innovate, and resilient in the face of crises such as the one the world is experiencing today.

People: to participate in the development of our employees, our customers, and the communities in which we operate.

Planet: to make a positive impact on our planet and its inhabitants.

It is thanks to the People / Profit / Planet balance that we can be truly sustainable. If you support some pillars over others, everything falls apart.

Q: How have you been able to keep up with this vision during the lockdown period? And now that we are starting to feel the economic crisis generated by COVID-19, how did Michelin cope and is coping with this crisis?

A: Two absolute priorities: to protect our employees and communities, and to ensure business continuity. As early as mid-March, the Group temporarily suspended part of its manufacturing operations in most of its sites and implemented effective health and safety protocols to protect our teams. Since June, every Michelin plant is up and running. In order to ensure business continuity, we tracked supply and demand on a weekly basis, reduced our capex budget by around 30% (€500 million), lowered the 2019 dividend payout by €330 million, reduced Corporate overheads by €192 million, secured €1.5 billion in confirmed lines of credit (still undrawn), and performed financial stress testing to make sure that Michelin can withstand any development as the crisis unfolds.

Q: What are your key learnings from this crisis?

A: Being a global and diverse group is a major asset. Thanks to our international footprint, we were able to anticipate, define the right protocols, and help our communities everywhere in the world. Strategic extensions and acquisitions are key to our resilience as well. We are multidimensional and that’s a key advantage when the storm hits!

Q: Is it possible to reconcile a strong and quick recovery with the type of “all sustainable” vision you are carrying forward as a group, and how?

A: This crisis should boost the transition to a greener, more virtuous economy and so our “All Sustainable” strategic vision is more relevant than ever. The international consortium Science Based Targets initiative validated Michelin’s CO2 reduction targets at the end of May. This is an important step towards achieving “carbon-neutrality” at all Michelin sites in 2050. I also want to salute the European Green Deal and the related strategies. It is a major step towards sustainable growth, allowing competitiveness and growth, while ensuring the ecological transition.

If you take the bigger picture, our “All sustainable” strategic vision guides our actions, and permeates our activities at every level, at all the stages of the value chain, and during the full life cycle of our products.

Q: If you could give a recommendation to decision-makers who are working right now on their countries’ recovery plans, what would that recommendation be?

A: Betting on collective intelligence and ecosystemic approach must be a priority. This crisis has allowed companies to reconnect with citizens. It proves that concerted actions between political decision-makers and economic actors are possible, necessary and efficient. This momentum must continue!

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