US Military Awards $1.7 billion Ground Tyre Contract to Michelin

The United States military has awarded Michelin Americas Truck Tires a 10-year $1.7 billion contract to provide ground tyres for every type of wheeled vehicle for all military branches (Army, Navy, Air Force, Marines) around the world. This contract is in addition to the recently awarded $700 million-plus contract for military aircraft tyres. Michelin is already the majority supplier of US Army tactical tyres. The company invested $16 million to increase military tyre production in order to meet the surge in demand related to Operation Iraqi Freedom.

Pointing out that Michelin had received contracts totalling $2.4 billion over the next 10 years, Deutsche Bank analysts suggested that the Michelin’s business is becoming less and less cyclical.

“Michelin has provided top-quality tyres to the U.S. military for decades,” said Luc Minguet, COO of Michelin Americas Truck Tires. “Now, we’ll add our expertise in logistics and supply chain management to streamline the timely supply of ground tyre to US troops at home and around the globe. Michelin is ready to step up as the one-stop source for all military tyre needs.”

Michelin will work with Science Applications International Corp. (SAIC) to manage the wholesale supply, storage and distribution functions for all ground tyres used by the US. military. The Defense Supply Center – Columbus, Ohio (DSC-C) will retain only the contracting functions for tyres. Michelin will provide 100 per cent of the military’s ground tyre needs through its own and competitive tyre sourcing.

According to an official statement released announcing the news, the move is expected to save US taxpayers hundreds of millions of dollars over the life of the contract.