Michelin’s Gift to the Community

Up in Dundee Michelin is creating more than new tyres – the company, through its Michelin Development division, is creating opportunities. An estimated 200 plus jobs will be created as a direct result of funds – almost half a million pounds – that Michelin Development has invested in twelve new or fledgling Dundee companies during the past few years.

Michelin Development was established with the aim of helping small and medium businesses flourish in regions were the tyremaker has plants or other strong community links. These locations also include Stoke-on-Trent, Ballymena and Burnley – the closure of Michelin’s factory at the latter site in 2001 prompted the establishment of Michelin Development. The investment Michelin Development provides comes in the form of unsecured base interest rate loans (at present 5.25 per cent), the risk for which is covered by Michelin. And it appears these investment loans are doing what they were intended to do – throughout the UK almost a thousand jobs have been created through Michelin Development’s support, with an expected 211 new jobs in Dundee alone. One Dundee company has secured £500,000 worth of contracts thanks to the programme, while another has trebled its payroll.

So far a total of 17 loans have been made to business in and around Dundee, and 80 across the UK. According to Bob Wilcox, director of Michelin development, these loans are proportional to the number of jobs each company plans to create, however a company faces no penalty if they fail to reach their anticipated growth targets. “We have had a couple of failures,” commented Mr. Wilcox, “although there have been many fewer than we anticipated.” Only ten of the 80 loans made so far have been written off.

And what is Michelin Development’s policy towards companies that do not achieve their goals? “Failures are not expected to pay back their advances, said Mr. Wilcox. “In Dundee, we have had a number of significant successes, some of which have come back for a second loan. Start-up companies are normally looking for £80-£100,000 because in the first six months they are short of cash when the banks are reluctant to commit, and that is where we think we make a difference.

In addition to cash resources Michelin Development also provide advice in a number of areas, including marketing courses as well as health and safety, environmental and quality control information. Senior Michelin executives are also expected to devote time to helping applicants. “We don’t just give them the money and walk away,” explained Mr. Wilson. “We keep them in touch with other companies and pay them regular visits.

“People ask, what is in it for Michelin? And the answer is that there are no catches. We are doing this because we want to help local businesses grow…we would like to have our cash paid back, but if we lose 100 per cent, that is less important than helping the community.”