Pirelli: German Tyre Manufacturing Base Still Strong

45 years since Pirelli took over the German Veith Group, the German branch of the Italian tyre manufacturer last year reported sales of 850 million euros. Now, in the words of Pirelli CEO Marco Tronchetti Provera, the German operation is on course to break through the billion euro barrier by 2010. Thanks to investments in the order of 190 million euros over the last four years, income has increased 30 per cent.

During a press conference held at its factory in Breuberg, Germany, the Pirelli Group outlined its industrial activities and plans for tyre business expansion in this particular market, one the company sees as key for its growth strategies. The May 26 press conference was attended by numerous company representatives, including Tronchetti Provera, Pirelli Tyre CEO Francesco Gori and the CEO of Pirelli Deutschland, Guglielmo Fiocchi.

According to Pirelli, the company’s presence in the German market allows it to further develop a presence in the original equipment segment, strengthening at the same time its focus on high value added market segments and research activity, which occur in part as the result of constant interaction with vehicle manufacturers. Indeed, during the last four years Pirelli’s activities in Germany registered significant growth, partly the result of a consistent flow of investment in innovation. In 2007, Pirelli Tyre Germany’s revenues amounted to around 850 million euros, and the objective of Pirelli Tyre Germany is to reach revenues of 1 billion euros in 2010. In 2007 alone, Pirelli tyres were homologated for more than 150 new vehicle models: 126 car and 31 motorcycle models.

The manufacturing core of the Pirelli Group in Germany is the Breuberg factory, purchased 45 years ago following the acquisition of Veith. The plant produces high performance car and motorcycle tyres that are mounted as original equipment on cars of automakers of the calibre of Audi, BMW, Ferrari, Lamborghini, Maserati, Mercedes, Porsche, Volkswagen, and Volvo, Ducati and Honda. Pirelli says it is largely thanks to Breuberg, therefore, that the Pirelli Group is amongst the market leaders in the passenger car tyre high performance and ultra high performance segments and holds first place in Europe in the business of motorcycle tyres.

The focus of Breuberg on premium segments is partly linked to the presence of MIRS (Modular Integrated Robotized System) production lines, the robotised process patented by Pirelli that reduces manufacturing phases from the traditional fourteen to three. The system is capable of covering the entire manufacturing cycle, from the mixes to the finished product, without interruption, without semi finished products to move, without intermediary stockpiling phases and without wasting energy.

Breuberg is, says Pirelli, one its most important factories worldwide and the largest tyre factory in Germany. The facility is located on an area of 367 thousand square metres and employs 2,600 people, of which about 200 are entirely dedicated to research and development activity. In fact, the company adds, the plant is home to Pirelli’s most important research centre in Europe after Milan, and Pirelli believes innovation to be the main strength of the Breuberg facility. In 2007, investment in research and new technologies amounted to about 50 million euros. Production in Breuberg amounts to 10 million pieces per year (80 per cent car tyres and 20 per cent motorcycle tyres). About half of this output is destined for the German market and the remaining 50 per cent for the rest of Europe, including Russia, a country whose tyre market is growing strongly, especially at the high end, and where Pirelli plans to establish a direct industrial presence by the end of 2009.

Indeed, Marco Tronchetti Provera has confirmed that Pirelli Tyre is looking for joint venture partners in emerging markets such as Russia. This follows news reports that Goodyear is considering building a five million unit tyre production plant in the Yaroslavl region of Russia, at a cost of between $200-250-million.

Pirelli Group CEO Marco Tronchetti Provera and the head of the tyre division, Francesco Gori, gave Tyres & Accessories further details of the company’s market position and strategy. Full details of this interview will follow shortly online (www.tyrepress.com) and in the next issue of the magazine. Pirelli is currently ranked as the world’s number five tyre manufacturer.