Pirelli Plan to Focus on Cost Rationalisation & Green Solutions

As part of its 2009-2011 Industrial Plan, Pirelli Tyre reports it is continuing with the cost cutting strategy it commenced last year. The goal of this plan is to save more than 300 million euros over a three-year period through the rationalisation of manufacturing structures and staff in Europe, the renegotiation of raw material purchasing agreements in order to take advantage of falling prices, and savings from lower energy and logistics costs.

Manufacturing capacity in emerging markets is to be expanded so as to take advantage of increasing demand in these regions, coupled with their lower manufacturing costs. In the commercial tyre sector 87 per cent of Pirelli’s total production is already located in low-cost countries, compared with an average of 50 per cent for the company’s four major competitors. In the consumer tyre sector, high production cost countries will increasingly focus upon high value added production, such as 4×4 tyres in the UK, UHP tyres in Germany, and in the company’s new Settimo Torinese facility in Turin, Italy, where 155 million euros in investments are already confirmed.

Pirelli also intends to focus on the development of products that anticipate market demand, especially in terms of the development of “green” products and technologies in line with new environmental standards. At the end of the plan’s three-year period the “green” component of the Pirelli Group’s revenues is expected to rise to around 40 per cent of the total, as opposed to approximately 20 per cent today. Development of products under the Cinturato brand name will continue, says Pirelli, as will the development of new technological solutions, such as the Cyber Tyre.