Where the Rubber Hits the [Off] Road

The word unique is arguably overused in the tyre business, however in the case of Michelin’s Almeria proving ground it is certainly appropriate. Situated in the south of Spain, Almeria is the largest purpose built EM/OTR test facility in the world, which means Michelin has free reign to put products such as the new XHA2 (see textbox) through all manner of torture in the name of product development. It also provides the valuable opportunity for discrete and detailed original equipment testing, something that vehicle manufacturers will clearly appreciate.

Michelin bought the 4,500-hectares of land the Almeria off-road tyre test facility is now built on in 1977. The site was chosen because it is one of the driest places in Europe with the express purpose of developing it into a centre of excellence for earthmover/off-the-road tyre developments. More than three decades after Michelin moved in, the latest generation of OTR tyres are tested on surfaces ranging from thick mud to sharp objects designed to literally stretch the company’s tyre treads to the limit. In total there are over 100 kilometres of track where automated long term testing “robots” circle various courses ad infinitum to measure durability. Throughout the site modern testing equipment is used on some of the newest and largest machines in the business. For example you can’t miss the fact that Michelin’s Almeria centre is home to the only CAT 797 currently operating in Europe.

Such is the scale of the proving ground, Michelin now also tests truck tyres and some of its 4×4 tyres products in Almeria, with more than enough as yet unused space to add further proving tracks should the need arise. However, when Michelin invited Tyres & Accessories to see the only off-road proving ground of its kind in action, the emphasis was very much on the development of earthmover and loader vehicle tyres.

The amount of investment Michelin continues to put in the direction of its OTR/EM tyre proving ground speaks volumes about the significance this sector of the business holds for the wider company – especially in the current economic climate. Running the aforementioned CAT 797 for example, represents a huge investment in and of itself. This enormous machine (fully laden it weights more than a 747) uses around 7000 litres of diesel a day, meaning its annual fuel bill is the best part of £2.5 million at UK pump prices! So why do Michelin executives continue to investing in running these machines and the world-beating proving ground they drive over? Because they can. Due to the virtually incalculable benefit of real-life testing and the advantage attached to being the only ones around with such a proving ground, this would be reason enough. However it also ensures the company develops – and is seen to develop – leading edge technology and to further extend the company’s knowledge in what is still one of its most profitable business units. There are also benefits when it comes to developing OE relationships.

Green shoots?

Looking around Almeria, there are clear signs of Michelin’s ongoing relationships with certain leading OEMs. In addition to this it is also interesting to note that, as economic conditions and market forces leave customers demanding lower equipment prices, Michelin is also gaining access to original equipment manufacturers in the emerging markets, and particularly in the Far East. It appears that this is all part of the tyre manufacturer’s long term strategy of positioning itself now (mid-downturn) so it is ready to ride any future waves of recovery – however long it takes for them to arrive.

As T&A reported back in May, the US earthmover/off-the-road tyre market recently plateaued and began showing the first ‘green shoots’ of low level market increases. According to Luc Minguet, Michelin president earthmover and industrial tyres worldwide the year got off to a particularly rough start for the OTR business with OE demand plummeting 20 per cent in the first two months and replacement sales down by up to 60 per cent in same period. According to the data Tyres & Accessories has seen, European sell in off-road sales closed the first quarter at 50 per cent below what was achieved in 2008. The sell in sales nosedive comes as a result of the OEMs simply halting production due to lack of demand on the one hand, while on the other hand the fact that the collapse of the housing market was right at the centre of the economic whirlpool meant the need for replacement tyres was sucked down too due to the lack of new building projects.

Looking forward, the theory is that the multi-trillion dollar stimulus/support packages that world leaders such as President Barak Obama, Gordon Brown and Angela Merkel have all approved will directly or indirectly result in many of these nations upgrading their largely Second World War infrastructure. Meanwhile demand for raw materials continues seemingly unabated in comparison with what has been experienced in the US and Europe. And both cases are likely to increase demand for tyres from their artificially low positions at the being of the year – quite apart from the eagerly await return to form in the general economy.

There are two further reasons for Michelin to be optimistic about the possibility of better days reaching the OTR/EM business sooner than other sectors: Firstly by nature of the fact that a large part of this business services raw material producers and distributors, the OTR segment is simply closer to the top of the foodchain, so it feels the pain or pleasure of macro-economic meteorology ahead of everyone else. And secondly, now that we leaving the OTR/EM tyre shortage of recent years behind (with difficulties now only remaining in the largest sizes), customers are increasingly turning away from the cheapest products they used as stop-gaps during the depths of the drought. Then the priority was just keeping machines running. Now the emphasis appears to have shifted onto how to keep machines running efficiently for longer. Why pay half the price for a product that runs for a quarter as long, and doesn’t do a particularly good job at that. And this is where Michelin representatives believe the French manufacturer’s long experience and emphasis on R&S has the edge. The budget manufacturers that did so well out of the earthmover tyre shortage are generally relative newcomers to radial technology and as far as facilities are concerned had no other option but to produce tyres that function on paper and/or in simulations to the right size and then simply test them in the field on customer machinery. Michelin on the other hand has been able to simulate, prototype and then test tyres in real-life, but controlled conditions before they reach the OEMs or customers.