B2B E-Commerce not a Revolutionary Subject for Michelin
Evolution for sure, revolution not at all. That’s Michelin’s opinion regarding the B2B E-Commerce initiative of leading global tyre producers which was announced recently.
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MIRS Introduced By Pirelli
Product NewsPirelli recently invited journalists and analysts to its factory at Bicocca, Milan in order to see first hand the company’s new manufacturing process MIRS (Modular Integrated Robotized System). MIRS reduces the steps in tyre manufacturing from 14 to 3 and a tyre can be produced every three minutes. Tyres are built round a special drum, with the instructions given to the robots (the process is totally automated) through a barcode. The tyres are said to be more uniform and consistent. As well as its speed and flexibility, MIRS has the advantage of compactness and a line capable of producing 125,000 tyres a year can be sited in an area of a mere 350 square metres. Pirelli Chief Executive Marco Tronchetti Provera said that Pirelli will invest 50 million Euro over the next three years in 80 MIRS lines, increasing output by ten million tyres a year. Two of these lines will be located at Pirelli’s Burton-on-Trent factory in the UK, concentrating on SUV and 4×4 tyres. Burton stopped making tyres in 1994 and the news is a welcome change for the UK tyre manufacturing industry. It is a large factory, and there is ample scope for more MIRS lines to be added in the future, should this be Pirelli’s strategy. The figures associated with MIRS are truly impressive; investment costs are lower than for traditional factories and the minimum economic batch size has been reduced from 3,200 units to 375. The time taken to change sizes comes down from 375 minutes to 20. Workforce productivity is increased by 80% and MIRS uses less energy than a ‘normal’ plant. The manpower needed is significantly reduced too – it is estimated that 850 staff will be needed to produce the proposed ten million tyres. There is one other figure which, in these days of competition and falling prices, is even more interesting – a MIRS tyre is 25% cheaper to produce than a conventional tyre.
Michelin Price Increase
Product NewsAfter Continental and Goodyear, Michelin is now planning a price increase of 3%, which would be equivalent to absorbing an increase in raw materials (Rubber, Oil) of about 12%. Due to the fact that raw material prices are continuing to grow it seems unlikely that much of the price increase will benefit the manufacturers.
Out of Sight – Out of Mind
Product NewsAccording to results from Tyrecheck 2000, carried out by Police forces throughout the UK, as many as one in ten cars on UK roads may be running on illegal tyres, 27% are, at best, close to the end of their safe and legal life. That’s in excess of 13million illegal tyres in use every day. Imagine then the figures for faulty shock absorbers hidden out of sight? Recent research carried out in the UK suggested that over 6 million out of 25 million (24%) cars on the road were running on at least one faulty shock absorber. Belgian research confirmed that this is not purely an UK problem when figures produced there showed 20-25% of motorists driving with faulty dampers. If the car driver is unaware of a problem, how can the industry realise the potential sales in the shock absorber aftermarket? The market is estimated by Datamonitor to be worth in excess of 124M Euro at Retail Selling Price (RSP) in the UK alone, and across Europe has a value of some 471M Euro at Manufacturer Selling Prices (MSP). How does the fast fit salesman persuade the customer that he needs a new shock absorber? Moreover, how does he persuade him that he needs to change a pair? More about this can be found in the December issue of TYRES & ACCESSORIES.
MAST Raises Its Prices
Product NewsMichelin Americas Small Tires (MAST) has announced an increase in price in the US replacement market for passenger and light truck tyres. Michelin, Uniroyal and BFGoodrich brands will all rise by 5%, along with private and associate brands.
Six Percent More For Continental Tyres
Product NewsContinental Commercial tyre prices increased by seven percent in August. Effective 1st November, prices for passenger car tyres (summer and winter) and light truck tyres are to rise six percent. Higher costs for raw materials, oil and chemicals, as well as more expensive energy and distribution costs, are the reasons for this decision. The company cannot continue to absorb rising costs without passing them on. The retailer’s situation is comparable. “Our decision provides an opportunity for the retailers to improve the gross profit in their own field”, Jescow von Puttkamer told NEUE REIFENZEITUNG.
Goodyear decrease in net income
Product NewsGoodyear’s net income for the fourth quarter of last year amounted to US$ 47.8 million compared with US$ 121.5 million in the fourth quarter of 1998. The company’s net income for the whole of 1999 was US$ 241.1 million compared to US$ 682.3 million in 1998.
Fixed Prices For Fast Fit At Renault
Product NewsRenault has introduced a fast-fit and system check for cars three years and older. The check includes tyres and shock absorbers and will be extended to other Renault models shortly.
Again Price Increases for Rubber Blacks in Europe
Product NewsUnprecedented crude oil and crude oil products have pushed production costs for carbon black ever higher.This, combined with the low value of the Euro have again led Degussa-Hüls AG to raise prices for rubber blacks to 40 Euro per metric ton. Prices effective from 15th November.
Scrap Tyre Open Forum
Product NewsAround forty people from all sectors of the tyre industry, the waste collection industry and the trade press met in an open forum meeting to discuss the different aspects of the scrap tyre situation and to examine market trends. Among the topics on the agenda were retreading, recycling and re-use. Retreading in the UK (especially car tyre retreading) is going through what is probably its worst-ever period for sales. The situation at the forum was described as “an environmental disaster” by one delegate. Recycling suffers from a lack of investment; backers are scared off by the instability of prices in the scrap tyre collection market, at least at local level. Re-use brought up the subject of part-worn tyres, the UK market for which is estimated at around three million units. The futures for landfill engineering and energy recovery were also discussed at length. It was not only the various disposal methods that were under discussion – there were complaints about whether the playing field was as level as it should be and the Environment Agency was criticised by some for the length of time it took to evaluate test results. Possible future statutory control measures were discussed, particularly the fear that these might be imposed on the industry as a whole, or on one sector. Unless the industry can come up with an effective voluntary scheme, this was regarded as inevitable. More about this in TYRES & ACCESSORIES’s March issue.
Save Gas With Goodyear
Product NewsGoodyear’s Chief Engineer of Product Design has warned of the economic cost of tyre under-inflation as gasoline prices reach a new high in the USA. Petrol consumption and tread life are adversely affected. A Goodyear survey showed up to 28p.c. of vehicles had “seriously under-inflated” tyres.
Michelin’s First Half Results
Product NewsMichelin has published its financial results for the first six months of 1999. Turnover is up 3.8% on the same period last year to 6,488 million Euros. Operating profit has improved too, from 511 million Euros to 611 million Euros, or 9.4% of net sales. These results are better than those of major competitors Bridgestone and Goodyear, with Michelin benefiting from falling raw material prices and an increase in inventory, allowing the group to absorb fixed costs more easily. Despite a favourable economic environment, Michelin has been unable to reduce net debt, which rose by 1,000 million Euros to 3,800 million Euros. It is assumed that the group requires significant financial investment to further develop the Pax system and to build new C3M factories. Michelin is expecting consumer prices to continue to fall in Europe over the next few years and it is vital for the company to reduce costs significantly in order to be competitive. As part of this process, Michelin has announced that it will reduce its European workforce by 10% over the next three years.
Ford Ambitious to Become Largest Tyre Marketer in USA
Career TracksAmerican trends, schemes that have proved successful on the other side of the big pond, will spill over to Europe after a short delay. That has always been so. So watch out for the letters FCSD and remember that they stand for Ford Customer Service Division. The car giant has just started a strong advertising campaign in North America, introducing to the public “America’s Newest Tire Store”, a network of 2,400 of the current 5,000 Ford and Lincoln Mercury dealers. According to a Ford spokesman, this is the latest step in providing customers with everything they really need, and all at one stop. The Ford and Lincoln dealers, he claimed, have suitable business premises, sufficient relevant expertise and the scope to offer competitive prices – with the express advance warning that Ford has no intention to be cheap but will market tyres “at a fair price”. Tyre manufacturers build tyres to Ford specifications, the spokesman explained, and it would therefore only be a natural progression for the company to market “original replacement parts”. Thus only original equipment suppliers will be able to take part in the Ford replacement business. To give the project a kick-start the company currently runs a lavish and expensive TV campaign (costs are not disclosed), later to be supported and partly replaced by radio advertising and direct mailing. Carl Bergmann, Customer Service Operations Manager, can see no point in sending customers away in future when they want to buy tyres. And these are certainly not empty words: In July 1998 the Ford organisation sold a mere 700 tyres, the figure for this July was 97,000, and that is only a start. The sales target for the current year is one million tyres, three million in the year 2000, to be doubled again to six million units in 2001, at least according to a Ford Motor Co. spokesman talking to the press. These are large numbers indeed, but not unrealistically so, because if each of the currently participating 2,400 dealers only sells one set of tyres per day, the three-million barrier will be breached.
Price Collapse For Winter Tyres
Product NewsGood news for motorists: Tyre prices are coming down fast, especially in popular sizes. So far we have heard of price reductions of up to 15 p.c. compared with the previous season. Unknown second and third lines of large groups compete for the bargain hunter with rock-bottom prices.
Oil Prices To Rise
Product NewsIn the past few days, oil prices have risen US$4.20 to US$26 per barrel. This has caused concern among tyre manufacturers as raw materials comprise about 40-50% of the cost of sales.
