How Michelin wants to protect its tire market

Co-number one in the world in tires with the Japanese company Bridgestone, Michelin (20 billion euros in turnover in 2020) has been shaken for several years by the transformations of the road tire market, the heart of its sales (75% in 2019).

Read also Article reserved for our subscribers Michelin will seek its growth outside the tire

Like all historical tire manufacturers, the Clermont-Ferrand firm has seen Asian manufacturers land on its beds for ten years. “If the Covid crisis has disrupted logistics flows, raised the price of materials, created shortages, it has however changed nothing in the geopolitics of tires: there is still massive overcapacity in Southeast Asia”, summarized Florent Menegaux the president of Michelin during the media day organized in Clermont-Ferrand, headquarters of the company, Thursday, November 25. And these overcapacities generate exports at price levels deemed unfair.

This fact has social consequences for Michelin’s industrial activity in its historical establishments. The closures in 2019 of the La Roche-sur-Yon (Vendée) and Bamberg (Germany) factories are an illustration of this. Michelin no longer has any truck tire factories in France today and its tricolor car tire sites are strictly oriented towards the very high end.

One of the company’s responses is to seek growth outside of tires. By 2030, Michelin hopes to generate 25 to 30% of its turnover in services and in activities such as hydrogen fuel cells and medical equipment. But, to date, tires (road and other) still represent 95% of sales. The company must therefore continue to innovate in this area as it has done for 130 years – Michelin invests 1 billion euros per year in innovation – while relying on five pillars that support its expansion.

Take the lead in renewables

Michelin’s “media day” this Thursday was devoted to “100% sustainable tire challenges”. The aim of the company is to produce tires made of materials “100% biobased or recycled” in 2050, with a milestone of 40% in 2030. Today, 28% of a Michelin tire is made from renewable materials, mainly natural rubber. Being a “green tire” leader can represent an advantage in markets where environmental awareness is a selling point, but above all it makes it possible to be less dependent on oil.

Michelin is increasing its partnerships to produce, from waste, materials that are now petroleum-based. The Biobutterfly project (with Axens, a petrochemical specialist) aims to produce butadiene, a component of synthetic rubber (25% of a tire), with agricultural ethanol. The other synthetic rubber molecule, styrene, will be extracted from polystyrene waste using technology from the Canadian start-up Pyrowave. Enviro, another start-up – this one from Sweden – manufactures carbon black (20% of a tire) from used tires cured at very high temperatures. Finally, a Clermont-Ferrand company, Carbios, has developed enzymes that digest old PET plastic to remake new plastic fibers that will be used in the textile frame of the tire (7% of the total material).

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