11:10 p.m., October 8, 2022
The world is perhaps less complicated seen from Clermont-Ferrand. Florent Menegaux, at the head of Michelin for three years, does not intend to change anything in the strategy of his group with 70 factories and a turnover of 24.5 billion euros this year.
You have increased your prices eight times in eighteen months, four times since January. Do you expect further increases?
We had no choice but to pass on part of the rise in energy, raw materials and transport to our prices. We do not anticipate any new ones at this stage. Longer term, I don’t know. But beware, the increases decided do not correspond to all product categories and do not apply to all areas of the world.
You speak of a hectic environment. Is this your way of qualifying the current context?
The overlapping crises produce a cumulative, unprecedented, intense effect. I don’t need to describe how complicated the geopolitical context is. It has a strong impact on the operations of companies located around the world like ours. Supply chains are affected. Boats take longer. Europe lacks 400,000 truck drivers, including 100,000 Ukrainians who have left to fight.
Have you secured your energy supply?
Yes, of course. All energies will not be in tension at the same time, and we believe that the crisis will not last. The main risk is a gas supply disruption in Europe, and we have anticipated this. Our strategy is clear: to be able to change the type of energy quickly in the event of a cut. We use a lot of it to bake our tires. From now on, our gas boilers can run on fuel oil, and we are in the process of replacing them with electric ovens, using a technology that took us fifteen years to develop.
Are your raw materials under stress?
Natural rubber is available but we are having trouble getting it to our factories. We have been promoting sustainable rubber since 2018, according to a label defined with the rest of the industry. It certifies that the rubber has been produced in a responsible way for the environment and people. This week we presented a world first: two homologated tyres, containing respectively 45 and 58% sustainable materials, with performances strictly identical to those of current tyres.
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Does a green tire exist?
Today, on a tire, 72% of the 200 components are of fossil origin. Stocks of fossil fuels have taken hundreds of thousands of years to build up, and they are being consumed at an accelerated rate. We know that we are going into the wall! In addition, these fossil materials generate CO2. By 2030, 40% of the materials in our tires will be made from biosourced or recycled materials. In 2050, it will be 100%! It’s a revolution. The driver will not see the difference: his Michelin tire will perform just as well.
Where is your disengagement from Russia?
It is in progress, as planned. We are in the process of imagining a solution for the local team to buy our factory by the end of 2022 and we are assisting them in finding new suppliers. It is very complex because, to operate, this site used semi-finished products from Europe.
Do you still expect to make 30% of your sales in activities other than tyres?
To make a tire, you have to master technologies that can be useful for the manufacture of other products that also need to be flexible and composite. They can be found in the form of gaskets or straps in dozens of product families. Some forms of polymers are compatible with the human body. In the medical field, we manufacture tissues and implants. We even go to space! Michelin designed some of the textiles for the suits of SpaceX astronauts. These new activities are progressing five to eight times faster than tires and will generate the profits of tomorrow.
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All energies will not be in tension at the same time and we believe that the crisis will not last
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What future for tires at Michelin?
We produce 180 million tires per year, which now represents more than 90% of our turnover. In the future, growth in tires will be less dynamic. We therefore want to find sources of growth. In particular, we have a very ambitious hydrogen project with Faurecia. Our joint venture Symbio has started construction in France of a hydrogen fuel cell factory, an area in which we want to become a world leader.
Does the electric vehicle offer you new opportunities?
The electric car needs a less energy-intensive tire to maintain its autonomy, even though it requires it much more than a thermal vehicle. It is generally considered that 20% of the energy consumed is related to the tire. The electric car is heavier. It has a very high torque on acceleration and also uses the deceleration to recharge the battery, which puts even more stress on the tire. It wears out 20-40% faster. Our tires, given their level of quality, are already made to withstand the constraints of electricity. They wear out less. We have even developed a unique technology to reduce rolling noise. The advent of electricity, we have been working on it for twenty years!
With 3 billion in profits this year, will you raise salaries?
We increased low wages by 3.75% at the start of the year, and others by 3.25%. We then distributed an exceptional bonus to all our employees worldwide, followed by a second increase in July of up to 3% for the lowest salaries. In addition, we are working on the concept of a “living wage”, allowing families to live and to have access to education and leisure. This work is carried out with an NGO which helps us to do the calculation in the 177 countries where we are present. We want human factories. This is at the heart of the Michelin model.
