Michelin: the tyre turnaround

Image shows Eric LeCorre stood next to the famous Michelin man

When Eric Le Corre became UK managing director of Michelin in 2010, he took control of a company that had lost its competitive edge. Two years on, he has a re-energised staff, a target of £70m pre-tax profit and an aim for the business to become an icon for British economic recovery. We went to visit him at the firm’s HQ in Stoke-on-Trent

He may well be admiring a figurine of the Michelin Man – emblem of the world- famous tyre company since 1894 – for Director’s cover shoot, but Eric Le Corre is a man focused firmly on the future.

The Parisian became managing director of Michelin in the UK two years ago after almost a decade with the group, working first in investor relations and then as chief financial officer for Michelin North America. And he admits that his task upon arrival at the Stoke-on-Trent HQ was considerable given the turbulent recent history of the company in the UK, an experience common to many in British manufacturing.

“Michelin was established in the UK in 1905, so we have a great past,” he says, placing the figurine carefully on his desk. “At the peak of our presence in the UK we employed 10,000 people and had six manufacturing sites. Like most industrial manufacturing companies we were faced in the Eighties and Nineties with challenges of competitiveness. In an industry that is truly global, it doesn’t cost a lot of money to move tyres from one place to another. And so I found a company, and a country, that had been going through 10 to 15 years of restructuring – we had done what was needed to bring back the necessary levels of competitiveness.”

Today Michelin UK employs 2,800 people across three sites – truck tyres are produced at Ballymena in Northern Ireland, car tyres at Dundee in Scotland and retreaded truck tyres in Stoke, which has also been home to the UK headquarters since the 1930s. But despite its significantly smaller size, the company remains a giant of the tyre business in Britain – turning out over 50 per cent of the tonnage of tyres made annually and employing more than half the people working in the industry. Plenty of strength on which to build a new vision and a bright future, says Le Corre, but to do that he first needed to change the outlook of the workforce.

“After years of restructurings, people’s mindset was ‘when is the final axe falling on us?’,” he says. “Some people were just hoping they could make it through to retirement, and that’s very difficult – if you want to re-energise people, you have to switch their mind. To do that the first thing was to say, ‘OK, let’s stop looking at our past, and look at what our future can be’. We took the classic approach of assessing our strengths, weaknesses, opportunities and threats, and then said ‘OK, now that restructuring has given us back our levels of competitiveness, with our sister companies across western Europe at least, where do we want to go?’”

Getting Michelin the right track

The result, formulated by Le Corre and his management team, is a strategy the company has named UK Vision 2015, and the targets are ambitious: “To become a benchmark company in the UK and an icon of economic recovery,” says Le Corre. “To generate an annual profit before tax of upwards of £70m – which would be doubling the average of recent years – to grow and modernise both our manufacturing and our commercial activities in the UK, contributing our fair share to the wider group’s 2011-2015 objectives, and last but not least to become a stand-out company to work for in the UK.”

Creating the vision, says Le Corre, was relatively simple – the challenge was to get every one of the 2,800 workforce engaged with it: “You can put it on a PowerPoint and the people can politely listen to you, but it doesn’t mean that they will see what they can contribute,” he explains. “So we wanted to do it differently. My communications team brought in an innovative small agency called Avvio, whose speciality is to transform a vision into a story, a tale that you tell to the people. First, they interviewed 40 people from across the company – management, sales staff, people on the shopfloor, the unions, and just listened to them.

“From what they learnt, they proposed to create this map – a single picture to give people, at a glance, the story of what we are in the UK: the sites, the sales force, our work with local communities, with children in terms of road safety, and our international projects like our future Indian and Chinese plants. This has not just been presented to people; it has been about getting around a table with a facilitator and generating dialogue. It has been extremely successful – since we began deployment in February some 2,500 of the 2,800 have gone through this and feedback has been extremely positive. I get a sense that morale is very good.”

The hope now is that this engagement can feed directly into performance – and with profitability up in 2011, there are positive foundations to build on. But Le Corre acknowledges that this is being attempted in difficult times: “We’re operating in a very challenging market right now,” he says. “Tyre markets in Europe were down in the first half of this year compared to last – this creates challenges for us in terms of the flexibility of our production. We had, for the first time in 20 years, to shut down one of our UK plants, in Dundee, between the end of May and mid-June. Yet people did understand and there was still positive feedback. The unions understand the challenges we’re faced with. Everybody wants to work hard to solve them.”

A testing environment

While there is relatively little the company can do to change global demand for tyres – the decrease in deliveries caused by the downturn means fewer road journeys, after all – it is working to tackle demand challenges closer to home. “The UK market is the most open in western Europe,” says Le Corre. “You will find every brand of tyre in the world being sold here. In addition, British roads are characterised by lots of traffic and slow speeds. This means a significant portion of UK consumers are price, rather than quality, orientated. So far as they are concerned a tyre is round and black – and they tend to forget that it is the only contact patch between their vehicles and the road, and key to safety and economic performance.

“So we are working to educate the consumer. For example, due to friction – or rolling resistance – tyres account for one tank of fuel in five that you buy. If all vehicles currently in the UK were fitted with the lowest rolling resistance tyre available, it would save the UK eight million tonnes of CO2 a year, the equivalent of converting 3.2 million cars overnight to zero-emission vehicles. Similarly, we’d like the government to really understand that the environment and low emissions are not just about the manufacturing part – it’s about the entire life-cycle of the product… 85 per cent of the impact of our industry is in the life-cycle of the tyres.”

It’s not the only way Michelin UK has identified an approach that is positive for the business and environmentally sustainable – as the company has also turned to generating its own power via wind turbines to battle rocketing energy costs. “We have a much higher cost of energy in the UK than in the rest of Europe, it’s a substantial part of our cost of manufacturing, especially in Northern Ireland,” Le Corre says. “We’re working on addressing this through reducing our carbon footprint – we’ve cut it by 25 per cent in the past five years, implementing wind turbines in Dundee in 2006, and we’re in the process of building turbines in Ballymena.”

It’s an approach also being employed socially – Performance and Responsibility Michelin (PRM), the company’s version of CSR, celebrates its 10th anniversary this year and includes road safety schemes, city cycling events and free tyre-pressure checks. Meanwhile, subsidiary Michelin Development was set up to help small businesses create employment in areas of the UK where the tyremaker has an historic link with the community: “It’s not because CSR became fashionable a few years ago,” says Le Corre. “It’s the belief that if we do all these things in the right way, we will have happy customers and people who want to work for us – and that will be beneficial to the business, simple as that.”

The next generation

Making Michelin UK an attractive place to work is a key challenge, Le Corre says, and one faced across British industry: “It’s fair to say that the image of the UK as a whole is not that of a manufacturing country. It’s a country with a big financial sector but few people know that the average pay in manufacturing is actually higher than that in financial services. So how do you make it known to the outside world? You have to start in the schools, then in the colleges, and then the universities. For example, we are part of the initiative See Inside Manufacturing, where we open the doors of the plants once a year to not just pupils and students, but their teachers and careers advisers – because often it’s not the pupils, but their teachers and parents that you need to convince.

“More widely, if you want to attract people, it’s not just about the pay – it’s about the feeling created by the current workforce, which is what we have been working on here,” he continues, adding that the interest in careers at the company has been encouraging. “Last year in Dundee we hired 140 people. We had a lot of high-quality applications. But we also had an open evening for women, to try to attract more women to consider manufacturing on the shopfloor. We expected 50 people to turn up, but 500 came – and 200 of them made applications. So a substantial number of those 140 new people are women.”

With so much focus on driving the tyre business forward, it would perhaps be easy to forget that Michelin is also famous for its Red and Green restaurant and travel guides and maps – first conceived in the early days of motoring to nurture a broadening of horizons and, naturally, more tyre-wearing journeys. The UK and European guides are operated from the subsidiary, Michelin Travel Partner UK, based in Watford. “From a numbers standpoint, the maps and guides are a very small part of the group as a whole,” says Le Corre. “But from an image standpoint and as part of our interaction with the consumer, talking about mobility, they are very, very important to support our brand across the world.”

On the subject of support – Le Corre adds that Michelin UK has been getting encouraging levels of assistance from UK authorities in achieving its 2015 goals: “A real positive of the UK is the responsive and reactive authorities who try to help businesses, whether it’s the British government, Scottish government, or the Northern Ireland executive,” he says. “We’ve found a lot of people who are easily accessible, understand our issues and try to assist us – whether that be advice or subsidies.” Indeed, 2011 saw the go-ahead for a £50m investment in next-generation equipment for low-rolling resistance tyre production in Dundee, supported by a grant from Scottish Enterprise. Meanwhile, the Stoke plant is in the middle of a £20m modernisation project, supported by a grant from the former Advantage West Midlands regional development agency.

But ultimately, Le Corre says, Michelin UK’s most bankable asset is its people: “Our brand commands a premium over the competition because of the quality of the product, the consistency of its performance – and that comes not so much from the equipment we use but the people who use it. That is why we focus
so much on engagement – through it I hope the people here have taken on board that we don’t just have a great past, we have a great future, and they are the ones who hold the key to that.”

About author

Chris Maxwell

Chris Maxwell

Director’s editor spent nine years interviewing TV and film stars for Sky before joining the IoD in 2011 and turning the microphone on Britain’s business leaders. Since then he’s grilled everyone from Boris to Branson and, away from work, maintains an unhealthy obsession with lower league football.

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