Michelin plant on schedule

Work on Michelin India Tamil Nadu Tyres’ Rs 4,000 crore manufacturing facility in a 290-acre site near Chennai is on schedule. According to Nicolas Beaumont, president and managing director, the first tyre will roll out from the new plant by end-2012.

The under-construction plant could just become the French tyre major’s biggest facility in the world once it is completed. At present, Beaumont said, there is no plant in existence or undergoing construction that has a land availability of more than 290 acres. Interestingly, Michelin also owns a 100-acre plot near Pune, which isn’t being put to use at present.Michelin also revealed plans of the type of tyres it intends to launch in India. Three tyre variants form part of Michelin’s repertoire in India, all of which are currently imported. XDE 2Ev (truck tyre for long- distance travel), XDY-3 (specially developed for off-roading) and XZY-3 (trailer tyre) are some of the tyres that the plant in Chennai will be manufacturing once it goes operational.

Beaumont also gave an idea of the market size when he said, “Michelin’s expertise lies in radial tyres. Only 14.5 percent of truck and bus tyres were radialised in India in 2010, and this number is expected to grow up to 50 percent by 2020.” He also made it clear that Michelin isn’t planning to manufacture passenger car tyres from the Chennai plant, “because the car market is already radialised,” he added.

The plant will eventually employ 1,500 people. At present, Michelin has a strength of 356, 68 percent of whom are in training at present; 120 are being trained abroad and around 40 in Michelin’s training centre at the plant site. By end-2011, the number of employees will rise to 500, Beaumont said. Talking about a possible distribution network being setup, Beaumont said that the option of service stores is being explored. “But you’ll never find a dedicated dealer for Michelin tyres. That wouldn’t make any business sense for the dealer,” he said. Beaumont also spoke about setting up a vendor base in India. “We’re finalising homologation for vendors as of now. At the end of the process, there’ll only be one or two vendors from outside India. Machines will also be acquired from India soon,” he said.

Initial plans for Michelin, once production begins, are to set up an effective network of sellers in the aftermarket, Beaumont said. “There haven’t been any talks with any OEMs but once production begins, I’m sure there will be some,” he added. The new plant will have a capacity of 450,000 tonnes of tyres and there is enough space to add another such facility in the same premises, Beaumont concluded.

Social responsibility

While work on site is underway on a war footing, Michelin is also doing a lot for the local community in the Thervoy-Kandigai industrial park, 45km from Chennai. On Beaumont's initiative, a socio-economic survey was conducted by FORRAD (Foundation for Rural Recovery and Development) in the 31 villages that surround the plant. The result was the setting up of a training centre by Michelin in its premises. Apart from the training that this centre will impart for Michelin India’s 1,500 employees, “the lab will also conduct classes in carpentry, plumbing and other such skills for the people of the nearby villages to improve their employability,” said Beaumont.

Language labs have also been set up inside the training centre. “Michelin’s practice around the world is to set up language labs where our employees will be trained in French, English and the local language – Tamil in this case – to improve the way our employees communicate with the surrounding community. This is not specific for India,” added Beaumont.

Beaumont said that when he first visited the site back in 2009, he was shocked to see that despite the road leading to the plant site being a State Highway, it lacked some vital road signs. “This is something I haven’t seen before. I’m not used to this,” he said. So, on his request, the government authorities granted permission for Michelin to put up road signs at vital points along the highway. “The authorities said that as long as our company name isn’t mentioned and that it doesn’t look like an advertisement, they had no problems,” Beaumont said.

“Health camps and eye camps were also conducted in conjunction with leading hospitals from the city where Michelin sponsored spectacles and even cataract surgeries,” he continued.

However, it wasn’t all hunky dory for the French tyre giant. When construction work began in 2009, villagers from nearby hamlets protested against the activity, despite the land being earmarked as an industrial park by the government. “Thirty out of the 31 villages were fine with our intentions,” said Beaumont who maintains that the resentment from the villagers was towards the government agency and not Michelin.

“The only environmental concern with a tyre manufacturing plant is the carbon black. In France, we have three plants right in the middle of a city and from that we’ve learnt how to handle this carbon black without causing an environmental tragedy,” said a cautious Beaumont.