Michelin is a household name worldwide. A giant in the tire industry, the France-based company likes to say it is in the mobility business. Indeed, Michelin makes tires for nearly everything that moves: passenger cars, trucks, SUVs, vans, motorcycles buses, tractors, bicycles and jetliners. Michelin entered the Tha market in 1988 with the establishment of Michelin Siam Co., Ltd. a joint venture with the Siam Cement Group, one of Thailand’s biggest conglomerates. In the 23 years since, the Michelin Group’s presence in Thailand’s fertile business environmen has expanded robustly to include several plants for tire and parts manufacture, molding and steel cords. The company turns out a mix of 10 million tires annually in Thailand, for sale in the domestic market and throughout Southeast Asia.
As further signs of Michelin’s confidence in Thailand as a prime investment location, the company has set up a major R&D and testing laboratory in the country and is moving its Southeast Asia regional headquarters here.
In the following interview conducted in Bangkok, Mr. Jean- Dominique Senard, a managing partner of the Michelin Group, discusses the company’s core values, proud accomplishments and future goals with the Thailand Investment Review (TIR).
TIR: Please describe Michelin’s historical presence in Thailand. Do you have further growth plans here?
Mr. Senard: Michelin has a long history in this country. We have built up a major industrial base in Thailand. We also now have a significant research center here. In addition, Michelin is currently in the process of moving its regional headquarters for Southeast Asia operations to Bangkok.
As we speak there are 6,500 Michelin employees in this country – that is major. We are proud to see our Thai workers regularly taking over responsibilities and we are proud of our very strong presence in Thailand. Moreover, Michelin certainly has clear intentions to increase its presence here. We have some projects in front of us.
TIR: What are the advantages of choosing Thailand as an operating location?
Mr. Senard: A big factor attracting us here is that Thailand is a major consumer country for our products. That was the case in the past and it will remain so in coming years. In addition, the population of Thailand really provides our business with very skilled people. Each time we have opened a new operation here, we have been very happy to see that the people are well trained and well motivated in helping the group to progress.
Of course there is also the fact that Thailand is a top producer of natural rubber. We are close to raw material sources and that is key. More than one-third of our rubber is sourced in Thailand. The proximity is fantastic for Michelin and this involves not only natural rubber. We are also close to supply sources for carbon black and other raw material necessities.
Thailand’s location is a big advantage. Sixty-four percent of our production in Thailand is exported, most notably to Asia.
TIR: How important were the incentives offered by the Board of Investment (BOI) in your decision to locate and continue investing here?
Mr. Senard: The BOI has been an incredible help for the progress of Michelin over the past years, from giving us advice to the very attractive incentive programs. The BOI has provided a friendly environment, and this helps Thailand to be competitive against other countries in the region. If this remains so in the future, we would be very pleased because it has been one of the major aspects of our presence here.
TIR: Does Michelin consider it important to engage in social-care and environment-protection activities in Thailand?
Mr. Senard: Most certainly. Social and environmental care is part of the Michelin spirit. Michelin has very strong core values, two of which are to care for and respect people and show respect to the environment. We promote actions that reflect these values. One example is road safety. We have been working with the Thai government and with non-governmental organizations to deploy best practices to save lives through road safety. In fact, Michelin has been granted Thailand’s Road Safety Award by the prime minister.
To protect the environment, we also have strong actions around our different industrial sites. We push our people to conduct good environmental behaviors in the plants and to help their communities increase awareness of the environment. We train, educate, and try to trigger new initiatives in the communities.
Another very important point is the recycling of tires. Michelin does a lot of work on that. It is key to protecting the environment and will be increasingly important in the future. We have helped to create tire-recycling areas at 280 playgrounds of schools and communities in Thailand. We are very keen on promoting this respect.
TIR: Please put the current market situation in perspective.
Mr. Senard: The crisis in 2009 was felt in this country, although much less than in other parts of the world such as Europe and North America. But it is really behind us now. As we speak business is good and growth is here. We need to meet demand in every sector, and that sort of pressure is good news.
The prospects in our business, which is the mobility business at large, are extremely good. We are in front of a major period of growth, during which the Michelin Group is going to implement new investments in Southeast Asia. Thailand is going to benefit from that.
TIR: What trends do you see in the tire industry?
Mr. Senard: There is a tremendous amount in the pipeline. Perhaps the main trend involves technology to produce tires that are highly efficient in terms of fuel savings. The Michelin brand is well known for characteristics of reliability, quality and innovation. We are carrying through with new technology for fuel efficiency as well as safety and longevity.
In fact, Michelin was a pioneer in fuel-efficient tires, and we are already in our fifth generation of so-called “green” tires. We invented the concept in 1990 at a time when nobody else really cared. In recent years, there has been a change in public opinion for fuel efficiency. People now realize that by using Michelin tires they have not only safety but also can save money through efficiency. The concept of fuel-efficient tires for cars, trucks and aircraft has become an important feature of our products. Our studies tell us that in the coming years, the need for that type of tire is going to increase dramatically.