Michelin said it was scaling up its competitiveness plan, targeting cost savings of EUR1.2bn (US$1.36bn) between 2017 and 2020 following expected annual savings of EUR200m to EUR250m in the period 2012-2016.
To achieve a further EUR500m to EUR550m reduction in overheads, the group will not replace some employees nearing retirement after departure and training and human resources planning programmes will enable the group "to offer new career opportunities and re-align skill-sets with its needs".
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New business processes and standard information systems continue to be deployed with the aim of reducing inventories and annual expenses by EUR250m and EUR200m respectively by 2020, while also ensuring better customer service.
The simplification initiative launched in late 2015 will benefit the group's various units as well as its internal organisation, in particular with the broadening of the shared service centres' responsibilities.
The cost of raw materials is expected to decline by between EUR150m and EUR200m over the same period thanks to the ongoing optimisation of raw material content and the engineering of lighter tyres.
In addition, the programmes set up over the past five years to improve manufacturing efficiency will be pursued – increasing production capacity in Asia, North America and South America, improving capacity utilisation, with plants that produce over 100,000 tonnes a year accounting for a growing proportion of total output, signing contracts in Europe to lock in progress, responsiveness and productivity, capitalising on projects designed to boost productivity and empower manufacturing teams and deploying measures to improve customer service at the group's plants.
Other measures include a 30% reduction in unit investment costs achieved through efficiency programmes, the reorganisation of engineering processes, and systems to independently manage performance and progress.
The group has set a target of reducing production costs by between EUR450m and EUR500m between 2017 and 2020.
