Michelin Strengthens Its Russian Presence With New Logistics Plant
The new logistics center of French tire maker Michelin in Davydovo, south of Moscow illustrates how global producers are focusing on growing markets like Russia, even while they reduce production in mature markets.
The logistics center opened in April and occupies 20,000 square meters out of a total industrial area of 78,000 square meters. It cost 20 million euro. The Class A+ warehousing, including parking and office buildings and is aimed at supplying customers more quickly.
In the past year Michelin has implemented temporary closures at plants like Dundee in Scotland and new labor rules at its French factories to help it adjust production capacity as the European tire market faces its sixth year of decline. In Russia the company has doubled its turnover in the past two years, reaching sales of more than 500 million euro in Russia and the CIS in 2012.
Michelin's factory in Davydovo is one of the largest factories in Eastern Europe. It is one of seven Michelin plants in Central and Eastern Europe, 47 production plants in Europe, and 80 worldwide.
Quality at every stage of the logistics channel means storage of tires, manipulation and transportation, as well as the speed of delivery.
The locally produced tires are sold not only in Russia and the CIS, but also exported to the countries of Eastern and Western Europe.
In order to reduce the cost in time and money of importing tires into the world's fastest-growing transport markets Michelin began production in Russia in 2003, two years after acquiring an industrial site in Orekhovo-Zuevo district, 90 km east of Moscow. The plant began by making passenger car tires for the local market, with an initial capacity of 2 million tires.
Michelin has since expanded the range of tires made at Davydovo. The factory turns out summer and winter light tires with a diameter of 13, 14, 15 and 16 inches. Russia is Europe's largest truck tire market and benefits from the the upgrade to modern radial tyres.
Currently, the factory employs about 1000 people, and the new logistics center added another 80 jobs. The company produces an average of 3,000 tyres per day. Tyres manufactured in Davydovo, Russia, must meet the company's quality standards. This means raw materials, technology, production and distribution must also be coordinated, along with what it calls a customer-centric supply chain strategy.
Thierry Chiche, general director of Michelin in Russia and CIS, said: "We have very wide range of products in thousands of dimensions. On such a vast territory as Russia and the CIS it's extremely important to be able to offer the right tire in the right place at the right time. It's crucial for our clients and our business development.
"The complex is another strategic step contributing to stable operations on the market and an ability to provide more quality of service to clients," Chiche said during the opening ceremony.
The logistics center, called MIR, for Michelin Russia, is capable of handling 8 trucks simultaneously. It can store 240,000 passenger car tires or 80,000 truck tires.
According to the company management, the complex will reduce the time of delivery of tires to customers by 30 percent and reduce storage costs to 5 percent.
"Logistics being a part of the infrastructure of the company enables us to serve our clients in a consistent and convenient way meaning quality at every stage of the logistics channel, that means storage of tires, manipulation and transportation, as well as the speed of delivery."
The plant in Davydovo also runs a line to restore old truck tires using Michelin retread technology, which puts used tires that have travelled on worn Russian roads back into business. The plant, which opened in 2011, has the capacity to retread 50,000 tires per year.
Russian companies, including Tebodin and Renaissance Construction, performed engineering, permitting, procurement, and project and construction management services. Construction was completed within nine months.
Renault is also expanding its Russian business. Avtoframos, the automaker's plant in Moscow, plans is increasing production capacity by 17 percent to 180,000 vehicles.
Davydovo is growing in importance as a logistics hub. It's also home to the complex Logoprom Davydovo and located 70 km from MKAD, on the 3rd (100-km) concrete ring between the road M7 Volga (international transport corridor N2) and М5 Ural. It benefits from access from the Gorkobskoye, Yegoryevskoye and Nosovikhinskoye highways.