Compagnie Générale des Établissements Michelin

Compagnie Générale des Établissements Michelin

12 cours sablon
63040 Clermont-Ferrand
France
(73) 92 41 95
Fax: (73) 90 28 94

Public Company
Incorporated: 1889 as Michelin et Compagnie
Employees: 130,000
Sales: FFr62.74 billion (US$12.11 billion)
Stock Exchange: Paris

Compagnie Générale des Établissements Michelin (Michelin) is the world’s leading tire company, and one of the largest auto wheel manufacturers. Still controlled by the founding Michelin family from French headquarters, it is an international operation with outlets in 140 countries. French sales account for only about 15% of its tire output. It owns about 70 manufacturing plants across four continents. Michelin is also a notable publisher of maps and guides, of which it sells 18 million per year. Although they account for only a small proportion of its revenue, these items have immense promotional value. The rosettes awarded to restaurants by Michelin Guide Rouge inspectors are among the most coveted accolades of European haute cuisine.

Apart from its publishing, Michelin has eschewed diversification, preferring to concentrate on the quest for the perfect tire. Here Michelin exhibits a high degree of vertical integration. It produces its own materials, including steel wire and natural and synthetic rubber, and designs and manufactures much of its own industrial equipment and tooling. All this helps ensure that Michelin tires, wherever made, conform to the same high standard. The company invests heavily in research and development—its firsts include the radial tire—and guards the secrecy of its manufacturing processes. Even General de Gaulle, visiting in 1944, was denied entry to the inner sanctum and Michelin’s own employees are permitted to know details of only those processes that immediately concern them. Although secretive about its methods, Michelin has always had a flair for marketing. It has an instantly recognizable symbol in Monsieur Bibendum, the chubby character made of tires who adorns its publications and products.

As a tire company, Michelin dates back to the 1880s, when the original Michelin brothers, andré and Edouard, took over a rubber products business created by their grandfather, Aristide Barbier, and his cousin, Edouard Daubrée. This firm’s premises were in Clermont-Ferrand, in the Auvergne. Set up in 1830 to manufacture sugar, the Daubrée-Barbier enterprise had diversified into rubber a couple of years later at the instigation of Daubrée ’s Scottish wife, Elizabeth. As a child, Elizabeth had played with rubber balls made by her uncle, Charles Macintosh, an inventor who pioneered the use of rubber in waterproofing clothes, and gave his name to rubberised raincoats. A rubber workshop was opened at Clermont-Ferrand, and was soon making not only these balls, but also other rubber products, including hoses and drive belts.

After the death of the original partners, the business, then also manufacturing agricultural equipment, was run for a few years by a manager. Business had declined by 1886, when the 33-year-old andré Michelin stepped in. He was already a businessman in his own right, making picture frames and locks in Paris, and under his management, the Clermont-Ferrand enterprise took a turn for the better. However, andré sometimes had to attend to his Paris shops at the expense of Clermont-Ferrand. In 1888, andre’s brother Edouard, six years his junior, was prevailed upon by the family to abandon his fine art studies and come to Clermont-Ferrand. The following year, the firm, whose most successful line was then rubber brake pads for horse-drawn vehicles, was incorporated as Michelin et Compagnie. It was in this same year, 1889, that a cyclist arrived at the workshop asking to have a punctured Dunlop tire repaired. Pneumatic tires, first patented in 1845 but not commercially exploited at the time, had been re-introduced in 1888 by Scotsman John Boyd Dunlop, but were still rare enough to be a curiosity as solid ones were the norm. Edouard Michelin found the repair a major undertaking, involving three hours’ worth of work followed by an all night drying session. The repair did not hold, but Edouard, struck by the comfortable ride that the troublesome tires gave, set to work on a design that would retain the comfort without the trouble. In 1891 the workshop patented a detachable tire, repairable in minutes rather than hours. That fall the brothers persuaded a cyclist to demonstrate their tires in a 1,200-kilometer race. Michelin’s rider sustained five punctures on the first day. Even so, he won the race, with an eight-hour lead over the favourite. The earliest Michelin tire took 15 minutes to change, but by June 1892 the time was down to two minutes. Michelin organized another race. Nails surreptitiously planted in the road caused 244 punctures, affording ample opportunity to prove how easy repairs were. By 1893, 10,000 cyclists had fitted Michelin tires.

The following year, Michelin launched a pneumatic tire for horse-drawn hackney carriages. The fleet of five Paris cabs that test drove the tires gained such an advantage in terms of quietness and comfort that the other cabbies were driven to sabotage. Soon even the saboteurs were converted and by 1903, 600 Paris cabs were running on Michelin tires. In 1895 Michelin announced the world’s first pneumatic tire for automobiles. Three cars, specially built to test the tire, were entered for a race in June 1895. One, the Eclair, meaning forked lightning, was driven by the Michelin brothers themselves. Despite frequent punctures, engine fires and gearbox failures, the Eclair was a success. Only 9 out of 19 competitors finished within the time allowed, of 100 hours for 1,209 kilometers. The Eclair was the ninth. This was the first of many races in which Michelin tires distinguished themselves.

Around the turn of the century, pneumatic tires were becoming the norm for the automobile industry, as well as for bicycles, carriages, and cabs. Competition was intense, with 150 tire companies in France alone by 1903. Overseas, Pirelli, Dunlop, Goodyear, Goodrich, and Firestone were all coming along fast. A strong brand image was crucial in this climate, and Michelin had come up with a brilliant one. The Michelin man, a rotund figure composed of tires, was born around 1898. His nickname of Monsieur Bibendum came from the caption of an early poster that read Nunc est bibendum, a phrase from Horace meaning something like “Time for a drink.” The glass flourished by the convivial Michelin man contained not alcohol but nails and sharp pebbles. Michelin tires, it was implied, would gobble up such objects with no lasting ill effects. Today, Monsieur Bibendum has become one of the most widely recognized logos in the world. Apart from promoting tires, Monsieur Bibendum embellishes Michelin guides and maps. The first such publication, the Guide Rouge to France, appeared in 1900. Initially distributed free, it contained tire information together with journey planning advice, including hotel listings. Guides to Europe, North Africa, and Egypt followed as, in 1909, did an English-language edition of the guide to France. Michelin also furnished motorists with itineraries, via an information bureau.

About the same time as its foreign guides appeared, the company was opening its first foreign subsidiaries. The United Kingdom operation was launched in 1905, the Italian the following year. In 1905 came the acquisition of rubber plantations in Indo-China. Meanwhile, tire technology was advancing rapidly. In 1903 Michelin introduced a tire with a sole of leather and studs of steel. Three years later came the detachable wheel rim, allowing a car to carry spare Michelin tires, as did the victor of the first ever Grand Prix, at the La Sarthe circuit. By 1913 Michelin had simplified the way wheels were attached to the vehicle, giving a neater solution to the problem of punctures. Motorists could then carry a spare wheel.

Michelin was on the lookout for new applications for its tires. Around 1908 they were starting to be fitted to trucks, using twin wheels to take the heavy weight, a system tested on Clermont-Ferrand buses. Michelin linked its name to the aeronautical industry by instituting a flying competition, offering Ffrl00,000 for the first pilot to complete a difficult course culminating in a landing on the peak of the Puy de Dôme mountain, near Clermont-Ferrand. Cynics said the brothers were getting free publicity by setting an impossible task, but in fact the prize was won in 1911, on the third anniversary of its creation.

When World War I came in 1914, Michelin showed a more serious side of its commitment to aeronautics by adapting its workshops to the production of bombers for the French air force. It supplied 100 free and the remaining 1,800 at cost. After the war Michelin ’s technological developments continued apace. In 1917 it had introduced the Roulement Universel, or all-purpose, tire with moulded treads. Two years later the woven canvas infrastructure of previous tires was replaced by parallel cord plies. During the interwar period, advances in low-pressure tires dramatically extended tire life expectancy. The first hackney carriage tire had been capable of about 129 kilometers, with pressure of 4.3 kilograms per square centimeter. Thirty years later, in 1923, there was a car tire with pressure of 2.5 kilograms per square centimeter, able to cover 15,000 kilometers. The 1932 figures were 1.5 kilograms and 24,195 kilometers or more. Improvements to durability and road holding continued throughout the 1930s.

By 1930 Michelin was the nth-largest tire vendor in the world. Throughout the 1920s and 1930s it continued to expand overseas, with tire plants at Karlsruhe, Germany, and in Belgium, Spain, and Holland. The opening of a wire factory in Trento, Italy, illustrates that Michelin was aware of the advantages of controlling the manufacture of components of the tire making process, as well as that process itself.

To all parts of the developed world, the interwar years brought a surge in the amount of motorized traffic. Michelin eased the motorist’s lot not only by its reliable tires but also through its guides and maps. As early as 1910 the company had started to publish road maps, the first maps of France especially designed for motorists. Now Michelin extended coverage to more European countries, and to Africa and the United States. It published a series of detailed regional guides, the forerunners of today’s Guides Verts. Michelin ’s Information Bureau continued to offer free advice and itineraries, and Michelin campaigned for road numbering and signposting.

The technical advances of the 1930s included the Pilote, a car tire giving superior road holding by increasing the ratio of width to depth. In year of the Pilote, 1937, appeared the Metallic, an innovative design reinforcing rubber with steel cords to support heavier truckloads. Similar technology is still used on truck tires. United States competitors were experimenting with synthetic rubber. Michelin, too, was researching this technology in the late 1930s, although it was not until after the war that the company began to manufacture butyl for making inner tubes.

In 1935 Michelin, initially in the person of Edouard’s son Pierre, went to the rescue of automobile manufacturer Citroën, then bankrupt. For almost 40 years, until Peugeot took it over in 1974, Michelin effectively ran Citroën and together the two companies made up the largest industrial group in France. Assisted by other family members, andré and Edouard Michelin remained at Michelin ’s helm until they died, andré in 1931 and Edouard in 1940. On Edouard’s death his son-in-law Robert Puiseux took charge. Puiseux led the company through the war and on to a fertile period of expansion and innovation. The family was closely involved with the resistance movement during World War II, and several Michelins were interned in concentration camps. andre’s son Marcel died in Buchenwald, and Marcel’s son Jean-Pierre was shot in action in Corsica. Despite these tragedies, Michelin kept going, although its German, Italian, and Czech plants were confiscated, and the factory at Cataroux, France, was crippled by Allied bombardments in 1944. Michelin had a long established policy of admitting only employees to its factories. Remarkably, although its French factories were obliged to produce tires for the Nazis, it managed to keep even the Germans off the premises. Inside, the patriotic Michelin workers were “customizing” their products for the occupying forces. Encountering the subzero temperatures of the Russian front, Michelin tires mysteriously disintegrated—but only the ones that were fitted to German vehicles.

Michelin maps were an invaluable weapon in the Allied armory. Michelin provided official maps for the French army at the outbreak of war, and more than two million were distributed to the liberating forces in 1944. The U.S. War Department reprinted the Guide Rouge for use during the Normandy landings. After the war Michelin, unlike some French companies, was free of any suggestion of Nazi collaboration. It swiftly regained its Italian and German property and reconstructed its bombed-out Cataroux plant. It declared a policy of expansion in both the industrialized and the developing world, which would be energetically pursued in the following decades. In France, many new factories would open, making not only tires but also wire, wheels, and tooling. In Italy, Germany, the United Kingdom, and other parts of Europe, existing plants would be modernized and new ones added.

In 1946 came what is arguably Michelin’s most important single contribution to tire technology, the radial tire. Instead of a crisscross or cross ply casing of fabric or steel cords, the radial tire casing was a single ply of cords placed across the tire, perpendicular to the direction of travel. This technology vastly improved road holding, flexibility, and durability. The radial tire, developed in secret during the German occupation, was commercially launched in 1949 as the X-tire, and Michelin had to expand its capacity rapidly to keep pace with the public demand for these tires. By 1969, 30 million X-tires per year were racing off the production lines. Today, 75% of all tires manufactured worldwide are radial tires, but Michelin has always blazed the trail. It built on its early lead by quickly making radial tires available for more and more vehicle types. During the 1950s X-tires for trucks and earthmovers were launched. In common with other manufacturers, Michelin also began to make tubeless tires. It had patented such a tire in 1930, but had encountered some practical problems. During the middle to late 1950s, however, tubeless tires caught on, and by the early 1960s, there were tubeless X-tires.

Meanwhile, there were changes at the top of the company. In 1955 François Michelin, the 29-year-old grandson of Edouard the co-founder, became gérant, or joint managing partner, alongside head partner Robert Puiseux. On Puiseux’s retirement in 1960, François became head partner, and over the next 30 years, led Michelin to the number-one position in the world tire market. Unlike many of its European competitors, which set up agreements with U.S. manufacturers, Michelin had continued to undertake the vast majority of its research and development activities itself. François maintained this policy, and 1963 marked the opening of a new Michelin test centre at Ladoux, not far from Clermont-Ferrand.

The company had been expanding steadily in Europe. Now it was time to look further afield. During the 1960s factories opened in Nigeria, Algeria, and Vietnam. Michelin also had an eye on the United States, where it had started a sales office in 1948, targeting owners of foreign cars. In 1965, however, Michelin entered into a contract with Sears, Roebuck to supply replacement tires for U.S. cars. So successful did this venture prove that by 1970 Michelin was selling 2.5 million tires per year through its own U.S. outlets. Overcapacity was felt in the European tire market during the 1970s, but Michelin pursued its expansion elsewhere. In the United States it constructed its first manufacturing plants in South Carolina and also built plants in Canada and Brazil. Much research continued to go toward perfecting radial technology. During the mid-1960s the XAS tire made the radial concept available to the fastest cars. Radial tires would achieve the ultimate cachet in 1979 when they helped Jody Scheckter drive his Ferrari to victory as Formula 1 World Champion. In the 1970s, Michelin targeted several new product lines at the long distance road haulage market. With the introduction of radial tires for aircraft in 1981, and motorcycles in 1987, Michelin could offer radial technology for virtually all types of vehicle. The basic technology continued to improve, with new ranges being launched almost every year. The M series, which appeared in 1985, offered a completely new range of state-of-the-art radial tires. Among these, the MXL became Europe’s best selling tire by 1990, when its replacement, the MXT, was introduced.

In 1960 Michelin had been the 10th largest tire manufacturer in the world, but by 1980, it was second only to Goodyear. In 1990 came a major acquisition, that of the U.S. tire company Uniroyal Goodrich, which made Michelin indisputably the market leader. Unfortunately, the Uniroyal deal was concluded just as a major recession hit the automobile and tire market. Faced with a Ffr5.27 billion loss for 1990 to 1991, in April 1991 Michelin had to cut costs with layoffs affecting 15% of its workforce. This, not the first but the largest round of job cuts of recent years, was an especially painful step for an employer that has encouraged its workers to see themselves as participants in the enterprise. François Michelin told the press that the main problem was not the acquisition of Uniroyal, but pressure from the automobile industry which in the past decade had forced tire prices down by 50% in real terms. In 1991, despite the pessimism expressed by some analysts about Michelin’s prospects, the company itself was looking forward to reaping the benefits of the Uniroyal acquisition when the economy emerges from recession. The strengths of the two companies in the U.S. replacement tire market were complementary, and North America represented more than one-third of the total tire market. Michelin also plans to build on its footholds in Japan, Thailand and South America.

Michelin has more than 4,000 scientists and engineers engaged in research and development. Its Ladoux test center, with 32 kilometers of roadway, is the largest in Europe, and there are others in Spain and in South Carolina. Michelin has been quick to harness computer technology for simulations and design, since 1988 using a giant Cray supercomputer. The firm’s share capital is structured in a way that ensures the Michelin family retains control, and French law protects it from takeovers. In 1991, 28-year-old Edouard Michelin joined his father François Michelin and René Zingraff as gérant. In its first century, Michelin had grown with, and often ahead of, the tire industry, by a process of unremitting innovation and improvement. In the early 1990s Michelin tires were to be found on motor vehicles of all kinds, on the trains of the Paris and other metro systems, and on aircraft. Worldwide, one in five tires was made by Michelin. The firm knows better than any the tough and fast changing nature of its chosen market. Having reached the top, Michelin showed every intention of staying there.

Principal Subsidiaries

Manufacture Française des Pneumatiques Michelin (29.99%); Société d’Exportation Michelin (99.80); Participation et Développement Industriels S.A. (99.99%); Compagnie Financière Michelin (Switzerland, 91.25%); Spika S.A. (99.99%).

Further Reading

The Michelin Magic, Blue Ridge Summit, Pennsylvania, Tab Books Inc., Modern Automotive Series, 1982; Jemain, Alain, MICHELIN, Un Siècle de Secrets, France, Calmann-Lévy, 1982; Short History of Michelin, Clermont-Ferrand, Michelin, [n.d.]; Les Services de Tourisme MICHELIN, Une Histoire Passionnante, Clermont-Ferrand, Michelin, [n.d.]; Il y a 100 Ans. . . , Clermont-Ferrand, Michelin, 1991; Les Brevets Michelin ont Cent Ans, Clermont-Ferrand, Michelin, 1991; Dawkins, Will, “Michelin’s man aims to ride out the bumps,” Financial Times, April 15, 1991.

—Alison Classe