Posted on Thursday 14 October 2010 by Ulster Business

Michelin

American Wilton Crawford became plant manager for Michelin in Northern Ireland earlier this year. Symon Ross talked to him about swapping Alabama for Ballymena and how the local business environment measures up to the US.

The first thing that’s clear on meeting Wilton Crawford is that he’s not from around these parts. Hailing from the Southern states of the US, the new Michelin plant manager took over from Englishman Graham Whitehurst in January when, after 12 years in Northern Ireland, Whitehurst moved on to a role with Michelin in France. Crawford himself has a long history with Michelin having joined the company in 1989 in a process management capacity before taking increasingly senior production leadership roles at five of its facilities in the US. Nine months into his new role there’s no trace of a Ballymena accent yet, but he says he has quickly settled in both personally and professionally at the Raceview Road site. “The people here in Northern Ireland have been wonderful. There is a very warm spirit much like I was used to in the US. I come from a farming background in a rural area, so it was an easy transition,” he told Ulster Business. “The business side of things was completely seamless. The work ethic is very strong here in Ballymena. The commitment to our company, to Michelin as a whole, and Michelin Ballymena as a site, is very strong and very similar to the other factories I’ve worked in.” The Florida-born father of three was factory manager at Michelin’s plant in Dothan, Alabama for four years before crossing the Atlantic for his current assignment, which is also for at least a four year term. The Michelin Manufacturing Way, launched in 2005 to standardise production and operating models across all the company’s sites, means that moving from the US to Northern Ireland has not been a massive adjustment. The Ballymena factory manufactures over 1.4 million truck and bus tyres each year, mostly for export. Having opened in 1969, it celebrated its 40th anniversary last year and currently employs around 1,000 people. After a slump in key markets in 2009 the company based its 2010 business plan on the plant operating at 78% capacity. Although the fourth quarter started softly, Crawford says that is now more likely to be 84%-85% for the year. “Things have actually improved to some degree, through the course of the year to where we are now, we are at about 84%-85% of the factory capacity. The demand from the marketplace has been higher than what we had envisioned when the plan was put together. That part is encouraging, because the economic crisis hit all zones and all product lines last year,” he says. “Next year looks a bit better. We think that 88%-90% of the capacity of this factory could be utilised in 2011.” Still, Crawford believes Michelin’s truck tyre factories are maybe two or three years away from seeing the type of peak marketplace demand seen in 2007. A lot depends, he says, on the housing and construction market picking up so more lorries are sold, and an uptick in general consumer sentiment to increase the amount of freight being transported. Crawford is well aware that Michelin plays a big role in the local Ballymena economy, with some staff still on site who joined the company 40 years ago. It has managed to avoid making people redundant through the downturn by utilising a flexible structure that allows it to take some shifts out of the production schedule if demand drops, as well as tighter controls on inventory. “For us to bring a new person here to Ballymena you’re talking 12-16 weeks before they are trained and validated to do a new job – meaning you are investing 3-4 months in that person. It’s much better for us, for our employees to be able to say demand is dropping and give them a fair heads up so they can plan,” he says. He has also continued the emphasis placed on workforce education and training introduced by his predecessor and notes that Michelin has just taken on a new group of apprentices. “We do have future needs. We can see that the business is going to continue to rebound in the next few years so we’re going to have to have new younger people coming in, particularly in the more technical metiers like engineering. Those jobs you don’t replace in just a year, it takes 3-5 years for someone to gain the expertise,” he says. “Our next step is to have more cross-training where people can learn multiple jobs. For gains in productivity and flexibility I think a lot of people will have to learn how to do two or three jobs.” He believes Michelin Ballymena has a long term future and is currently working on a five year vision plan. But the American also warns the business will have to evolve and overcome some significant challenges and competition. Though many customers have remained loyal to Michelin because of the quality of its products, the company is facing increased competition from the Far East, where Government subsidies are allowing Chinese manufacturers to churn out very cheap tyres. “There are more and more Chinese and Korean tyre manufacturers in the world today, and some we see, you wouldn’t have known who they were five years ago if they even existed at all. They are putting a lot of tyres in the marketplace in truck, and passenger and light truck, as well as all the other product lines,” says Crawford. “Some customers have to make a decision on a particular cost point. But our market share has actually stayed very healthy, even with the pressure that has come out of the tier two and tier three suppliers. “If you’re going to purchase a Michelin tyre its going to be among the most expensive, we recognise that, we firmly believe we have the best quality in the world. The total cost of ownership along the life of the product is very different to some of the other tier 2 or tier 3 products that come from other parts of the world,” he explains. “Our challenge is that we’ve got to stay ahead of the competitors with the technology and the overall performance of our product, because they will improve the quality of their products over time. We have to work on a 10-year R&D horizon,” he adds. Michelin uses a lot of power in its rubber mixing and curing processes and Crawford says the one major drawback he has identified in doing business in Northern Ireland is energy cost. “The rising cost of energy here is phenomenal in my view. It is far too high. If I compared what I know here in Ballymena, our cost per megawatt hour is twice what we know in the States. It’s twice even what we know in other parts of Europe. It makes it very hard to compete with that,” he says. The cost of energy per tonne of product leaving the Ballymena factory runs to about 15%-16% compared with 6%-8% in other locations in North America and Europe, and Crawford says that if the situation is not addressed it will quickly reach a tipping point. “We have to improve our productivity at every Michelin manufacturing site by 6% per year. Also we have to completely absorb inflation from a cost perspective, plus about 1% on top of that for our cost performance per tonne. If I look at this rising cost of energy that means that next year the equivalent cost increase that’s sitting there for next April/May is about 30 equivalent jobs. That’s not small. Over five years you are talking about over a hundred jobs which we would not want to lose,” he warns. “We have to compete in our own company structure as does any manufacturer – we all look at what is the best and worst performing. “We are building brand new factories in China, India and in Brazil. Those factories are naturally going to have a huge advantage for total labour cost, so the rest of us in the mature countries have to do the best we can on the other points, be it energy, raw material preservation, whatever we can do to reduce our costs. The energy factor is one where we have a big disadvantage right now.”

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