Reports in Indonesia indicate that PT Michelin Indonesia, a subsidiary of Michelin Global, is planning to scale up its tyre production. In an interview with reporters, Michelin Group's Indonesia President Director, Steven Vette said that the French tyre company was in a 'ramping up stage'.
"We are currently in a ramp-up stage. Gradually we will ramp up volume toward the end of the year," Mr. Vette told reporters during a media event in Jakarta on Tuesday, adding that the adjustment process was on schedule despite it being a 'very ambitious plan'.
The announcement comes after Michelin acquired 80 percent shares of the Indonesian tyre firm Multistrada in January 2019 for US$439 million as part of its expansion strategy to increase its market share in Indonesia.
Mr. Vette went on to remark that the PT Multistrada factory acquired in 2019 in Cikarang, Bekasi, West Java, will prove to be a key asset in this ambitious process. The recently acquired factory though needs some 'adjustment' before it attains the capability to produce products in Michelin's portfolio.
"Some adjustments were needed to enable the factory to produce more varied products under Michelin, BFGoodrich and Uniroyal in larger quantities," Mr. Vette told the reporters.
The Cikarang factory, a Multistrada asset acquired by Michelin in 2019 has a production capacity of more than 180,000 tons of tyres which include about 11 million passenger car tyres, 9 million two-wheeled vehicle tyres and 250,000 truck tyres. However, at present the factory has a meager production of only two-wheeled vehicle tyres for Multistrada's Corsa and Achilles.
In terms of production capacity, the factory, now in Michelin's inventory is now officially the fourth-largest Michelin factory in the world. Currently, the company is trying its best to keep increasing production with a goal to achieve the factory's maximum production capacity by 2021 or even exceed it, Mr. Vette was quoted as saying.
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"We think we will add, by the end of this year, several million tyres, and therefore we are very confident for 2021," he added.
In addition, through the transaction with PT Multistrada Arah Sarana TBK , Michelin also acquired a +20% stake in the retailer PT Penta Artha Impressi ("Penta") in partnership with Indomobil and private investors, which is another very important asset that the company wishes to use judiciously to boost the marketing and sales of Michelin Group brands in Indonesia.
The acquisition of PT Multistrada has proven to be a masterstroke by Michelin as it now has everything it needs to scale up production with a new massive factory in its kitty. With the adjustments in place soon, the factory could prove to be a game changer for Michelin's Indonesian subsidiary.
"Michelin is present in Indonesia to answer to the needs of the Indonesian consumers," Michelin Indonesia head of marketing consumer products Roslina Komalasari told The Jakarta Post, explaining that Michelin brands would be for the high-end market, while Multistrada's Achilles and Corsa would be marketed to its middle and lower consumer base.
Michelin Indonesia business-to-consumer (B2C) commercial director Faiez Pisal further added that it would tap into Multistrada's current network to expand Michelin's market reach especially in big cities in the country.
Source: The Jakarta Post
Image Credits: REUTERS/Supri
