MICHELIN OUTSOURCES DISTRIBUTION TO TNT LOGISTICS NORTH AMERICA
Under a large-scale logistics contract, Michelin North America, the tire manufacturer, has signed a six-year, multi-million dollar agreement with TNT Logistics North America that outsources the operation of a network of approximately 7-million square feet of distribution centers in 18 locations in the United States and Canada.
TNT Logistics North America said that the size and scope of the Michelin North America agreement makes it its largest contract, to date, outside of its automotive business unit.
TNT, part of the Dutch TPG N.V. postal and logistics group, will operate Michelin’s network of tire distribution centers in the U.S. and Canada. The agreement builds on a relationship that began in 1995 with TNT Logistics delivering value-added logistics services to Michelin’s operations in the United Kingdom.
TNT is expected to begin operations during the week of Aug. 5 in the U.S. and Canada. Michelin North America’s distribution in Mexico is already outsourced to different providers.
“This agreement is a continuation of our strategic efforts to reduce operational costs while further improving services to our customers,” said Jim Micali, chairman and president, Michelin North America, Inc. “Through this agreement, we will be better able to focus on our core tire business.”
To be more cost competitive, Michelin North America had announced on Sept. 10, 2001, that it would both reduce its annual operating costs by $200 million and eliminate 2,000 positions by the end of 2003. The expected financial benefits from the TNT agreement were not part of the Sept. 10 announcement.
“This agreement is the result of hard work and a commitment between the companies to realize the significant benefits that will accrue to each party as a result of this unique endeavor,” said Dave Kulik, president and chief executive officer of TNT Logistics North America.
The agreement calls for TNT Logistics to acquire certain operating assets and offer employment to qualified Michelin distribution network employees in the United States (450 employees) and Canada (150 employees).
TNT also will invest in operational tools and information technology over the period of the contract.
