Hello and welcome to Esprit d'Entreprise, the program of major interviews on Figaro TV. A slightly special program today since we are in the Grand Palais for the bicentenary of Le Figaro. You can hear it a bit. Hello, Olivia.
Hello, Gaëtan. Today we have the pleasure of welcoming Florent Menegaux. Hello.
You are the president of Michelin. Michelin, I don't need to introduce the Michelin group; it's a bit like Le Figaro, you are 135 years old. It's a piece of French history, in any case a piece of industrial history that has accompanied the last 135 years, and after 135 years is still a great company, a national flagship that competes with the biggest in the world. All of that is not the fruit of chance; it's also a bit like Le Figaro. And you are a company with a state of mind, constantly questioning itself, never resting on its laurels, and trying never to be overtaken and always to stay in the race. You have done this in tires, an extremely competitive sector where you are the world leader, and you have diversified into new activities like high-tech materials. We also know the Michelin Guide, the famous red guide that rates good restaurants but also now hotels and vineyards. So, Michelin, I won't bore viewers with numbers. In two words, in two figures: 28 billion in revenue and a little over 130,000 employees. So, we will obviously come back to your strategy, especially outside of tires, even if that's what made your reputation. You will also explain what you are doing in terms of innovation because you are a candidate to roll your tires all the way to the Moon. You will explain all that. You have also been one of the first leaders to have a critical political eye and voice on the disorders of our world. We'll talk about that later. But first, we will stop on the state of France because you have been a bit of a whistleblower in recent years, especially on public finances, denouncing the lack of economy, the recourse to taxes, especially on businesses. But we still have the impression that you were not necessarily listened to by our politicians. Do you share this observation?
Well, maybe calling me a whistleblower was not the objective. Michelin is very attached to its French roots. France is a superb country that has been the cradle of enormous innovation, allowing industrial flagships to travel the world and represent France across the globe. France has formidable assets, and because I love my country, we must also have a duty of lucidity and remember a certain number of things. For example, in this context, saying that the debate on the distribution of wealth is extremely important, but that beforehand we must worry about how we create wealth. So that's a debate I have with France and with the authorities. We must produce. Yes, that is, behind that, we must first create wealth, and then of course we must ask the question of how this wealth is distributed.
So among the questions, there is what we do as an economy? And there, no one agrees. And then, maybe, shouldn't businesses also sweep in front of their own door? It is said that there are many public aids to businesses. In these aids, is there a bit of housekeeping to do?
Well, first of all, in reality, the aids that are given must either serve to initiate innovation or to compensate for a certain number of competitiveness deficits imposed on the company by external factors. And today, I would prefer there to be much less public aid and for us to have much more competitive cost conditions that allow our country to be competitive compared to our country on its cost base.
So, you often plead for the necessity of giving purchasing power to employees. But then, how do we give purchasing power to employees without reducing competitiveness, without affecting it?
Well, in fact, we need to work a lot on innovation. We need to have products that customers want to buy and are willing to pay the price for. And on the other hand, we need to work a lot on cost economics and productivity, but above all, not to base competitiveness on a depreciated salary. That is a disease. And that's why Michelin has implemented a decent wage, because behind it, it's about properly remunerating the work done, but at the same time, it is very demanding on competitiveness.
Can you explain, come back a bit on this concept of a decent wage that we heard a lot about when you launched this concept?
So, it's about defining a minimum wage level to allow a family unit of four people, two adults and two children, to be able to house themselves, feed themselves, get around, have access to a little precautionary savings, and in fact, so that work and the person who works can focus on something other than survival and then concentrate on their work.
And you implemented this at Michelin, but has it found an echo in other French or international companies?
I have had a lot of requests. We have debates with many companies on this question. There are other companies that have implemented a decent wage. Michelin implemented it, and it has been effective for 2 years.
So, in a year, a little over a year, there will be a presidential election. So, in the case of measures to take to redress France, if there was one priority for you, what would it be?
Well, in fact, the priority is to have a project for our country, a societal project. That's what we lack today, and that's what will allow us to then define the arrangement of investments, what we need to work on as a priority, where to innovate, how to allocate our resources, etc.
Do you see any candidacies that carry this project, that carry projects for France that you are calling for, or are you staying cautious for now?
Well, it's not my role to carry such or such a project, but for now, I haven't seen a project. So for now, I see a whole series of decisions, of questionings, but not a project. In fact, that's what is missing today, and even in the current debate, we don't know what we are debating for. And so, we have a debate on the daily life that is interesting, important, but that does not allow us to project ourselves. And at Michelin, a company cannot live without a corporate project.
So, we will go a bit beyond our borders into a world that is a bit in turmoil right now, and Donald Trump has turned everything upside down. Especially global trade with his customs duties and his extremely aggressive policy. For a company like Michelin, which is very present in the United States and exports a lot, what are the consequences of this great upheaval?
Well, Michelin is first of all extremely global. Michelin is present in 175 countries, and of course, about 40% of our business is done in the North America zone, which includes Mexico, Canada, and the United States. We produce, our strategy is mainly to produce locally to serve local markets. Now, no problem with customs duties, but yes, because in fact, production in the United States is penalized by customs duties on imported materials, and not everything can be manufactured and made in the United States. And so, I was in the United States last week, I met with US government officials to tell them that, and notably to tell them that we have two factories that manufacture giant tires for the whole world and that are extremely penalized by customs duties on steel.
But that means your tires will cost more for American consumers.
Yes, American, and that's it, and notably also for export. That is, notably in these giant tires, from these two US factories, 80% of American production is exported. And what I said is that behind it, the measures taken today penalize Made in America, which is not exactly what the government wants to do.
Exactly. So, there are the United States on one side, but there is also another great empire that is reconstituting itself, China. You yourself are very present there. Do you consider China as a partner or rather as a predatory power?
Well, today, one of the recipes for Michelin's success is to be as local as possible. So Michelin is Italian in Italy, Spanish in Spain, French in France. In the United States, more than one in two Americans think Michelin is American. And in China, it's the same. So in China, we are in the local market to serve the local market. We have never used China as an export base to other countries in the world. Moreover, we are rather a net importer in China than a net exporter in China.
There is very strong local competition. There are 50 tire manufacturers in China. How do you manage to compete?
First, we are very innovative. Second, our brand is extremely well known. It is as well known as in France, in China. And we are considered in China almost as Chinese. And so, behind that, our development is very strong in China.
So we talk about the United States, we talk about China. So in fact, there are great empires that are reconstituting themselves. The world is now tripolar with China, the United States, Europe. As an industrialist, do you think Europe is doing enough to protect itself from these two great powers?
Well, today, Europe is facing a new challenge, which is to redefine the European project. Europe is a formidable construction that has prevented all our current European countries from going to war. We have had an incredible period of nearly 80 years without war, which has not been seen for several centuries. So Europe is a fantastic success. On the economic level today, we can no longer consider that each country can try to be the dominant country in Europe. We need a European project other than simply not going to war, because that has been done. It's perfect.
And do you see things moving forward on this subject?
Well, there is a more recent awareness today in the new commission of Ursula von der Leyen. Clearly, they understood that there was a huge problem with industry in Europe and that if we weren't careful, a huge part of the economy would go abroad. So there is an awareness of this diplomatic unity of Europe. Now, we also have a new phenomenon, which is the war on the European continent with the war in Ukraine, which suddenly sent a message saying, 'But we also have to be realistic, and faced with empires that are starting to have ambitions outside their borders, we also have to be able to defend ourselves.' So there is that awareness. On the other hand, at the level of Europe today, it is not fast enough compared to China, compared to the United States. Today, Europe is moving much too slowly. So we need to go faster.
So, Michelin has just closed two sites in France, in Cholet and in Vannes. Does that mean that a company like yours can no longer be competitive if it produces in France?
What I said is that today, the conditions of competitiveness to export from France or to export from Europe are not met. On the other hand, at the same time that we closed sites, we opened a brand new factory for a brand new generation of products that will irrigate the world in the coming decades. That is talked about much less. So there is a strong sensitivity in France to closures, and I think that, moreover, we must absolutely indicate to your audience, to the people who are listening to us, that the economy is alive, it is made of change. You are not meant to keep the same factories forever. And no, a factory has a lifespan. Technologies have a lifespan, markets are constantly evolving. Markets change, consumers change their ideas, their mindset, their desires. And so we must constantly adapt, and the more agile you are at adapting, the more capable you are of investing and the more capable you are of developing in the country. And so it is not at all abnormal for a company to continue investing in a country. Michelin, all of Michelin's global research is done in France. Michelin still has 13 factories in France. So we continue to invest in France, but at the same time we close.
Yeah. We haven't lost this battle of competitiveness that we talk about enormously.
Temporarily, we are not there. But it's not lost. It's never lost. There is never a battle that is lost. We just have to get to it.
So, earlier I was talking about global trade. Now, Europe is signing a very large trade agreement with South America, Mercosur, against the will of France, which is causing protests, notably from livestock farmers. Is this a good or a bad agreement? Many industrialists say that in fact we have a lot to gain, farmers less. What is your opinion on this agreement?
Well, Michelin is very present in South America, very present, and we know this continent well. And I think that we need free trade agreements because, moreover, they define fair rules of the game. And today, the Mercosur agreement as I understand it seems very fair to me. So I am very much in favor of it. I think that one of the issues in the world today is that we need to multiply this type of agreement, because in them we define the rules of the game. And the great difficulty is when you are in global competition without fair rules of the game, it doesn't work. And today, I think that in the Mercosur agreement, there are conditions of competitiveness and equality of opportunity that seem to me to be well met.
Isn't it naive to sign an agreement like that? We have often been promised wonders with international agreements, and it's true that there have been disappointments.
