Self-Finance Until the World Is Too Small, Then Debt-Fund Continental Conquest

"For twenty years, he was the chief architect of Michelin’s international development. Without him, the company would probably never have dared to take the considerable financial risks it did by going into debt (having previously only grown through self-financing). It would not have launched large eurocurrency loans and convertible bond issues that succeeded each other in the sixties and seventies, nor organized an entire financial structure in Switzerland, Bermuda, and the Netherlands to manage its international cash flow."

"A new and perhaps decisive element: in 1967, Michelin presented the ZX, more universal than the X and better suited to the powerful and fast cars of those vroom-vroom times. A boost in programs: five new factories in 1971 on the European continent; Bamberg, Hamburg, Trier in Germany, Fossano, Alessandria, Turin (Stura) in Italy. In 1972, seven factories. By 1974, Michelin had forty-five factories around the world and its production had quintupled in fifteen years. L’Express hailed Michelin as “one of the greatest builders of the Western world.”"

"As in Egypt, Bibendum had to wait a long time in front of the door before being authorized to enter the Brazilian market. The first contacts with Brasilia date back, it seems, to 1975. In April of that year, two Michelin executives, Jean Bollotte and Daniel Lejeune, were received by Delfin Netto, former Minister of Economy, then Brazilian ambassador to Paris. The group, they said, would like to build five manufacturing plants on the same site. To do so, Michelin would invest one hundred and sixty million dollars and export a notable portion of its production. At that time, Brazil was still experiencing strong growth. “The truck market,” François Michelin would explain to his shareholders a few years later, “is twice as important as in France. Trucks cover a thousand kilometers a day, and tires last three months.” A new Promised Land."

"Obviously, the rise of the American currency, boosted by Ronald Reagan, should allow it to better navigate the situation. The exports of the European subsidiaries to the United States were planned, at the beginning of the seventies, based on a dollar oscillating between four francs eighty cents and five francs. By the end of 1980, the American currency was at four francs twenty cents. In January 1981, it oscillates around five francs eighty (after nearing six francs twenty in August). On the other hand, the investment program—which luckily was carried out with an undervalued dollar—is, if not completed, at least largely underway. In the units of Greenville, Anderson, Spartanburg, the break-even point has already been reached. In Dothan, it is approaching. Only the Lexington plant, which has just been commissioned, weighs on the results. In the current state of affairs, the creation of three new plants in Texas—and for which land has been purchased in Austin, Midland, and Temple—can wait. If the American automobile market picks up, the third Canadian plant in Waterville, also in Nova Scotia, which will be commissioned at the end of 1982—the largest, it is said, that Michelin has ever built in the world—could suffice to bridge the gap[47](private://read/01jkqdqdgs7t399cyecbezrhj0/#ftn_fn47)."