Forty years ago, when John Reid was just six, Michelin opened its Dundee tyre-making factory. The French corporate giant was doing well and had ambitious plans for Scotland
Forty years ago, when John Reid was just six, Michelin opened its Dundee tyre-making factory.
The French corporate giant was doing well and had ambitious plans for Scotland with Dundee producing car tyres with a rubber processing plant attached to it, Perth to make truck tyres and Aberdeen housing a plant to make the steel cord which goes into tyres.
The Dundee and Aberdeen plants were opened but then the oil crisis of the early seventies struck and the price of petrol soared and hit new car sales. Plans for Perth were abandoned and then in the mid-eighties the Aberdeen plant was closed leaving Dundee as a standalone factory in Scotland.
Since then the plant, which employs 860 people, has had to constantly prove its worth to Michelin, which currently has 15 tyre plants in Europe, in an increasingly competitive world. At the same time, its importance to the Dundee economy has grown as other large employers have closed their operations in the city. It has been estimated it is worth £45m to the Dundee economy.
Today Reid is factory manager at the plant where he has spent most of his working life. When he was given the top job he had already helped to save the plant from closure in his previous role as personnel director and now he has successfully battled to put it on even firmer footing after attracting substantial investment from its French parent company.
Michelin is investing millions in a state-of-the-art robotic production line in a new building at the plant, which enables it to produce the next generation of fuel efficient tyres. He also recruited 140 new staff as part of the investment.
The plant, which is based on a 32-hectare site, is capable of producing 24,000 tyres a day. It makes 13, 14 and 15-inch tyres for smaller cars, 95 per cent of which go to markets all over the world. About 70 per cent go to central Europe, with the rest distributed to North America, the Middle East, South America and even China. “So there are cars running around in China with Dundee tyres on them,“ says Reid proudly.
Reid was born in Glasgow and raised in Ayr. He left Belmont Academy when he was 17 and went to Strathclyde University in Glasgow to do a five-year thin sandwich course studying manufacturing, sciences and engineering. It was a new kind of course which had been created following the Finniston Report that concluded the UK had too many engineers who knew nothing about business.
“We’d lots of good ideas out there, but they didn’t work because no-one could make it work as a business. And equally there were lots of businesses run by accountants who knew nothing about engineering. So the idea was to try and give engineers a broader view of the business.”
During his degree Reid worked with a number of different businesses but on completing it he joined Michelin. He started working at Michelin’s UK headquarters in Stoke-on-Trent. “My first job was as a supervisor on shift, managing 27 operators and two engineers. That was a real baptism of fire. But that was the way Michelin did it in those days. I survived that!”
Reid then moved to France for about a year where he was taught all the tyre technology, and learned a bit of French.
In 1992 he moved to Dundee and has been there ever since. “I’ve done almost every job in the plant – I’ve been what we call front line leader, production shop manager, workshop manager, engineering manager, head of personnel for the site and operations manager.”
Seven years ago, when he was the head of personnel, Reid and the then factory manager Trevor Haines, got a telephone call from France to say the company wanted to close the factory and they had to go to France to present to the group how they would go about doing it. However, Haines and Reid decided to go to France with a different presentation on why they shouldn’t close the plant. “After they got over the initial frustration that we’d answered the wrong question, we actually managed to convince them we were right,” says Reid. “So the plant came back from that doomsday decision.
“About three years later, we were then in Europe going through another restructuring and our industrial director at the time quite transparently said there are three factories fighting over the same volume and at the end of the year there will only be one. And that was a big plant in Italy and a plant in France, only 20 kilometres from their headquarters.
“So at that time we, again, felt the pressure and the odds were stacked against us. However, we managed to deliver the required performance and progress and, unfortunately for them, the other two plants closed.”
In 2010 Reid got the job he always wanted to do – factory manager – but it came with a major challenge. “By 2009 the confidence had gone out the plant,” he explains. “People were getting a bit fatalistic. It’s only a matter of time. They keep coming back for us. They’ll get us the next time. Why bother? And it was really hard work keeping the place going. So although our strategy of survival up to that point had been successful, we were pretty threadbare at the end of it. And it was clear our performance was suffering and if we didn’t do something fairly quick and dramatic we would probably be closing at some point anyway.
“During 2009 we had a whole stream of senior executives coming to the plant and there was quite negative feedback. You don’t want that because that’s the start of a decision making process, so the threat was clear to me. The different strategy was let’s stop trying to survive, because survival is very defensive and not very positive. You’re not trying to create things, you’re just trying to stop things happening to you. So it was clear, for us to make the progress at the speed we had to make it, we had to go on the offensive.
“The challenge was then to change the attack from survival to success and my job with the team was really to try and, first and foremost, bring back the confidence in the plant and the self-belief. In the addresses that I made to the workforce I said if we’re going to go down, we’re going to go down the way we want to do it.”
“We had gone for maybe ten or more years where we had pretty much zero investment. The fabric of the building and the condition of the process was deteriorating. So one of the things we wanted to do, or we had to do, was change that.
“It was clear to me we had one crack at this and if we didn’t go in hard and bold we weren’t going to make it happen. So I stood in front of the workforce right at the very start of 2010 and painted out what I thought was the vision of our factory. What we would want our factory to be like. And one of the things I said was, we have demonstrated a failure to deliver in the past. Now we’re going to do it. And one of the things we will do is overspend our budget where we need to.”
Reid oversaw a transformation of what was a tired, messy and timeworn plant into a clean, tidy, modern-looking operation where customers could be brought without embarrassment. The workforce gave up their spare time to help improve the plant. “We had a ‘chuck it out’ week which became a chuck it out fortnight,” says Reid. “So we had guys coming in at weekends to clear up the external parts of the site. We had not only deteriorated within the plant but outside of the plant. You could see some of the rubbish we had from Google Earth.
“At the end of the first year we started to see a change. My industrial director at the time was a really supportive guy and I’d overspent the budget by about £800,000 to make these things happen. But I was convinced that if whatever we did was of a good standard, then it would be defendable. And that was exactly how it happened. So we did it and asked for forgiveness later.”
“Our objectives were to focus on three key bottom line indicators: lost time accidents, respect of the monthly production contract and changing scrap levels. It has been very successful.
“We haven’t had a lost time accident now for three years and when you think we’ve got 860 people in a very congested, fast moving plant, that’s a pretty impressive record. We’ve transformed our delivery performance so our respective contract has been 100 per cent every month. In fact we out-produced our contract over 2010 and 2011 by a couple of hundred thousand tyres. We also reduced our scrap level by a third, which I reckon saved us about £800,000 a year. So huge gains and opportunities there to redirect the money into our accelerate programme if you like.”
Reid also looked at the way the factory was working and discovered pockets of employees who were working on “their own little agendas”. “It was about clearing that up and refocusing on what we’re here to do,” he says. “We brought in a lot of new manufacturing techniques as well, very quickly. So we transformed not only the physical appearance and the standards of the site, but also the managing practices that we used, which helped us improve our performance.”
One early initiative was creating “the workshop of the future”. “The logic was we don’t have the money to transform everywhere because it’s a big site, so let’s pick one area and make that the show home effectively. Let’s try out all the different ideas we’ve got in this one area and then we can refer people to that. This is what’s coming to your workshop soon. This is what we expect when everybody and anybody does anything, this is the standard we expect to beat.
“And it was also an opportunity for us to present to our central colleagues that we understood what high standards were.”
Reid did not seek permission to improve the plant. He just did it. “The idea was to change the company’s view of us as an asset – demonstrate what we could do and get some confidence back into the plant so we would earn the credibility to go and knock the door looking for investment, which we did at the end of 2010.”
Michelin agreed to invest in a new building to house new computer-controlled robotic machinery which makes new ultra-low rolling resistance tyres which are much more fuel-efficient.
Reid says Scottish Enterprise and the Scottish Government have been very supportive and, indeed, provided grant support for the new developments at Dundee. “They’ve given us a level of grant support, investment support which is second to none,” he says. “If you compare that with the level of support Michelin gets in continental Europe, we got four or five times the average that’s given to Michelin abroad.
“So that was not only a direct and very practical support to the cost – because it took away costs from the projects and made them more competitive than our sister plants – but it also demonstrated clearly the value of our relationship with the local community and the Scottish Government.”
Reid was dealt a blow during the summer when the sale of tyres slumped and resulted in him having to shut the plant down for three weeks. “The plan for this year was to produce seven and a half million tyres. It looks like we’ll end up producing 5.8 million, which is about a 25 per cent drop against our plan. We’ve used a number of mechanisms to get through that. The first line of defence, if you like, is our flexibility model.”
Under that a number of workers at the plant have variable hour contracts with a minimum guaranteed amount of work over the year. Within a week’s notice Michelin can flex their hours up or down.
Despite those problems Reid says he has had a fantastic two years and is immensely proud of what has been achieved. “A lot of people, including myself at times, thought we probably couldn’t do it. But we have pulled it off. So it’s been just fantastic, great fun, lots of energy in the plant. It’s been great to see, having gone through the really difficult years. It’s great to see the guys with some confidence and some motivation and belief in the future.”
Reid, who is married with four children, spends most of his spare time with his family and walking his two black labs.
He also loves Dundee. “When I came here 20 years ago, being a west coaster and having been around Glasgow, it was a bit of a culture shock because at the time it was quite a run down, hard, industrial, struggling city. It was quite a challenging place to be in. However, over the years I’ve grown to love it. It’s a great place in terms of the situation – the river and the beaches – and you’re only an hour away from the mountains.
‘They’ve done a lot of work to regenerate the centre of the city. It’s big enough that you can get most things that you need, small enough to be 15 minutes away from your house.The redevelopment of the waterfront and the new V and A are really positive things for the city, so it’s a great time to be in Dundee.
“I’ve had a long and very happy relationship with the city,” he says. “And I think that’s what I get my buzz out of, which is playing my part in keeping this factory here and making it a success.”
Michelin apprenticeship school
Michelin has a very active social responsibility policy and one of the benefits for Dundee has been its apprentice training school, which is not just for its own workers but also open to employees from other companies in the area.
Reid says: “At the moment I reckon we’ve got over 20 external apprentices for other companies. The benefit is there for small outfits around Dundee who don’t have the resources or the finance to carry an overhead like that. We use it because it’s a good thing to do, and its also utilises the capacity that we’ve got.
“It’s purpose built, built alongside the plant 40 years ago as a place to train our own engineers. We’ve trained 406 apprentices over that time and we’ve got about 50 apprentices at the moment.”
On-site energy generation
The Michelin factory site can be seen for miles around thanks to the two huge 400ft tall wind turbines within it.
With a combined capacity of 4MW, the turbines generate an estimated eight million units of electricity to help power the factory as well as homes in the surrounding area. They provide roughly 30 per cent of the electricity required to power the factory.
“Right now our energy bill is about £8m a year,” says Reid. “So anything we can do to shave off some of that cost is a significant gain for the plant.
“They were a bit controversial when they were built but wind turbines were a great solution,” he says. “When the turbines are at their nominal speed they take the full mode of the plant.”