Michelin and Goodyear sign logistics companies

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Michelin North America Inc. (MNA) and the Goodyear Tire and Rubber Co. have signed up logistics companies to streamline their disbribution.

MNA signed a six-year, multi-million dollar agreement with TNT Logistics North America under which TNT will operate Michelin's network of tire distribution centers in the United States and Canada.

TNT, headquartered in Jacksonville, Fla., is a leading provider of customized logistics solutions to Fortune 500 companies in the automotive, tire, retail and other industries. It is a division of the Dutch company TPG N.V.(Amsterdam). It has been working with MNA since 1995 when it set up logistics services for Michelin's operations in the United Kingdom.

By the week of Aug. 5, 2002, TNT is expected to begin operation of MNA's network of approximately 7 million square feet of distribution centers in 18 locations in the United States 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 MNA Chairman and President Jim Micali.

"Through this agreement, we will be better able to focus on our core tire business by having TNT provide its world-class logistics services to us."

"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)," said Dave Kulik, president and CEO of TNT.

"TNT also will invest in some new operational tools as well as a new suite of information technology over the period of the contract to deliver streamlined processes and enhanced customer service."

While specific financial terms of the agreement were not disclosed, Michelin indicated that it could realize a capital gain of about $26 million on the sale of certain distribution centers to a joint venture managed by Lexington Corporate Properties Trust.

Meanwhile, Goodyear Tire & Rubber Co. has announced that Exel, a supply chain management company that provides customer-focused solutions to a wide range of manufacturing and retail industries, would become the lead logistics provider for its North American Tire operations.

Exel currently handles distribution center operations for Goodyear in York, Pa.; Orlando, Fla.; Columbus, Ohio; Memphis, Tenn.; and Victorville, Calif.

Goodyear began working with Exel in 1996 to streamline the company's supply chain with good results, according to John Loulan, vice president for operations, manufacturing and supply chain in North America.

"The success has been evident in significant positive results in inventories, that have improved our cash flow, and fill-rates that have improved our customer service," Loulan said.

Loulan said that additional opportunities exist throughout the supply chain, particularly to the benefit of Goodyear's independent dealer network through continuing fill-rate improvements.

"This move will expand Exel's reach into our supply chain network beyond its current effective management of our distribution centers," Loulan added.

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