copertina 13-07-20008:21Page1

Pubblicaz. non in vendita. Spediz. in abb. post. comma 34 art. 2 legge 549/95 - Milano. Registrazione presso il Tribunale di Milano n. 494 del 24.9.1994 RLD W The quarterly magazine for Pirelli’s management throughout theworld -January 2000- No.22 by E-Pirelli the E-Factory MIRS: Pirelli World n.22b 13-07-2000 8:12 Pagina 1

CONTENTS E-Pirelli for the New Economy

For Pirelli World it would be difficult to begin the year Innovation really is spreading across the board: with 2000 with more exciting news, in particular in the field MIRS, tyre production is being totally revolutionised of new technologies. The evolution of the Group towards (cover story), while the Challenge project permits the the e-economy is a daily occurrence. While the techno- creation of value through manufacturing (page 22). For logical alliance with the American Cisco opens up tyres, the concept of e-advertising has already begun: important new prospects for the Group and its optycal with our new international campaign being transmitted as technology, in particular on the US market, the most a world exclusive on the Internet. An innovative initiati- advanced in the world (page 9), our www.pirelli.com web ve to take full advantage of the net’s potential (page 12). site is changing: easier and faster navigation, more con- An obligatory conclusion for the energy cables where, sumer-friendly approach, ever more in line with the in the face of an evolving market (page 15), Pirelli is needs of surfers the world over, ready for e-commerce strengthening its position as world leader with the BICC (page 11). acquisition, being announced as we go to press.

MIRS: Modular Integrated Robotised A technological alliance with Cisco for Pirelli’s new top-of-the-range car System for tyre production - page 2 the future of communications - page 5 tyre, PZero Rosso - page 7

www.pirelli.com: the Group Pirelli’s advertising campaign for Report from NKF, our Cables and Systems re-launches its Web site - page 11 the year 2000 - page 12 company based in the Netherlands - page 19

The Pocket Factory...... 2 Solution for a R-evolution ...... 15 A High Speed Alliance ...... 5 The Winter Takes it All...... 17 And Now there Are Three ...... 7 A Commitment to Art ...... 18 Real Estate, Real Success ...... 9 The Acquisition of NKF Is Completed...... 19 [email protected]...... 11 Run, Tyre, Run...... 12 Taking up the Challenge...... 22 A Year Later...... 14 World Brief...... 24

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INNOVATION

Manufacturing revolution in the Tyre Sector The Pocket Factory Giovanni Ferrario, General Manager of Pirelli’s Tyre Sector, speaks of the new Modular Integrated Robotised System for tyre production

n a multi-modular, roboti- year 2000 at the Pirelli Bicocca sed area of 350 m2 easy to plant in Milan. In the next months, a “I locate close to any custo- strategic rollout plan for the MIRS mer, using a completely innovative mini-factories will be decided upon; process protected by broad patent it will begin in Europe and the coverage, Pirelli is totally revolutio- United States in 2001. The total nising the traditional technologies planned investment is Euro 250 mil- and methodologies of high perfor- lion over the next five years, con- mance tyre manufacturing”. These centrating on the high performance are the words with which Pirelli segment; MIRS is destined to presented to the world on the 2 increase our production capacity, December the “pocket” tyre factory not substitute existing facilities. MIRS – Modular Integrated Robotised System. A unit occupying a few hundred square metres in which a series of machines can pro- duce a tyre, from compounding to the finished product. A tyre every three minutes, without interruptions nor human intervention in the pro- duction cycle, with much more flexibility than in traditional proces- ses. A technology which will bring about major changes to all aspects of our industry. Giovanni Ferrario, General Manager of the Tyre Sector, explains.

Mr. Ferrario, Pirelli has presen- ted a prototype factory. When will the mini-plants become operatio- nal?

The first industrial pilot plant using the MIRS process will come on stream in the second half of the

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…which will be a flexible “pocket” plant, able to be set up in any strategic area, both in terms of location and time: where it is nee- ded, when it is needed. A tyre fac- tory ready to meet instantly the needs of the nearby car manufactu- rer, which theoretically could lead to the elimination of any logistics issue. It would not be science fic- tion to predict the eventual establi- shment of tyre supply from one of our MIRS units directly into the vehicle maker’s production line.

With a level of flexibility previou- sly unknown…

Completely, given that MIRS enables us to modify the size of tyres in real time, in line with our customers’ needs. It will be possible to produce even a very limited num- ber of a certain particular tyre, without affecting cost effectiveness.

Have you already presented the process to some car manufacturers?

MIRS will radically change many production process is concentrated Yes, we began talks on MIRS aspects of Pirelli’s tyre production. into an extremely small area. No with several vehicle makers when Which is the most important? space is taken up by large quantities we decided to bring a number of the of materials waiting to enter the plants on-stream over the next five The integration of the whole process. production cycle. In a traditional years. The program that governs MIRS is part factory, only 12% of material is of a software package that, upstream being processed at any given How can we quantify the differen- from the manufacturing phase, oversees moment, so the remaining 88% is ce in terms of cost to Pirelli the engineering process, back to stored, awaiting its turn. between a traditional and a MIRS the initial design phase. It is a MIRS is not like that: raw factory? single architecture that, star- More materials are transformed ting with the definition of into the finished product Considering a mini factory which product specifications, productivity, with no interruption and is able to produce a million tyres automatically intervenes in therefore with no need per year, the overall saving in pro- mould design, the choice of less space for interim warehousing. duct costs can be quantified at 25%, materials, the design of the This enables Pirelli to slash while workforce productivity building drum. The same software the average time of material increases by 80%. defines the path driver for the MIRS transit from the raw materials store robots and manages their work cycles. to the finished product store from Are there other cost savings? six days to 72 minutes. This allows a considerable reduction In logistics, for example, the of space. A concept which gives an idea of reduction could be remarkable. the substantial modifications of the Today, a tyre is difficult and expen- Without a doubt. The entire MIRS factory in the years to come… sive to transport. The truck takes

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away a large quantity of fresh air. bution sets in motion thousands of Moving on to products, what should Moreover, it makes an outward trucks daily. Moreover, in the tradi- the high performance tyre market journey fully loaded and returns tional process each interruption expect in the immediate future? empty: the structures necessary for means an enormous specific con- tyre transport do not accommodate sumption of energy for cooling and MIRS generates an ultra-low profile other product types on the return handling. The reduction in proces- tyre of totally innovative characteri- journey. sing steps greatly reduces the stics in terms of performance, reliabi- energy requirements of production: lity and comfort. Starting from this So pollution will be reduced? ecologically, this means less pollu- year, with Original Equipment custo- tion because of the reduction in mers, it will represent a new point of Naturally, yes: today tyre distri- transport flows. reference in the High and Ultra-High Performance segments. Pirelli will also give an industrially advanced response to the requests of total mobi- lity.

Will those products also be a step forward in terms of quality and unifor- mity?

That is a result we have been able to achieve due to the simplicity of the MIRS module, in which the 14 tradi- tional phases of tyre construction are reduced to three: preparation of semi- finished components, building/curing, finishing. Which means the elimina- tion of a great deal of the traditional process’s discontinuity – interim warehousing, cooling of semi-finished components, transportation to the next production phase: with the thermal fluctuations they create, in theory all interruptions and re-starts can genera- te quality dissimilarities. With MIRS there is no “stop and go”: tyre building is all a continuous flow procedure, from the extrusion of the tread com- pound to the finishing department. A Tyre every 3 Minutes The quality of the product will be dou- In the first step of MIRS, the semi-finished content is produced by extruding the com- bled: the percentage of waste will fall pound in the form of a continuous strip: under software management, each extruder or drastically. building machine specialized for each individual compound participates in the pro- duction of the strip, in the quantity and weight necessary for the various components. Any preview of the products? The second MIRS step is an integrated one: building and curing. Beginning with the strip of intermediates fed continuously to the system, a series of robots deposits the Last December, while presenting the material on a single rigid drum. The last building robot physically “offers” the drum new process, we revealed the first with the green tyre to the next machine that feeds the curing press. Following curing, three “concepts” of tread pattern – the same robot returns the drum to the production cycle. If the type of tyre being manu- Rain, Dry and P Sette.r – as well as a factured changes, the machine itself procures a drum of the new required size. The prototype Run-flat tyre with telemetric cured tyre, meanwhile, has reached the final finishing section: one every three minu- sensors to check inflation pressure. tes, without being touched by human hands. MIRS will later be gradually extended to all the other product segments.

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SPOTLIGHT

Pirelli and Cisco sign a technological agreement for the future of communications

A High Speed Alliance Together with Cisco, a worldwide leader in networking for the Internet, Pirelli strengthens its position in the US market

Simone Piattelli Palmarini reports communications. growing European market - in the core from Milan, Italy The success of Pirelli’s pioneering business of optical fiber, optical cables, interest in this epoch-making idea and in optical components and submarine opti- he full importance of an the fast ramification of its optical back- cal systems, which are among the faste- epoch-making idea is often bone network recently led to a major, st growing segments of the optical indu- “T not perceived in the gene- strategic alliance with the worldwide stry. The synergies originating from this ration in which it is made”. When leader in networking for the Internet: new partnership lead to the expectation British economist Alfred Marshall was Cisco Systems. of a solid improvement in Pirelli’s writing these words in his “Principles of The terms and the future of this allian- Internet-related optical technology and Economics”, 110 years ago, computers ce were illustrated on December 20th by business. A unique opportunity to were still in the “mechanical era” and Marco Tronchetti Provera, Pirelli’s expand both Cisco and Pirelli’s global were used for simple data processing, as Chairman and CEO, in a press conferen- business perspectives by entering new in the case of the US Census Bureau, ce held in the Group’s headquarters in dynamic markets and driving the which made use of the first commercial Milan. The agreement with Cisco inclu- Internet technology forward to maturity, “mechanical computer” to tabulate data des a 10% equity investment of $100 with an unswerving commitment to the for the 1890 census. Today, nobody million by Cisco in Pirelli’s optical com- research and development of fiber optic would doubt that – maybe even more ponents division and submarine optical technology. than the development of the computer transmission systems division, and the In today’s global economy, partnershi- itself - the Internet is the epoch-making sale of Pirelli’s terrestrial optical systems ps are increasingly considered as a pri- idea, boosting day by day both the num- business to Cisco for an aggregate con- mary key to success, and Cisco Systems ber of cybernauts and the whole Web- sideration of $2.15 billion, of which has developed a unique approach to the related technology, optics in the first about 20% of contingent on revenue tar- business of strategic alliances. As stated place. As Marshall suggested, it may gets and other performance milestones. by John Chambers, Cisco’s President take a generation to fully evaluate the As underlined by Mr. Tronchetti and CEO, in his message to the journali- impact of the Internet on the global Provera, this agreement will allow the sts attending Pirelli’s press conference, society and its behavior, but it’s already strengthening of Pirelli’s strategic and “in the Internet economy, only those clear that, until today, no other techno- competitive position - in particular in the companies that work together will logy has so deeply changed the world of U.S.A. key market, but also in the accomplish their joint goals at an

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Internet pace. If you look into the future, Cisco provides end-to-end networking of grant assistance to poor countries – we face a very exciting time. The solutions that customers use to build a Cisco is harnessing the tools of modern Internet will be the beginning of the unified information infrastructure of information technology and the power second industrial revolution, and it will their own, or to connect to someone of the Internet to eradicate extreme be led by companies that understand else’s network. An end-to-end poverty. In the same way that Internet their strengths, and understand how to networking solution is one that provides has revolutionized the way we do busi- partner. No one or two companies can a common architecture that delivers con- ness, the “NetAid” project launched by do it by themselves, but only by working sistent network services to all users. In Cisco will use the power of the Internet together can the companies accomplish contrast to many technology companies, for social change, by increasing aware- their joint goals”. In addition to the rea- Cisco does not take a rigid approach that ness of extreme poverty and mobilizing sons that drove John Chambers’ com- favors one technology action to help over 1.3 pany to join forces with Pirelli, his mes- over the alternatives and billion people in the sage has given us the opportunity to imposes it on customers world’s poorest coun- learn more about our counterpart. as the only answer. tries. One of the world’s Pirelli’s new partner is based in San Cisco’s philosophy is to most powerful Web Jose, California, and represents one of listen to customer reque- EMPOWERING THE sites, the NetAid site is America’s greatest corporate success sts, monitor all technolo- INTERNET GENERATION intended to be a long- stories. Since shipping its first product in gical alternatives, and term resource for the 1986, Cisco Systems has grown into a provide customers with a range of UNDP and is expected to generate over global market leader that holds n. 1 or n. options. one billion hits and millions of actions to 2 market share in virtually every market But beyond the new, positive profit- help end extreme poverty. Created as a segment in which it participates. After focused opportunities originating from means to generate awareness and drive becoming a public company in 1990, this alliance, Pirelli has a further reason traffic to the NetAid Web site, the Cisco’s annual revenues have vertically of being proud to be bound to Cisco. As NetAid initiative has included three increased: as overlapping measured by NetAid concerts market capitali- held on October zation, Cisco is 9 at the Palais des among the large- Nations in st in the world, Geneva, with 18,700 Wembley employees and Stadium in selling its pro- London and ducts in approxi- Giants Stadium mately 115 coun- in New Jersey tries through a featuring George direct sales force, Michael, Celine distributors, Dion and Bono, value-added and among others. system integra- The concerts tors. Cisco’s were simulta- networking solu- neously broadca- tions connect st via radio and people, compu- television and ting devices and Webcast via the computer The home page of www.netaid.com. Internet from the networks, NetAid Web site allowing people to access or transfer a member of the global community, at www.netaid.org. A different and unex- information without regard to differen- Chambers’ company has created a uni- pected power of the Internet that, unlike ces in time, place or type of computer que strategic alliance for the sake of Alfred Marshall’s 1890 epoch-making system. Driven by the philosophy sum- humankind: together with the United idea, will not have to wait for the next marized in the motto “Empowering the Nations Development Programme generation to be entirely understood and Internet, Empowering Humanity”, (UNDP) – the world’s largest provider appreciated.

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PRODUCT

Pirelli’s PZero Rosso is the new top-of-the-range car tyre ears. Then, electronics arrived: electro- nic traction, suspension and stability control. Ever more sophisticated mana- gement systems to improve safety and driving comfort made their way aboard And Now there sports cars as well as most other modern motor vehicles. Laws were enacted governing acoustic pollution: thunde- Are Three rous engine and exhaust notes, aerody- namic noise, tyres squealing as they bit into the asphalt have all played their last With Scorpion Zero and PZero System, PZero Rosso symphony. As part of this evolution in takes its place as leader of the PZero range: an ultra-high the sports car segment, Pirelli has created performance collection with maximum choice and zero limits the PZero Rosso: comfortable, quiet,

Daniele Pirola reports from Miami, Florida, USA

hree Zeroes for a new Millennium. What better way T to celebrate the year 2000 than with a third PZero, the fastest, quietest, most comfortable product in the history of Italian sports car tyres. That is exactly what the Pirelli Tyre Sector did when it launched its latest creation, the PZero Rosso, to the world’s press in Miami, Florida, in February. The new tyre takes its place as leader of the PZero clan: PZero Rosso, PZero System, Scorpion Zero. A family name which marks a fundamental turning point in Pirelli ultra-high performance car tyre technology. The new arrival is called Rosso, the Italian for red, because as with Ferrari, for instance, red has always symbolised a love of driving fast cars; that is what led to the birth 15 years ago of the first PZero, the founding father of the dynasty, which continues to give life to this new generation of ultra- low profile tyres. With PZero Rosso, a complete new Pirelli ultra-high performance car tyre range has been created for drivers who want the maximum, not only on the road but off it, too. Not so long ago, words like “comfort” and “silence” were no part of a sporting super car’s vocabulary. Performance and wet grip were enough: the love of driving meant the bump- thump which small road undulations transmitted to the cockpit fell on deaf

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ultra-high performance, no trade-offs. ved the maximum of their respective nylon and originally developed for space Naturally, PZero Rosso is the top capabilities. Thousands of small colou- exploration. The development of the performer of the breed. Sports handling red bricks in movement, shared with car new PZero has also permitted important made up of quick, sharp response, pro- designers so that Pirelli could know in process innovations, including the use of gressiveness, precision of trajectory, advance the characteristics each primary the highly automated Flexi system straight line speed, cornering power: the component should embody so as to during building, ensuring continuous qualities on which Pirelli founded its become part of a specific car under deve- control of the tension of the belt material lineage of low profile tyres more than 25 lopment. Simulation under load, stee- on the carcass to provide maximum years ago with P7, created for the mythi- ring, change of trajectory, on the steering build uniformity. The result is a profile cal Lancia Stratos. Behind all PZeroes pad, the impact of an obstruction: PZero which produces an absolutely uniform are years of intensive study of profiles, Rosso underwent exhaustive video tests. footprint at high speed for outstanding tread compounds and patterns which Using finite elements to design the handling and road holding when guarantee the ultra-low profile will pro- tyre is how Pirelli identified its cornering. PZero System, with vide maximum safety in potential aqua- primary objective: weight its wide commercial availabi- planing situations. To the point that reduction. A lighter, more A newborn lity and being well known in Pirelli introduced the PZero System, two resistant structure was crea- in the P Zero the motor industry, conti- different tread patterns for a car’s front ted so that PZero Rosso nues to represent the “spirit” and rear axles, which provide exceptio- brakes better and accelerates family of the PZero concept. Since nal handling in the wet. To those ele- more progressively, cutting 1994, the small yellow PZero ments of top performance, PZero Rosso down thermal strain under stress on its sidewall has distinguished it today adds top comfort, because the and maintaining the tyre’s integrity, as an ultra-high performance tyre, which makers and buyers of modern luxury regulating its wear. has become the point of reference for the supercars demand quiet running from New materials, such as Aramid Pulp, sports car industry. During the PZero’s long life – it was unveiled with the super- charged, turbo charged Lancia Delta S4 and, later, the Ferrari F40 – it has obtai- ned 200 homologations; 2.5 million units have been sold and it is a range of almost 80 different sizes. It has become the most popular tyre with tuners and stylists for its ability to innovate. PZero has the largest range in the UHP segment and is testimony to its vital energy: a mil- lion units were sold in 1999 and a sale of two million is forecast for 2000. And then there is Scorpion Zero, the extension of the “zero limits” concept to the new Sport Utility/Activity Vehicles The PZero Rosso fitted on the last generation of Ferrari and Porsche. segment, which is developing fast. These are vehicles fitted with off-road tyre their tyres, the ability to absorb road sur- have also contributed to this result. sizes but which have sports performan- face undulations, ensure handling Aramid Pulp – fibres five times lighter ce: so the Scorpion Zero has a super- uniformity, smoothness. To be top in than steel but of equal durability – used reinforced structure, an innovative dou- performance and comfort is why PZero in the basic tread compound maintains ble “Z” tread pattern and sizes of up to Rosso’s has been conceived, developed, thermal stability under prolonged stress 21 and 22 inches in diameter, which built and tested; and that has been done with no decline in performance. And in meet all change-over needs. A tyre together with the top sports car manufac- the future, the PenTec, used in the zero which, while being essentially for road turers right from the tyre’s first design degree bandage which lies on top of the use, returns excellent performance off- stage and with the help of the most steel belt, gives greater dimensional sta- road, especially on sand. With PZero advanced methods of finite element bility and resistance to fatigue at high Rosso and PZero System, Scorpion Zero analysis. speeds. Produced by AlliedSignal, this is the third “zero” of the Collection: an With PZero Rosso, virtual and integra- polyethylene fibre is a new generation ultra-high performance celebration of ted systems of tyre development achie- polymer five times more resistant than the new millennium.

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M&As

irelli’s real- Successful tender offer by screen-cinema, estate unit Pirelli & C.’s Milano Centrale on Unim one of the bigge- P Milano st in the world. Centrale announced Naturally, a in October the laun- project of this ch of a take over bid kind, which for Unim, the com- Real Estate, means re-desi- pany spun off last gning a whole year by Rome- area of the city based insurance Real Success in the name of a colossal INA. The much more bid has been carried sustainable out with two finan- The Group is very active in Italy’s asset management development, cial advisors: market with extremely interesting prospects has helped Mediobanca - the Milano Centrale leading Italian mer- to mature a clear chant bank - and competence in UniCredito Italiano. all the related It has encountered a areas of opera- very successful tion. In particu- response, with over lar, the Bicocca 90% of Unim’s sha- Project has pro- reholders accepting vided the com- the offer. The ope- pany with ample ration is of primary skills in real importance: it has a estate services value of about management. 2,000 million of Such experien- Euro, out of which ces were treasu- 1,750 not charged red over the to the Group, fol- years, and today lowing agreements Milano Centrale reached with inter- is the only national partners. Unim’s properties include this building in the centre of Rome. Italian company The Group therefore faces extre- local authorities, entirely re-desi- able to offer a complete range of mely interesting prospects in the gned the area, in line with the needs services: asset management, for asset management market, a field in of modern times. Facilities for the both commercial and residential which Milano Centrale is speciali- production of material goods have areas, property management, agency sed. been substituted with structures for work, project management and advi- Pirelli’s experience in the real the non-material production of ce, town planning. estate sector began several years ideas: universities, research In Italy there are a num- ago. Towards the end of the centres, headquarters of Leader ber of companies able to Eighties, advanced technology major international grou- offer one or more of began to make large industrial sites ps like Siemens and - of the Italian those services, but only redundant. One example was the shortly - Deutsche Bank. Milano Centrale can Pirelli Bicocca area on the outskirts All of these will be fol- market offer them all. On the of Milan, an enormous 700,000 lowed in the near future by basis of this unique quality, square metre complex which, in just structures for leisure and enter- the company has grown at a a few years, had become too big for tainment: an auditorium of over rate of 15-20% a year over the last a world in which technological pro- 2,000 seats where La Scala Opera decade: a doubly important record, gress demanded fewer space. House will transfer its productions considering that Italy has recently Pirelli went right to the heart of for about two years during refurbi- become the most attractive country the matter and, together with the shment work on its stage; and an 18 in the world in terms of property

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market prospects. tant agreement with This relatively new Morgan Stanley, which phenomenon has been has already resulted in caused by two main rea- contracts worth approxi- sons. The first is given mately 500 million Euro. by the evaluation of long Within this framework, term trends in the world the successful conclusion real estate scenario: in of the Unim operation the early Nineties a means to Milano major worldwide crisis Centrale the achievement hit the international pro- of an important objecti- perty market; later on, ve. Unim was, in fact, the recovery started first attractive for two main in the USA and expanded reasons. One was its rich to Europe: in both cases, property portfolio which Italy was the last to suf- can clearly be separated fer and to recover. into residential and com- The second reason is mercial. Seventy-five that, in recent years, the percent of the latter has Italian real estate has gone to Morgan Stanley changed, getting closer Real Estate, Milano to the Anglo-Saxon Centrale retaining 25%. model in terms of pro- Negotiations concer- perty evaluation, now ning the residential sec- linked to the value it tor are currently taking generates from locations. place. With a matured In the first half of 1999, Some of Unim’s properties, in Trieste (above) and Rome (below). management ability in Italian residential real the field, the Pirelli sub- estate prices rose by sidiary has now the 3.7%, while commercial necessary skills to fully rents still lag the rest of exploit the recently Europe. acquired patrimony. A macro-economic fac- The second reason was tor of primary importan- Unim’s interesting asset ce should also be added: management structure: the greater reliability of Milano Centrale now Italy on the international aims at integrating it into market. A factor which its own, reinforcing and favoured the arrival on enlarging its manage- the Italian market of ment capability. some of the world’s key With the recent addi- players, determined to tion of Unim, today invest in the country: Milano Centrale manages names like Morgan property for third parties Stanley, J.P. Morgan and for a total value worth Soros. over 5 billion Euro, From its position as making it by far the lea- leader of the asset mana- ding Italian asset mana- gement market, Milano gement company – and Centrale had already tied one ready to become close relations with many involved in new intere- of these investors: worth sting operations. mentioning is an impor- by Andrea Kerbaker, Milan

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INTERNET

The refreshed Pirelli web site epitomises the new e-commerce era [email protected] The Group is ready to board the Internet with the re-launch of its web site, increasingly innovative and technologically upgraded he year pletely new 2000 graphics, is more T dawns user friendly, and on a new Pirelli takes advantage web site. A tech- of all the latest nologically technologies. advanced and Two are the key user friendly site points. Firstly, a has come out on newly devised the 31 of January. smaller screen Since the day it inside the compu- was born, the ter screen will Internet has give the visitor always puzzled the impression of everyone. At the watching televi- very beginning sion - a relaxing people did not and friendly sen- know what it was sation - and will nor what it was also reduce the used for, and con- amount of mouse- sequently behaved towards it with a which focused on product promo- clicking steps through the simpli- mixture of curiosity and wareness. tion and were a solution to both fied choices available. Secondly, a One thing was for sure: it was cost language problems and product dif- modernised and refreshed home efficient. The general feeling was ferentiation. The roles of the corpo- page complete with search menu that it was like a brand new train rate and the local sites were clearly and newsroom will help visitors still travelling slowly but accelera- defined, the latter becoming an find what they need with more ting more and more each second: increasingly more important immediacy. everyone had to have a place on it, instrument for the different The new millennium even if nobody knew exactly what markets as a means of inaugurates a new com- was the final destination. Pirelli promotion. A consumer mercial era. Today the chose a modern and innovative The increase in num- Internet sums up all exi- approach towards this new pheno- ber of topics offered on friendly site sting technologies. Its menon, and became one of the first the net has led to a steep potential is enormous, Italian multinationals to surf on the rise in terms of visitors: in and according to all econo- net, launching its corporate web the last few months the site mic and financial indicators, site in 1995, focusing on its activi- has grown from one million to two it is the path to follow. The future is ties. million contacts, with the Calendar e-commerce, and this is the direc- In the following years, Pirelli and the Tyres sections leading the tion that the Group has decided to aimed at developing, integrating, statistics as the most accessed. take: the train travels faster and and expanding all commercial ope- In January 2000, Pirelli looks at faster, but Pirelli is now fully rations based on new technologies the third millennium with new equipped and ready to keep up with in the web. The main novelty was eyes: “wizened” by 5 years of the speed. the creation of the “local sites”, experience, the web site has com- by Livia Armellini, Milan

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ADVERTISING

he scenery is a harsh and wild 4 Oscar winners in the team of Pirelli’s advertising campaign for the y landscape, a setting that recal- T ls the old westerns, which we all remember from our childhood. Total silence, as if nature is waiting for some strange event. Suddenly, with Run, Tyre, Run deafening thunder and swathed in a swirling cloud of dust, a herd of tyres Launched on the Internet, the new Pirelli ad pours down the sloping side of a moun- is a 30 seconds commercial in which our tyre tain. It rumbles on remorselessly, with the power of a horde of buffalo, fast as comes out as the protagonist a drove of wild horses. It splatters down through the river, kicking up columns of sion, brutish. The one who emerges in water. the lead is the most gifted. Therefore, The stampede continues, the horde brand differentiation and superior drawing ever closer to the edge of a performance are strongly underlined deep canyon. End of the race. Silence. without the triteness of actually saying All over? Not quite. The dust settles. so. One survivor appears. In an almost An innovative campaign, yet at the Melvillian end, like Ishmael who outli- same time in the mould of our previous ved the band of Pequod, it has stopped commercials. Innovative because in the right on the edge of the precipice and film the protagonist is not an athlete, a now towers over it, unscathed. famous testimonial, but the product Naturally it’s a Pirelli tyre. Power is itself sublimated to a symbol, an icon. nothing without control. On the other hand, the theme of running The new Pirelli commercial, which the great race, of the challenge, is a con- will be transmitted this year on televi- stant element in our recent communica- sion across the world, has just one great tions strategy: from the impossible race protagonist. The tyre. A mini-film of Carl Lewis to the epic, daring esca- which, in 30 seconds, is able to aggran- pes of Marie Jo Perec from the monsters dise it, while at the same time making it of nature (of our conscience?) to the a metaphor. Certainly, the viewer sees performance of a football virtuoso tyres, many tyres, but the treatment is like Ronaldo. such, the idealisation so stimulating, the A challenging campaign, cinematographic metaphor so evident created with exceptional that, in the end, the message conveyed equipment and an out- is the glorification of the brand. Just one standing team. In distinguishing factor which singles out fact, an extraor- the individual from the herd. The herd is, by defini- tion, mass confu-

dinary team. Under the co-ordination of Armando Testa, since June 1999 the Group’s new agency, worked a distinguished nucleus of talent, which included even a double Oscar winner. He is the man responsible

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n for the year 2000 n

Heineken, Philips, Volkswagen tunity and many others. of shoo- After six weeks of preparation, the ting Pirelli ad was shot entirely in the United forwards, States in five days last December at two backwards and to the locations oozing with atmosphere. The sides. Explosive charges of central part of the film is set in Twin for the special varying magnitude were placed at diffe- Mountain-Red Cinder Volcano, effects: Alle Hall, who rent levels in crescendo over the terrain California, while the final scene with won the awards for Forrest to give warning of the tyre herd’s arri- the canyon was shot in the Moab Valley, Gump, already a cult film, star- val, creating clouds of billowing dust Utah. Editing by Hank Corwin (The ring Tom Hanks. Alle was the and sand. And to conclude, special cata- Horse Whisperer) was carried out at the inventor of the machines which made pult platforms were built to create the USA Studios in Los Angeles. the commercial possible. But special effect of tyres flying through the air. Certainly, viewers who see the new effects do not dominate as much as one Another major contributor behind the 30 second Pirelli advertisement will not would expect: the advertisement’s sce- scenes was Dane A. Davis (The Matrix, think for a minute that all those devices nes were filmed live using 2000 real The Abyss, Boxing Helena) for sound and all that talent were used to produce tyres as “bit part players” and a P6000 design. He, too, worked in a highly spe- the mini-film, but they will have the as the “leading actor”. That choice cialised way: all the noise that is heard impression of being in a rather familiar imposed on the production team the comes from the real cacophony situation: the western, with a creation of machines built specifically generated by tyres, but treated charge of buffaloes, John for the Pirelli ad, starting with simple in such a way as to give the One single Wayne (P6000) coming out cages necessary to protect the crew and impression of listening to a of it all without a scratch. filming equipment from the racing kind of musical soundtrack. protagonist: the The commercial will be tyres. It was also necessary to fit the The lighting director was transmitted for the first time vehicles (truck, camera car, vans) with Harris Savides who, among Pirelli tyre in early February on Italy’s independent arms and special suspen- other things, directed photo- top TV channels and subse- sion so that they could tow the tyres at graphy for the film Standing Room quently in countries of most intere- different levels of height/width. A truck Only with John Travolta, which has yet st to the Group in Europe, North and was modified and fitted with a large to reach the cinemas, The Yards with South America, Japan and other strate- pivoting 12 x 8 metres platform for the Faye Dunaway, The Game with gic markets. The television commercial descent of the tyres, with the possibility Michael Douglas. Savides was also will be supported by a press campaign of adding stilts/ramps to correct the responsible for the lighting of videos for following the TV ad’s theme and set in inclination of the stampede. pop stars such as Madonna, the Rolling a western, big country environment. The list of these laboriously built Stones and David Bowie, and was in Over a backdrop of a Far West machines continues with the construc- charge of photography for the Nike, American valley towers an imposing tion of a frame with arms of different Levi’s and Volvo commercials. The pinnacle of rock: high up on the top sizes, able to move independently and mini-film’s director was Thed Lenssen, stands our tyre, symbol of those who fitted to the chassis of an off-road vehi- a famous fashion photographer of some save themselves from the herd. It will cle: this was to give movement to the years back and now the creator of key appear in motoring magazines. tyres on the flat and provide the oppor- commercials for companies like by Enrico Gandolfi, Milan

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M&AS

Pirelli Kabel und Systeme: one year of integration A Year Later Re-organised and more cost effective, our German Cables and Systems subsidiary is now ready to reach a level of profitability in line with Group expectations An aerial view of the Cables and Systems plant at Berlin, Germany. n October 1998, Pirelli acquires tion of municipalities and an internatio- to new customers like Adtranz, GEC the power cable business of nalisation of utilities, while the general Alstom and ABB. At the same time, the I Siemens Kabelwerke. The Berlin, market’s interlocutors followed a similar Group acquired new markets, among Neustadt and Schwerin factories in process of globalisation and concentra- them Poland, Norway, Sweden and Germany become part of our Group, a tion. Saudi Arabia. business with an annual turnover of The primary objectives of Pirelli The integration of the Siemens struc- almost 500 million of Euro, which Kabel und Systeme’s new management ture into that of Pirelli took place in line makes Germany the fourth largest cables were to improve attention paid to costs with the restructuring plan, announced and systems market by production after and integrate the existing structure with in January, 1999: an objective accompli- Italy, France and the USA. that of the Group, partly re-designing the shed with the active collaboration of the The challenge is: “to be able to retain organisation. Results show a perceptible union which, had shown its belief in the the positiveness of the past while absor- improvement in PBIT and in net profit purpose of the acquisition. In bing the élan of a new managerial cultu- (excluding the cost of restructuring), and Information Technology, the transition re”, as Italo Mazza, head of the new a reduction in net working capital. to the SAP system is in its final stages; German operation, said in a Pirelli Cost cutting achieved in 1999 was the company is now looking at the World article at the time. possible due to the accomplishment of implementation of a modern call centre The starting point was sound: the numerous synergies. Pirelli took new and an e-commerce interface. Berlin factory alone is one of the bigge- business channels to Germany, closed So, a year of integration successfully st of its kind in Europe and close to cele- peripheral warehouses and substituted concluded, Pirelli Kabel und Systeme is brating its 90th anniversary. Over the commercial branches through the home now facing new goals in line with the years, the recognition it has received office, optimising the geography of logi- Group’s position as world leader. The both in the German and international stics and stock management. In purcha- first is to take the leadership in changing markets has been significant, including sing, the combined task force easily the German market – in price, new pro- its recent work in superconductivity. identified areas of improvement and ducts, services. New results should also Siemens Kabelwerke carried a technolo- supply contracts were re-negotiated at come from a reduction in costs due to gical dowry of high quality, sustained by Group level. In manufacturing and the reallocation of MV and compoun- a leading-edge R&D activity. maintenance, the adoption of Pirelli best ding production activities. The overall Characteristics similar to those of the practice brought about cost reduction at objective is to reach a level of profitabi- world it recently joined. various levels. lity in line with Group expectations, by The last year has been an important Other synergies were achieved in stabilising PKS at a high level of opera- period for both Germany and the rest of sales, where change of ownership resol- tional excellence in all company func- Europe for the evolution of the energy ved the channel conflict problems with tions, both newly created and renewed. market: here, too, we have seen a reduc- Siemens competitors and opened doors by Riccarda Zezza, Milan

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FOCUS

The power cables market goes global by Eugenio Razelli, Director, Energy Business, Pirelli Cables and Systems

t has been called a “r-evolution”: Solution for an evolution which looks like a I revolution in the power cables market, born and nurtured without the a R-evolution radical technological changes so typical of its neighbouring telecommunications market. Talking about a “revolution” is a A new scenario in the energy cables market brings sign that many things have changed and new customer needs, new technologies, new business are changing, imposing on the endemic opportunities: Pirelli responds with customer care, evolution of this market an accelerated, sudden and new trend. New customer product innovation and new marketing tools needs, new technologies and products, new business opportunities. The former, the most evident and immediate, are the result of a radical change which has taken place in recent years. It concerns both the utilities and the general market: two segments representing 80% of the power cables business. The protagonists of the general market are the trade distributors, who sell to installers, contractors, manufacturing companies, and to the building industry: a market worth 4,800 million Euro. Until recently the traditional structure of this sales channel was made of an extremely high number of small retailers heavily rooted in their territories. Now it is undergoing an intense process of globa- lisation: large distributors are expanding aggressively in world markets, setting in motion completely new marketing poli- cies, to the point of transferring the enti- re sales process on-line. With this objec- tive, the trade is moving towards the creation of its own brands, with branded catalogues and products - connotations and characteristics which refer to a point of sale and no longer to the cable manu- facturer. Faced with such strong compe- tition forces, the answer of a producer who does not want to lose his brand awa- reness in the marketplace must be imme- diate and challenging. Competition is the name of the game. Competition is also the name of the game when talking about the utilities market. It is a very actual subject: in The installation of Pirelli’s Afumex power cables in the church of S. Francesco in Assisi. recent years, the power supply infra-

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structure has been liberalised and privati- 20%, Pirelli can and must act as a leader, interactive feedback services (back offi- sed almost everywhere in the world. The bringing forward tangible solutions to ce, call center, internet). consequences have been immense. The focus on customer care, product innova- In terms of product innovation, Pirelli energy business has quickly moved from tion and new marketing tools. profits from the competitivity of the mainly normative to straight market In terms of utilities, customer focus market, transforming it into an opportu- regulations: new technologies have means anticipating the client’s needs, nity to satisfy the evolving needs of the further opened the marketplace, lowe- with an offer of innovative services: tai- customer. Our renowned capability of ring entry costs; the number of players lor made logistics and engineering sup- launching new products, together with has multiplied, and those already exi- port services; proactive system design, their reliability is a powerful instrument sting have tried using diversification stra- installation and maintenance; a product, of differentiation. tegies; finally, the process of globalisa- integrated by stock management, techni- As for marketing tools, the Internet is tion has resulted in growing investments cal support, continuous research for new leading the transformation of wholesale in non domestic markets. The final result solutions as well as internet tools. On the energy sales not only in North America, has been an exponential increase in com- other hand, in the general market, the but also in the rest of the world. petition in a market which accounts for main target is the final customer. New Companies that distribute electricity and 25% of the world power cables business, initiatives further enrich the already gas are using the web to provide open worth 2,200 million of Euro. innovative end-end user marketing: pro- access to the market: it has become a For both markets interested by this ducts bearing our unmistakable brand source for the exchange of data between revolution, Pirelli is already reacting: name, and therefore guaranteeing quality operators, large distribution companies being the world’s number one in power and reliability, are launched on the and electrical centres. Some of these cables production with a total share of market giving birth to a series of highly companies already offer online services for the commercialisation of energy, such as personalised information and 1999 Cross-Border Electricity Transactions search engines: for instance in Europe, (by target continent) Enron recently launched EnergyDesk.com to distribute its energy Liberalisation of global power markets continues to spur cross-border acquisitions and stake- commercialisation software to the building by electricity companies, which last year launched a record number of international deals. market; in Canada, Ontario Hydro uses the Internet for the transmission of elec- North America tronic commerce with larger commercial 6% and industrial clients. The energy industry is therefore expe- South & riencing a strong growth in terms of e- Central 16% America business, especially in the Business to Europe by value Business sector, an area in which Pirelli 64% is strengthening all its main sales chan- 14% nels (distributors of electric material, Asia Pacific energy utilities, contractors and big installers, OEMs, etc.). The main instru- ment to achieve this goal consists of a South & series of e-services to guarantee the 23% Central America reduction of the total cost for the consu- mer. At the same time, Internet may be used as a new and extremely powerful tool for opening a one-to-one dialogue by number Europe with the consumer, both through Pirelli’s 38% Asia Pacific corporate and the local sites. 28% New services, improved products, focus on reliability and brand awareness, the Internet: all signs of the revolution 11% which has overcome the energy industry North America Source: Financial Times 21/01/2000 and which finds Pirelli ready and wai- ting.

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PRODUCT

Encouraging debut for a new Pirelli tyre The Winter Takes It All

The German motoring press gives Pirelli’s new Winter Snowsport rave reviews

he new Pirelli Snowsport win- than planned. ce, whether it be on snow, aquaplaning ter tyre is enjoying a great suc- Snowsport was created by Pirelli to conditions or in dry handling. T cess in Germany, one of the offer maximum sports performance, The tyre’s innovative tread compound most dynamic markets in Europe, where even in the most difficult winter condi- comes from the “Silica 2” generation, winter tyres account for a good 30-50% tions; an all-rounder delivering excellent formulated to maximise dry grip while of all tyres sold. adhesion on all slippery, cold and wet keeping intact the tyre’s adhesion capa- Germany’s motoring press, known as surfaces. In fact, the name Snowsport city on cold and wet surfaces. A “con- one of the toughest in Europe for its clearly expresses the philosophy on ductive strip” which runs longitudinally unvarnished reviews of new products, which Pirelli has based its new breed of through the centre of the tread – a Pirelli tested the new Pirelli product against its winter tyres: and that is to enable high patent – ensures that any electro-static market rivals. The results were very performance cars to continue to express shocks the silica may provoke are harm- positive. their sporting temperament, even when lessly discharged. Rated V for speeds of “Top level performance on snow. The the roads are not in optimum condition. up to 240 km/h, the Pirelli Winter new Snowsport celebrates a very con- Below 7°C tyres begin to lose their Snowsport is made in a range of sizes for vincing debut”, comments the authorita- grip, even on dry asphalt. When the tem- rims from 15 to 18 inches in diameter to tive Auto Motor und Sport, while Auto perature drops to -20°C and road condi- equip most top cars. Bild affirms: “Merits the name tions are worsened by ice and snow, the The new tyre was designed by a team Snowsport. This top performance merits increased rigidity of the tread compound of international specialists at Pirelli’s the test victory”. ADAC Motorwelt and the lack of a specialised tread pattern development centre in Breuberg, describes it as: “A well-balanced tyre, reduce even further the performance of Germany and underwent extensive very good on snow”, while Auto Zeitung the tyre. The answer is a winter testing in the highly diverse win- talks about: “Italian art”, and Rally and version, with its tread mix and ter conditions of Scandinavia, Racing comments: “A winning perfor- design specially developed Approved the Alps, New Zealand and mance on snow and on dry roads for the to ensure it stays fully opera- Japan. As well as ensuring Italian tyre”. tional in slippery conditions. by top great versatility, the new The independent assessments of the The new high performan- car makers tyre’s integrated develop- qualities of the Winter Snowsport by the ce Snowsport is the PZero of ment project has enabled toughest testers in Europe have also pre- Pirelli winter tyres, an exalted Pirelli to offer the Winter dicted that the new high performance position achieved thanks to its asym- Snowsport as original equipment winter Pirelli would achieve considera- metric tread pattern, derived from the because of its ability to meet the various ble success in the marketplace. In fact, Group’s world championship-winning needs of the world’s car manufacturers. the run-away success of Snowsport in motor sport experience. Such asymme- An offer which has already been well Germany, Austria and Switzerland has trical arrangement of the new tyre’s tread received in Germany, where the Pirelli prompted Pirelli to introduce the new grooves, blocks and sipes contributes Winter Snowsport has been approved by tyre into other markets like Italy and greatly to the achievement of an all- Audi, BMW, Mercedes and Porsche. Japan this winter, a full 12 months earlier round balance of high-level performan- by Robert Newman, Milan

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CULTURE

Pirelli contributes to a substantial face-lift of the Capitolina Gallery in Rome A Commitment to Art The restoration of Rome’s major museum is the latest step among Pirelli’s cultural activities

n November 1999 restoration new building at Bicocca during refur- has also been done on the lighting work at the Capitolina Gallery bishment work. Rome was missing and electrical systems, not to mention I in Rome, organised by Pirelli, from the list, and it therefore repre- the re-opening of the skylights, was completed: the collection has sented the most natural evolution of which have finally improved the now re-opened to the public. this process. exploitation of natural light. Great It is another gold coin to add to the From the beginning, Pirelli has care has also been paid to the ampli- collection of the Group, which has been the one and only sponsor of the fication of the spaces available and to always been involved with cultural Capitolina Gallery, assuming respon- the improvement of comfort and ser- activities in various parts of the sability, among other things, for orga- vices for visitors. world, coherent with its belief that it nising the private viewing and the The project will guarantee a steady is impossible to sustain a balanced gala evening for the inauguration. and prestigious return in the long growth of our society without cultu- Significant restoration work has been term: first of all a long lasting resto- re. Promoting cultural growth, as far carried on the painting by Guercino ration of this kind will bear the name as the Company’s limits allow, has “The Burial of Santa Petronilla”, of its sponsor for many years to therefore become one of Pirelli’s mis- which now has regained the tonality come. Secondly, it will allow Pirelli sions. The restoration of the Gallery of its original colours. Major work to establish a partnership with the offered an ideal opportunity for various cultural bodies. The a number of reasons. First of aim is to create an active colla- all, Rome is hosting the boration without keeping such Jubilee: a timing opportunity to entities from maintaining their link this restoration with the independence: a basis on which numerous celebrations happe- to accumulate fertile ground for ning in the capital; the right future co-operations. For place at the right time. example Pirelli now liaises Secondly, the Capitolina with the V & A in London and Gallery is the first museum in the Louvre in Paris, as a result Rome for number of visitors - of their earlier joint projects. more than 400,000 a year plus On the other hand, the collabo- the additional public attracted ration with the Municipality of by the Jubilee. Last but not Rome for the Capitolina least, Pirelli has often been Gallery has proved a solid associated with some of the ground for a good relationship world’s top cultural entities: in the future. the Victoria & Albert in The sponsorship of an under- London where it sponsored the taking such as the restoration of recreation of the Italian the Capitolina Gallery will also Gardens; the Louvre in Paris allow the Group to increase and which has been able, with the develop its social role, establi- Group’s help, to build three shing contact with the general rooms to contain the museum’s public, essential in today’s Etruscan remains; and the La business world, and therefore Scala Theatre in Milan which with the opinion-makers. will be hosted by Pirelli in a Domenichino, portrait of the “Cuman Sibyl”, 1622. by Livia Armellini, Milan

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NKF

A report from Pirelli’s new power cables activities in the Netherlands

The Acquisition of NKF Is Completed The Delft company is a well-oiled machine, ready to enter the Pirelli world to bring a dowry of skills, making synergies with the Group Riccarda Zezza reports from Delft, The history of the Netherlands has of its history. Pirelli acquired the pro- the Netherlands some elements in common with that duction of high, medium and low ten- of NKF, now approaching its 90th sion power cables in Delft. A reality he Netherlands, January birthday. A small country, Holland which means around 400 people 2000. Heading to the head- has always considered its dimensions employed and an annual turnover of T quarters of the NKF, the both as an asset and a liability, and on around 85 million of Euro. power cables company recently this basis has been one of the foun- Today, the identity of the Delft acquired by our Group. The road from ders of the EU. NKF, in turn, has company is quite clear. It produces a the airport to Delft is not long, always worked as a small company. complete range of power cables, nothing seems to be very far away in Today, it is obvious that it is not pos- cable systems and accessories, cove- Holland: out of the morning mist sible to survive in a market populated ring the 1 to 400 kV spectrum. It leads looms a traditional Dutch welcome - a by giants where conditions to compe- the Dutch market with a 60% share, windmill stands in elegant greeting, a te are becoming increasingly tougher: rising to 90% in HV cables. In the delightful testimonial to the techno- but it is clear that the company has a battle with the Titans of the power logy of an age long gone. great deal to give and to get from its cable market, the company has been It is not difficult to find NKF: here, marriage with Pirelli. able to adroitly manoeuvre itself due everyone knows the location of the This is what comes across from the to a concentrated integration of its cable factory, a true part of the city’s director Ron Koelewijn’s sketch of products and services. In fact, servi- history. The headquarters, a brick the company: as he runs through the ces have become a veritable NKF building which seems more like a history of NKF, founded in 1913, we speciality. Segmentation of the house than a head office, look out catch a glimpse of a solid company market and intense specialisation in over a canal crowded with small woo- which has survived its past unscathed, specific areas seemed to be the safest den boats: no doubt this is Holland. and is now different, revived, proud way of offering a competitive pro-

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duct. "We want to concentrate on cer- tracts, but which operates mainly as a with major customers and other sup- tain segments in which we can be mobile maintenance and control pliers of network components. more efficient", explains Koelewijn. team, moving from one location to There is an example of an NKF pro- And it is precisely from the segmen- another with high technology cara- duct born out of the ability to envisa- tation of the market that a completely vans, equipped for diagnostic and ge the integration of different techno- new need has emerged, one which no testing operations. logies: called Click-fit®, it is a spe- other Dutch cable producer had pre- Skill continues to be one of the cial joint for HV cables which, eases viously identified: maintenance of principal elements of NKF’s strategy. joining cable by using external rubber existing networks. extrusion techno- In other words the logy. Click-fit® is demand for “pure” an accessory pro- services. duced exclusively In response to by the Dutch com- this need, NKF has pany, and it has created a “servi- now been on the ces” unit within its market for five structure, offering years. services such as The NKF direc- maintenance, tor’s narrative is testing, diagno- coming to an end stics, emergency and a question fault repairs, and comes spontaneou- rehabilitation to sly to mind: the general market “small” but proud and to utilities, of their strong which have more points, what are the numerous and expectations of more frequent NKF’s employees needs to conserve on becoming existing structures. Pirelli people? In just two years, "Apart from the the services “pro- fairly obvious mat- duct” has become ter of the greater 10% of NKF’s strength of a bigger activity and is still Group, Pirelli growing. seems to offer Clearly, these NKF the kind of services are prima- certainty it has rily provided by sought for many human resources years. The cer- explains Bert tainty, that is, of Willems, manager taking our patri- of Services: on one mony of knowled- side employees ge and ability, of who have gained which we are their experience An internal view of the Delft plant and, below, one of the mobile units for the supply of services. proud, into a safe working on the numerous turn key An objective pursued with continuous harbour". contracts completed over the years, in-house training programmes, also in You can access the factory directly on the other people especially trained co-operation with the Delft Technical from the offices. The size of the pro- for this project. University – study and research duction area is impressive and, as we A task force which, when needed, projects on diagnostic methods – and begin our tour, we are struck by the can become a specialised assistance with the integration of knowledge sound of music. In each department, unit in the supply of turn key con- through partnerships and alliances workers can choose the kind of music

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they wish to hear, 24 hours a day. anyone and transferable from one ning greater product and process Jacques Born, Head of Production, process to another – as well as the use reliability and the results have been tells us, "In 1999, we started to of a highly formalised and detailed encouraging. Environment and safety improve people involvement here weekly plan, which is evaluated at the procedures have been upgraded, too: with a new system of operator trai- end of each week. Moreover, produc- after ISO 9001 in 1988, we obtained ning and the organisation of their pro- tion is divided into four areas, each ISO 14001 in 1996. The certification cess responsibility. Groups of opera- run as a single process by the same of safety procedures will follow later tors have contributed to re-enginee- manager. NKF has established that this year". ring working pro- In 1999, invest- cedures and pro- ment was concen- cess improve- trated principally ments. In one case, on an expansion of this has led to the capacity sufficient adoption of their to produce bigger, own improvement longer cables. For plan which has example project yielded a reduction “Delta” - HV in HV extrusion cables weighing 62 line downtime and tons and measuring start-up, with nota- 2,200 metres per ble cost savings". drum - is now in Due to the cha- progress. "This and racteristics of its more can now be market, NKF has handled by routine always needed to production machi- be a flexible struc- nery", Born says. ture, able to focus "Equipment has every year on the been updated and product requested coherent technical by the customer. management has Insolation lines are also led to a better the only ones to understanding of work dedicated, technology, inclu- while machines for ding data manage- laying up, stran- ment and process ding and armou- control". ring are the same So a well-oiled for both types of machine, ready to product. enter the Pirelli The need for world and bring flexibility has with it a dowry of meant operators skills and improve had to be capable on its own weak- of operating all nesses. "Together machines in order with mother to change roles in An image of the Click-fit joint in the Dutch factory. Pirelli", Born con- line with the demand of the moment. such an organisation makes it easier cludes, "we hope to improve our satu- There is considerable personal to identify weak points and obtain ration level as well as benefit from responsibility at all levels, including good quality. Pirelli’s buying power, commercial quality control. "Make it right the first time is our and technical synergies". At NKF To make that possible, NKF has motto", explains Born. "A large pro- there is a wide-spread positive feeling introduced the transparency and stan- portion of organisational changes in towards the acquisition. A feeling dardisation of data – accessible by recent years has been aimed at obtai- which is certainly reciprocated.

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FACTORIES

by Guglielmo The Tyre Sector creates value through manufacturing has diluted its own Fiocchi, Industrial geographical con- Director, Pirelli fines and reduced Tyre Sector its time con- straints. A com- n the Taking up plex process, way to based on simple O the modifications, pocket factory, the the Challenge which presents us mini-marvel of the with a very diffe- future which will rent scenario from make it possible to Promptly responding to the new competitive the one of two order a few tyres environment, Pirelli tyre production has diluted its years ago. A pro- changing sizes in cess which is also real time, there is own geographical confines, reduced its time constraints based on past a present time: and standardised its methods and languages experience, trea- technologies and sured as an impor- human resources tant instrument of must respond to change. increasingly com- In recent years, plex, changeable the ground has and pressing been prepared by needs. TPM. TPM The final years implied the acqui- of the second mil- sition of a means lennium in Europe of continuous were not only improvement, the boom years for the application of Internet and the solutions in a vertiginous deve- coherent and con- lopment of com- tinuous way, the munications, but creation of inno- also for the fall of An internal view of the Bollate tyre plant. vative channels of commercial bar- communication. riers, the introduction of the Euro as On the basis of such premises, the Not just practical solutions and cost the Continent’s currency, and a manufacturing industry is changing. reduction, but an entire thought change in the way of thinking and Pirelli, whose roots are deeply structure superimposed on the fac- competing. entwined in history, was one of the tory’s traditional way of thinking. It is not allowed to stay behind first to take up the challenge of the The Best of Best, or the method of when instruments like the Internet future. identifying and extending the have slashed distance and waiting The present, therefore, most effective practices, time: people are getting used to finds the Group prepared. was the natural continua- order everything with a click; five Even in a business like A unifying tion. As these types of minutes are already too long to wait, tyres, in which some communication channels a day an eternity. Industrial structu- space-time constrictions language came to life not only insi- res efficiently built on a foundation are so inherent in the very de single factories but also of centuries of history, tied to very essence of the product that it between plants, the need different timings and needs of pro- seems they cannot be reduced. grew for the standardisation of duction, logistics and technology, In the face of the challenge/opportu- instruments and languages. must invent, develop and plan reali- nity offered by the new competitive The introduction of the lean orga- stic means of satisfying the new rea- environment and while waiting for nisation was the first step towards a lity and new geography of world the full-speed start-up of the new different means of regarding human markets. MIRS mini-factory, tyre production resources and their employment in

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the production process. “European factory”. Joint manage- and lean organisation, is ready to The lean organisation is a re-orga- ment with R&D, quality, logistics, accept the challenge. nisation of the production processes sourcing; creation of industrial Resources which, today, have an applied by Pirelli Tyres in recent teams using common methods of increasingly specialised personal years in South America and Europe: work, objectives and language; know-how and can transfer it a simplified structure of three uniformity improvements; a sharing anywhere in the Pirelli world, levels. of the most effective solutions: thanks to the fact that factories The responsibility and autonomy these are some of the initiatives speak the same language. of internal decision making is applied over the last year and desti- Now, we have the resources, the increased at each level, counting on ned to continue. The results are model/vision and the methods. To new resources: dedicated inter-func- already showing, starting with a ensure the full involvement of the tional teams built into the various 47% increase in industrialisation or complex organization within this phases of the production process. 10% better delivery in 1999 compa- system, we are now testing in year The concept of functional integra- red to 1998. 2000 in all the factories “The chal- tion is born: think/work by process This different means of operating lenge”: an award scheme with the and no longer by function, while also implies, more than anything main objective of stimulating the functions become a common font of else, a change in mentality. For achievement of company goals, resources and competence. instance, it is not enough to look at ensuring coherence with Pirelli poli- Today, value creation through the factory as a universe in its own cies and procedures. manufac- The turing challenge means for destined Pirelli the to become ability to an award respond in future optimally years, will to a series involve of tasks, a all factory question levels, sti- partly mulating confron- self-asses- ted last sment year and mechani- which sms, cele- will be brating fully excellent developed perfor- in the year mance, 2000. promoting The and objective is pursued essentially right, with its own obligations and encouraging internal bench- through standardisation of methods objectives: it is necessary for the marking. The evaluation criteria and languages, which speeds-up the factory to be integrated into a much will not only be internal, as is the communication process between wider and complex entity, with more case with the TPM Award, but will functions and factories and eases the indicators, different priorities, also relate to external customers, the sharing of knowledge and resources. performances measured more again- local community and economic The process began in the st external rather than internal coef- results. European car tyre factories, the first ficients (e.g. service to market, Having acquired the instruments, to participate in the change: no lon- claims etc). here is a kind of “mental map” to ger did autonomous developments A more open mind, which needs use them in the best possible way, to take place in individual subsidiary prepared resources. A new genera- assess and achieve the continuous companies, but a single integrated tion of people, recently grown up in progress of the Pirelli’s industrial system was created, a kind of the factories to the rhythm of TPM team.

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World Brief

Giuseppe Morchio New designed to resist to the mechanical Gianluigi Galli and Gustavo Trelles, President of International stress caused by such depths. The con- 1st, 2nd and 3rd in Group N. The World Cablemakers Federation nection will guarantee both countries Rally Championship now heads to great advantages in terms of balancing Sweden (10-13 February). In November, the International load peaks, reduction of leaks in the Cablemakers Federation elected generation process and improved utili- An Italo-Brazilian Gift Giuseppe Morchio, General Manager sation of power resources. Production of Pirelli’s Cables and Systems Sector, will begin in the year 2001, due to the Pirelli has presented the Museum of as its new president. Founded in 1990, record-breaking extension of the cable. Latin America with a 95 cm statue of ICF is the worldwide association for Saint Francesco di Paola - sculpted manufacturers of power and telecom New Investments in Madeira between 1760 and wires and cables. Giuseppe Morchio - in Superconductivity 1780 and attributed to pictured below executing the traditio- Antonio Francisco Lisboa - nal Chinese eye-spotting ceremony - American Superconductor Corp. and which has been at Pirelli Pirelli Cables and Systems announced a headquarters in Brazil for new agreement by which Pirelli will ten years. The President provide up to $13.8 million in additional of Pirelli South America funding to ASC for the development of Giorgio della Seta pre- high temperature superconducting sented the statue as a gift (HTS) wires for use in power cables. to express the Group’s grati- Pirelli is also developing advanced co- tude towards Brazil, where axial HTS cable systems in France, Pirelli has been operating Germany and Italy. The Group is targe- since 1929. The ceremony ting the manufacture, installation and was held at the Museum of demonstration of several additional HTS Art of San Paulo (MASP) power cables systems over the next few on the 29 November, in pre- who took over the Presidency with the years, after which HTS cables are targe- sence of the Minister for full approval of the General Assembly, ted to enter the commercial market. Culture Francisco Weffort. will serve for two years. In his opening speech, the president encouraged put- Pirelli at the Montecarlo Rally ting a new spirit in the business, making the cable industry more pro- Pirelli conquered the 3rd and 4th gressive and pro-active. final positions thanks to Juha Kankkunen’s Subaru Impreza and to WORLD A Record Contract for Pirelli Toni Gardemeister’s SEAT Cordoba. The quarterly international newsmagazine Cables and Systems Worth mentioning is the performance for Pirelli management of Kankkunen on the “historic” and JANUARY 2000 - NO 22 At the end of December, Pirelli super-complex Stage of Sisteron, www.pirelli.com signed an agreement with the where the 4 times world champion sco- Published by Pirelli S.p.A. Norwegian company Viking Cable S.A. red victory also thanks to the soft “ther- Direzione Comunicazioni Esterne for the construction of the longest sub- mal” compound of the Pirelli PZero Giancarlo Rocco di Torrepadula marine HVDC cable in the world - 578 RS9. He was fastest both on the dry tar- Editor Andrea Kerbaker Assistant Editor Riccarda Zezza km. The cable will connect Norway and mac, which characterised most of the Editorial Consultant Robert Newman Germany running under the North Sea, SS, and on the central icy kilometres at Artwork Young & Rubicam B.C., Milan at a maximum depth of 420 metres, Col de Fontbelle. Pirelli-fitted were shielded by a special double armour, also the Mitsubishis of Manfred Stohl, Printed by Garzanti Verga, Milan

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