Sustainability Channel

Pirelli announces a project for a new radial truck tyres factory in Argentina

PIRELLI READY TO STRENGTHEN ITS POSITION IN ARGENTINA WITH A PROJECT WHICH FORESEES INVESTMENT OF APPROXIMATELY 300 MILLION DOLLARS BY 2014 TO BUILD A NEW RADIAL TRUCK TYRE FACTORY

THE PROJECT FOR THE NEW FACTORY WILL DELIVER PRODUCTION CAPACITY OF 700,000 RADIAL TRUCK TYRES TO SATISFY GROWING INTERNAL DEMAND AND FOR EXPORT TO MERCOSUR MARKETS

REVENUES IN ARGENTINA SEEN AT 500 MILLION DOLLARS IN 2011 (+40% COMPARED WITH 2010)

Pirelli is ready to strengthen its position in Argentina with a project to build a new radial truck tyre factory which aims to rebalance the company’s position in South America. The project, which will take the macro-economic context and demand dynamics into account, calls for investment from 2012 of approximately 300 million dollars for the first phase of development which ends in 2014. This investment is part of the total foreseen for the industrial segment as announced to the market last year with the presentation of the industrial plan. A second phase would require additional investment of about 200 million dollars. The Argentinian government, accompanying Pirelli’s commitment, will facilitate the project by funding part of the investment at a facilitated interest rate and by guaranteeing the delivery of services (gas, energy, electricity, etc.)

The first investment phase aims to deliver an annual production capacity of 700,000 pieces and employ about 700 people. The second phase would enable the plant to reach a potential production capacity of 1.4 million pieces, at full operation, and employ about 1,200 people. When the project is completed, it would bring Pirelli’s total number of employees in Argentina to approximately 2,300 people, including the 1,100 already employed at the Merlo plant.

Pirelli’s growth plan under consideration was presented today at a meeting in Buenos Aires, at the Residencia Presidencial de Olivos. The participants were the President of Argentina, Cristina Fernández de Kirchner, the Minister for Industry, Débora Giorgi, the chairman of Pirelli, Marco Tronchetti Provera, and the chairman of Pirelli Neumáticos Argentina, Franco Livini.

The project, which aims to further strengthen Pirelli’s leadership in South America, is part of the company’s international expansion strategy which, in recent years, has seen an increasing direct industrial presence in countries like Argentina which have fast rates of growth and competitive industrial costs, in the context of a region-based logic which permits, among other things, the containment of effects connected with exchange rate fluctuations. The new plant, in particular, would satisfy increased demand for radial tyres in a country whose economic growth is attracting new investment from the automotive industry. The dynamism of the auto market in South America is also linked to the launch of new industrial projects by some of the major car makers, including Fiat, Ford, Renault, Volkswagen, Toyota, Peugeot, Mercedes, Mitsubishi, General Motors, Hyundai and Honda, whose recent total investment plans for the area amounted to over 20 billion dollars. The Truck Business Unit in South America counts among its clients such major truck makers as Ford, Scania, Volvo, Man, IVECO, Mercedes and Agrale. Today, Pirelli satisfies the demand in Argentina with imports from other production sites.

According to data released by the National Association of Automobile Manufactures (Adefa), production in Argentina in the first nine months of 2011 grew by over 23%, compared with the same period in 2010, and the full year is expected to see record production of more 800,000 vehicles. According to data from the Association of Dealerships in Argentina (Acara), sales of new vehicles in August 2011 were 32% higher in total than a year earlier, with auto sales 31.5% higher and heavy vehicles 33% higher, which demonstrates the favourable demand trend in the truck segment and which, in the coming years, will result in a larger replacement market.

The planned strengthening of Pirelli’s position in the country could bring Argentina to represent 13% of the Pirelli group’s total truck tyre production. The investment will not only allow us to satisfy growing internal market demand, which will absorb 50% of production, but also that of the important export markets like other markets of the Mercosur area.

In 2011, Pirelli estimates that its revenues in Argentina will reach 500 million dollars, an increase of 40% from 2010.

The project for the new factory, the construction of which is expected to start at the beginning in 2012, foresees the production of technologically innovative tyres, which offer efficient solutions in terms of performance, safety, eco-sustainability and economy of usage. The product lines foreseen will use SATT technology of the latest generation, which lengthens product life, optimizes wear and improves driving precision. Compounds and tread patterns are planned and optimized as a function of the performances required in their different uses.

Output from the new site, would be in addition to the 5 million pieces already produced annually for the entire car, Suv and light truck range at the Merlo factory, in the province of Buenos Aires, where Pirelli has operated since 1951 and where production capacity is already being increased. Last year, Pirelli announced a 100 million dollar investment to increase capacity in the SUV and Light Truck segments in Merlo. Merlo’s output today represents, as said earlier, 10% of total production in South America and 20% of car tyre production in the area.

Pirelli’s Truck Business Unit

Pirelli’s Truck Business Unit has six plants, located in Turkey, Italy, Egypt, China and Brazil, where there are two. All the division’s factories utilize the group’s most modern production technology and draw on Research and Development carried out in Izmit, Santo Andrè (Brazil), Yanzhou (China) and Milan, which ensure that the tyre design is in line with the specific needs of different markets.

The global growth strategy adopted in recent years has allowed Pirelli’s Truck Business Unit to confirm its weight in traditional markets and to expand into rapidly growing economies. In particular, thanks to the recent investments in Brazil and China, the Unit can count on significant, competitive production capacity to satisfy the growing demand for tyres for industrial vehicles, which is particularly strong in fast growing economies. This strategy has ensured Pirelli a leadership position in some of these markets, beginning with those of the Mediterranean area, particularly Turkey and Egypt and in South America.

Pirelli in Argentina

Of the 19 production sites which today compose Pirelli’s industrial universe, 7 facilities – 1 in Argentina, 5 in Brazil, 1 in Venezuela – are located in the South American continent with production that covers the entire range of segments: auto, industrial vehicles, motorcycles, agricultural machinery and worksite machinery.

Pirelli has been in Argentina for more than a century. In fact, it participated in the Buenos Aires Expo of 1910, formally marking the birth of Pirelli Argentina. The step up in size happened in 1929, at the edges of the capital where the company built a new factory for electrical conductors: the “La Rosa” factory. In 1948, it became Industrias Pirelli Saic and in 1956 Pirelli Argentina acquired a factory in Bella Vista, outside Buenos Aires, where it concentrated all its rubber processing, both for the cables sector and diversified products. In 1968, with the acquisition of 100% of Coplan, in which it had held 50% from 1951, Pirelli began the direct production of tyres in the town of Merlo, where the group’s plant has grown over the years and where the company is still located.

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Pirelli, the Italian Interior Ministry and the Ministry for Education bring road safety to Italian schools

Protocol of intent signed by Pirelli, the Interior Ministry and the Ministry for Education and Research to jointly develop projects aimed at reducing traffic accidents.

The initiative was presented at the Chamber of Deputies before the Interior Minister, Roberto Maroni, the Education Minister, Mariastella Gelmini, the chairman of the Transport Commission of the Chamber of Deputies, Mario Valducci, and the director of the Italian highway patrol, Roberto Sgalla.

A video produced together with the national police force will teach secondary-school students the role that tyres play in safe driving.

The project is one of a number designed by Pirelli, within the scope of the European Road Safety Charter, aimed at improving road safety and reducing the number of accident victims.

Today, Pirelli signed a protocol of intent with the Interior Ministry and the Ministry for Education and Research in order to select and support joint projects and other initiatives aimed at increasing awareness among Italian drivers – especially secondary-school students and other young drivers – on the issue of road safety through education and other informational campaigns.

The signing of the protocol took place in Rome today at the Chamber of Deputies before the Interior Minister, Roberto Maroni, the Education Minister, Mariastella Gelmini, the chairman of the Pirelli group, Marco Tronchetti Provera, the director of the Italian highway patrol, Roberto Sgalla, and the chairman of the Transport Commission of the Chamber of Deputies, Mario Valducci. This agreement calls for the three parties to work together for at least three years on road-safety projects.

The protocol falls within the scope of the initiatives Pirelli has undertaken throughout Europe in order to help reduce traffic accidents in observance of the principles of the European Road Safety Charter, of which Pirelli is a signatory.

The signing of the agreement was accompanied by the presentation of the first promotional project born out of the collaboration between Pirelli and the Italian Polizia di Stato (national police force), which is in the form of an educational video explaining the central role that tyres play in driving safety. The video is to be shown in Italian secondary schools, published in the web site of the Interior Ministry, and used as teaching material for the national police force. In particular, police officers will be showing the video to young people during road safety courses held in schools. The high impact of the images and the direct language used underscore the importance that tyres play in road safety, while placing an emphasis on proper maintenance and the appropriate use of tyres and on the need to choose the right tyre for the car and for the usage conditions, such as using winter tyres in the colder months. The video is also to be used by the police force as an in-house training tool and in the numerous road-safety and accident-prevention campaigns of the Interior Ministry’s Department of Public Safety.

The video presented to the Chamber of Deputies was produced last April at the Pirelli track in Vizzola Ticino during a training exercise for the Polizia Stradale (Italian highway patrol).The training involved some 50 agents who, joined by the heads of Pirelli Experimentation, studied theory and also had the opportunity to experience first-hand the role that tyres play in passive safety, including in-vehicle stability, grip in curves, and braking. Another goal of the course was to learn to understand the structural and performance characteristics shown on the sidewall of all tyres and in the vehicle’s registration book, such assize, load index, speed code, homologation, tyre pressure, and tread depth.

Tyres and safety. The tyre is an essential component in the performance and safety of any vehicle, as confirmed by the central role tyres play in Formula One racing, where Pirelli is the sole manufacturer. This importance is even more evident in terms of the prevention of accidents. Here, tyre quality and proper maintenance are decisive factors in road safety. As the sole point of contact between the vehicle and the road surface, the tyre is crucial both in braking and in grip in all conditions –dry or wet, in a straight line or in a curve. A worn or improperly inflated tyre can extend braking distance by up to 70%, so it can be the cause of traffic accidents.

As many studies have shown, we tend to pay too little attention to our tyres. According to a study conducted last year by Federpneus and Assogomma, in collaboration with the Italian highway patrol, more than 50% of Italians drive on underinflated, worn, damaged, or even non-homologated tyres.

Pirelli Research. Throughout the world, Pirelli is synonymous with both performance and safety. Together with environmental protection, road safety is one of the key elements of the premium strategy at the heart of the group’s industrial and business decisions. Pirelli’s commitment to road safety comes in the form of a great many training and promotional activities and, above all, in research and the constant application of innovative technologies to promote sustainable mobility.

This means ecological materials and tyre structures developed to achieve the utmost in fuel savings and, at the same time, an increase in vehicle safety, particularly in braking and in curves.

Pirelli’s Research and Development unit, in which the group invests roughly 3% of its annual revenues, also works towards cutting-edge solutions such as the “cyber tyre”, which is a smart tyre that “reads” the road surface by way of an integrated microchip. Currently in final testing before actual commercialisation, this cyber tyre monitors the health and pressure of the tyre and provides important data regarding the state of the tyre and the conditions of the road surface.

Pirelli’s commitment to safety and sustainable mobility is being repeatedly acknowledged in tests conducted around the world by the most prestigious certifying bodies and by the industry press, as well as by international sustainability indexes. In 2011 in particular, and for the fifth year in a row, Pirelli was named the world leader in sustainability in the Auto Parts & Tyres section of the Dow Jones Sustainability Index.

European Road Safety Charter. As part of the company’s commitment to road safety, Pirelli has signed the European Road Safety Charter promoted by the European Commission. As a signatory of this charter, Pirelli is bound to intensify its efforts already under way internationally in order to help reduce traffic accidents. Promoted by the European Commission, the charter aims to support all projects that can help to increase road safety. The activities that Pirelli has planned meet the standards of feasibility, utility and verifiability required by the European Road Safety Charter, which has been signed by more than 1,900 companies and other organisations throughout Europe, and they also work towards the targets for 2020 regarding the development of safety technologies and the planning of actions to increase awareness internationally.

Pirelli’s many initiatives also include those that seek to increase driver awareness of the key role played by tyre quality and maintenance in preventing traffic accidents. These activities involve both extensive promotional and prevention efforts and training programmes for customers and resellers. This includes the 2010 “Safe & Go” campaign conducted in collaboration with Autostrade per l’Italia. As part of this campaign, mobile workshops were set up along the Italian motorways where Pirelli technicians conducted tyre-condition tests free of charge. Pirelli has also recently launched the online contest “Dai voce alla sicurezza” (Give voice to safety) in order to increase awareness of road safety issues among truck drivers. In addition, Pirelli organises on-track activities for young people and organisations, and the company is also partnering with a number of leading safe-driving schools for drivers around the world.

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Italian painting resplendent at Bucharest

On Friday 16 September art triumphed at Bucharest thanks to Pirelli Romania, which has brought light back to “Susanna e I Vecchioni”, a masterpiece of Italian art painted in the 17^th century by Alessandro Varotari, known as the Padovanino.

Pirelli sustained the restoration of this important work, which was carried out with great care by the specialists of the National Museum of Art in Bucharest, a difficult task concluded in a record time of almost three months.

President of Italy Giorgio Napolitano, who was making a two-day state visit to Romania at the time, inaugurated the masterpiece at the national museum.

Also attending were the Italian Ambassador to Romania, Mario Cospito, the director general of Pirelli Tyres Romania, Giuseppe Cangelosi and representatives of the Italian community in Romania.

The support of Pirelli Romania for the Museum of National Art in Bucharest is part of the numerous social and cultural activities set in motion by the Group in the country. They range from its partnership with the University of Craiova on the subject of technological innovation to the Italian culture promotional project in Slatina, collaboration with the Niguarda Hospital in Milan and the InterCampus initiative with FC Internazionale Milano at Slatina.