Pirelli Tyre S.p.A.

The Company

As measured by sales, Pirelli Tyre is the world’s fifth largest tyre manufacturer, which has been the Group’s core business for over a century, and commands a leadership position in the high performance segments.

Pirelli Tyre is active in two principal segments: Consumer, which produces tyres for cars, sport utility vehicles (SUV), light commercial vehicles and motorcycles and scooters; and Industrial, which produces bus, truck and agricultural equipment tyres and steel cord, which is a key component used to reinforce radial tyres. These businesses are focused in turn on two different sales channels: original equipment, sold directly to car, truck and motorcycle makers, and replacement equipment, for replacing tyres on vehicles that are already on the road.

The Company is the Pirelli Group’s main industrial division and has 24 production units, including 19 dedicated to the manufacture of tyres, while steel cord is produced at the remaining five, mainly for the fabrication of tyres.

The Company has 24 plants located in 12 countries (Argentina, Brazil, China, Egypt, Germany, England, Italy, Romania Turkey, Spain, United States and Venezuela) and a commercial network covering over 160 countries.

Principal Corporate Commitments in 2008

Pirelli Tyre’s most significant corporate commitments in terms of environmental sustainability are:

Chairmanship of ETRMA (European Tyre and Rubber Manufacturers Association) - in October 2008 Francesco Gori, Chief Executive Officer and General Manager of Pirelli Tyre, was re-elected Chairman of ETRMA for his second consecutive three-year term, a sign of continuity for the priorities to be pursued: environmental protection, road safety and greater competitiveness.

WBCSD (World Business Council for Sustainable Development) - Pirelli actively participated in WBCSD again in 2008. Headquartered in Geneva, this is an association of about 200 international companies based in over 30 countries that have made a voluntary commitment to pursue economic growth with sustainable development.

Pirelli Tyre is a member of the Tire Industry Project Group, the project launched in 2006 to identify the potential impact on health and the environment of the materials associated with the manufacture and use of tyres. The heads of leading world tyre manufacturers that belong to the group met in Tokyo on 12 June, sixteen months after research work began. This important event offered an update on programme progress and outlined new approaches to study.

The Pirelli Group and the Milan Polytechnic have signed an agreement to create a professor’s chair, which was funded together with five scholarships for doctoral degrees over the course of ten years on the “Chemical Foundations of Rubber and Compound Technology”. It will organise the study of innovative materials and application of nanotechnology for the development of new generation, low environmental impact tyres.

The Silvio Tronchetti Provera Foundation and the Shandong University in Jinan (China) have signed a research agreement for the study of a new generation of “green tyres”. The university researchers will work with the Pirelli Group’s R&D Department in China to create tyres with low resistance to rolling, in order to reduce vehicle fuel consumption.

The Company has always pursued the goal of disseminating and consolidating a safety and energy efficiency culture, aware of the tyre industry’s role in daily life. In 2008 it spearheaded major actions to raise awareness in collaboration with public institutions, business associations and other industrial groups inside and outside Italy.

In particular, Pirelli Tyre participated in the ENI “30PERCENTO - consumare meglio, guadagnarci tutti” (“30 PER CENT - consume less, everyone wins”) energy efficiency campaign with its “Viaggia in Sicurezza” (Travel Safely) initiative. The aim is to explain the importance of energy saving for environmental protection as well as the household budget, with the primary focus on consumers. Through “Viaggia in Sicurezza”, which provided free tyre pressure checks at 400 outlets of the Driver network, Pirelli Tyre contributed to educating motorists in the proper maintenance of tyres, the first step towards ensuring energy efficiency, reducing harmful emissions and driving more safely.

Quattroruote

It is committed to promoting the sustainable mobility culture: the Progetto 10x10 of Quattroruote® was initiated at the end of 2007 by this leading monthly car magazine, and commits ten big companies to reduce the carbon dioxide emissions of their company fleets by 10%. The choice of Quattroruote, which has long been committed to responsible and sustainable use of private vehicles, fell on CO2 for several reasons:

  • it is a greenhouse gas responsible for events like global warming and climate change;
  • it is an easily measurable parameter, being ascertained upon certification of cars and indicated on their registration card;
  • it is one of the principal environmental objectives of the European Union;
  • a 10% reduction in overall carbon dioxide emissions represents a realistic goal that can be immediately pursued, in the expectation that industry develop new technologies to produce more eco-compatible cars.

Pirelli Tyre immediately joined the 10x10 project by adopting the objective to reduce the carbon dioxide emissions of its own Italian corporate car fleet by 10%. Most vehicles in this fleet are equipped with Cinturato tyres that, as previously mentioned, can reduce fuel consumption and harmful emissions by up to 4%, while guaranteeing high mileage (+30%).

In addition to taking steps to increase employee awareness on the issue of reducing air pollution and encouraging eco-compatible driving courses, it has introduced corporate car pooling and intercompany shuttle services. The decision to privilege video-conferences over traditional personal trips and the use of public transport is consistent with this strategy. Systems for enhancing more efficient organisation of trips to visit customers have been suggested to the sales force. In parallel with the 10x10 project, the Company has promoted an initiative to raise awareness on the issue of environmental impact by involving as wide a public as possible, by engaging the participation of Pirelli tyre buyers to contribute to reforestation and protection of an area in the Parco del Ticino that can absorb at least 50,000 kg of CO2 in a few years.

ISO 14001 certification and the environmental management system

The benchmark standard for certification of environmental management systems is ISO 14001. The Sector project to implement an environmental management system at its production units based on shared Group procedures and guidelines, led to it obtaining the first ISO 14001 certifications in 1998.

This is now a well-established process: at 31 December 2008, 23 out of 24 production units had an ISO 14001 certified system. The Tyre plant at Slatina, Romania will be ISO 14001 certified by the end of 2009.

The Company also has scientific test centres for tyre/vehicle performance, which conduct experiments and trials on tyres under different conditions of use, by means of subjective and controlled techniques. The test track located in the town of Vizzola Ticino (Varese, Italy) merits special mention. It was designed and built at the end of the 1960’s near the Ticino River. The ISO 14001 certification of the Centre, obtained in 2005, assumes particular importance considering that its 26 hectares lie within the Parco Lombardo della Valle del Ticino (Lombardy Ticino Valley Park), an Italian nature preserve listed as a UNESCO MAB (“Man and Biosphere”) area - one of 425 biosphere reserves in 95 countries worldwide.

The Vizzola site is used by various Group companies for experiments and tests, sports events, driving schools and motoring clubs, and is used by car manufacturers and trade magazines for joint tests and shows.

Implementing the environmental management system has made it possible to define and achieve waste management optimisation targets. Similarly, programmes spanning over several years have been set up and are currently underway to rehabilitate and redevelop green areas with the planting of indigenous plant species, elimination of ozone depleting substances, and support for university programmes to develop low environmental impact vehicles. Given its location within a protected area, the Track is in constant contact with the offices of the town of Vizzola and the Parco della Valle del Ticino. Through an agreement with the park administration, it contributes in economic terms to environmental improvement of the area outside the park. No spills or other significant environment-related incidents occurred in 2008. Consequently, no significant fines were imposed. However, several minor events did occur, which were promptly dealt with and resolved in accordance with the procedures set out in the implemented environmental management systems, and had no negative impact on health or the environment.

Comprehensive eco-innovation: from processes to products

Full integration of environmental sustainability with competitive development strategies is the principal driver for the profound “green revolution” that is taking place throughout the Group, particularly in the tyre sector. This awareness translates into concrete planning of green improvement activities throughout the entire product life cycle, which involve production processes as well as the products themselves.

The commitment to process eco-innovation has been confirmed by a number of major achievements:

  • planning of new low environmental impact production centres and modification of existing ones in compliance with internal “green factory” standards;
  • realisation of new production technologies, such as Next MIRS™;
  • streamlining of production efficiency, with the aim to reduce the consumption of natural resources, energy and raw materials, as represented by such advanced processes as CCM and TSM.

The eco-innovation commitment to products is confirmed by:

  • the new Cinturato, introduced in 2008, which can reduce rolling resistance by 20%, fuel consumption and greenhouse gas emissions by 4%, and simultaneously increase total mileage by 30%;
  • the research conducted by Pirelli Labs to recover material and energy from used tyres.

The details of these innovations are illustrated below.

PROCESS ECO-SUSTAINABILITY

Green factory

Work on creation of the Technological and Production Centre at Settimo Torinese for production of green tyres continued in 2008, as part of the process to improve efficiency and productivity standards. This project is being carried out as part of a framework agreement between Pirelli Tyre and the Region of Piedmont, Province of Turin and the City of Settimo Torinese.

This will be a state-of-the-art industrial centre, the Group’s most advanced in terms of technology and efficiency. The most advanced production technologies created by Pirelli research will be used and, perfectly in line with its sustainable development strategy, appropriate measures will be taken to limit environmental impact and resource consumption as much as possible. All of this will be done within the framework of eco-compatible architecture and design.

In this context, Pirelli Tyre and the Turin Polytechnic have signed an agreement to pursue joint research and technological innovation projects dedicated not only to minimising the impact of the new industrial site but especially further innovation of the most advanced processes and products of Pirelli Tyre research (such as Next MIRS™, CCM and the “smart” Cyber Tyre).

Dimensione ambientale interno 1.jpg

Breuberg, Germany. MIRS™ Process.

Next MIRS™

MIRS™ is an integrated, modular robotic system for making tyres. It has a very high degree of flexibility due to its ability to optimise modularity and logistics.

In the MIRS™ process, tyres are fabricated around a heated drum that is tailor-made for a particular tyre model. The drum is continuously rotated by a robot under an extrusion device that distributes rubber over the surface. The drum rotation and compound feeding movements are coordinated to provide the correct distribution of materials to create the specific tyre model.

Compared to traditional, large-scale tyre-building systems with their exceptionally high production rates, designed for customers in different geographic locations, the MIRS is a compact production “island,” flexible and easily programmable for extremely rapid adaptation to the production of new models. This system represents a real improvement, in terms of both technology and logistics, as it can be easily located near the manufacturing process that it serves.

The use of robotics in the production process makes it possible to realise extremely high product quality, due to the geometric distribution of the rubber fibres that is constant for each model.

The CCM process

The CCM process for producing compounds uses a 100% computer controlled pneumatic distribution system to transport the ingredients from their storage silos to the continuously operating twin-screw extruders.

The CCM technology was designed to manage the complexity of the process deriving from the large number of ingredients required to produce the compound. The computer controlled process improves the quality of the produced compound, and consequently the quality of the finished product.

By means of a specially designed powder capture and recycling system for solid materials, CCM technology has reduced dust levels in production areas to extremely low levels. The CCM process also saves energy, enabling a reduction of approximately 20% in energy consumption per unit of product.

The TSM process

TSM (Twin Screw Mixing) is the new process for preparation of compounds that offers high levels of quality, reliability and efficiency, developed specifically for the production of compounds used in the new Pirelli green tyres.

This technology makes it possible to realise major improvements in terms of compound uniformity, reduced dispersal of ingredients and a 30% reduction in energy consumption as compared with traditional techniques.

Energy efficiency

Pirelli is going to great lengths to realise energy efficiency, with positive results overall. Progress in realising energy savings is not linear and depends on the availability of technologies that are appropriate for industrial production in a specific context, including the economic cycle. In spite of constant improvements, specific energy consumption remained virtually unchanged between 2007 and 2008. This must be attributed to the concomitance of numerous factors associated with the current economic cycle. The general downturn in production volumes has caused the percentage impact of fixed consumption to rise, insofar as it is independent of production volumes. This stems from the fact that certain types of plants must remain active regardless of production volumes. Added to this is the impact of decommissioning and modifying certain production lines.

Current measures to realise energy efficiency consist in increasing the energy efficiency of production processes in technical, economic and environmental terms. Special attention is dedicated to the study of alternative energy sources, in order to increase diversification of energy on an eco-sustainable basis.

Energy efficiency levels are constantly monitored by means of specific gauges and indicators installed at all production units, where programmes to streamline and rationalise energy consumption have been implemented. A central organisation that is responsible for supervision and monitoring promotes energy saving measures. Their dissemination is tied both to informational and cultural aspects and to revision and streamlining the energy consumption of existing plant and equipment.

This has made it possible to achieve high levels of efficiency. The tyre production process has achieved a 9.2% reduction in its specific consumption of energy and 12.7% reduction in its water consumption over the last five years, as illustrated in the table of environmental performance described elsewhere in this section.

In the following charts, it is interesting to observe the different weight of energy and water consumption by the tyre production business as compared with the steel cord production business.

Consumption

The following chart illustrates the mix of energy sources provided by the Tyre and steel cord factories.

Energy sources

As for the water supply of Tyre and Steel Cord factories, the following chart illustrates that most water is taken from proprietary water wells as compared to what is obtained from the public water supply.

atersupply sources

The Company is constantly engaged in conserving its use of natural resources. In particular, it will devote increasing focus on eco-compatible technologies in terms of integration with renewable sources, reduction of climate altering emissions and water consumption.

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Yanzhou, China. Car tyre plant.

Investments to improve environmental performance

The investments made in 2008 to improve the environmental performance of Pirelli Tyre S.p.A. factories totalled 3.5 million Euro.

Environmental performance at production sites

As previously mentioned, the specific environmental performance of tyre and steel cord production activities of Pirelli Tyre S.p.A. is analysed separately below, being characterised by different products and, above all, fabrication processes.

Tyres

The following data consolidate the specific environmental performance of the Pirelli Tyre S.p.A. production units dedicated to the production of tyres. In line with the sustainability reports published over the past five years, the following factors and their environmental indicators are examined:

  • water consumption (expressed in m3/tonne of finished product)
  • energy consumption (expressed in GJ/tonne of finished product)
  • solvent consumption (expressed in kg/tonne of finished product)
  • waste production (expressed in kg/tonne of finished product) and the percentage of recycled waste
  • equivalent emissions of CO2 and NOX (expressed in tonnes/tonne of finished product and kg/tonne of finished product)

As can be seen, most of the reported indicators have shown a substantial improvement in performance over the past five years, due to the Company’s eco-sustainable strategy and commitment.

Summary of TYRE results

 

2004

2008

Diff. 2008/2004 [%]

Water consumption [m³/tonne FP]

18.56

16.21

-12.7%

Energy consumption [GJ/tonne FP]

12.34

11.21

-9.2%

Solvent consumption [kg/tonne FP]

3.40

3.49

2.6%

Waste [kg/tonne FP]

102.28

102.00

-0.3%

Recycled waste as total of waste [%]

72.20

72.41

0.3%

CO2 emissions [tonnes/tonne FP]

1.01

0.92

-8.9%

NOX emissions [kg/tonne FP]

1.88

1.60

-14.9%

Special mention should be made of the following points:

  • Following revision of the method used to account for energy consumption, energy consumption and carbon dioxide and nitrous oxide emissions from 2004 to 2007 have been recalculated.
  • Performance in 2008 was impacted by the current economic crisis and differs significantly from the trend for the last four years. The energy sector, including atmospheric emissions, was the most subject to external action since it does not depend in linear fashion on production. These emissions totalled about 910,000 tonnes.
  • In 2008 76% of carbon dioxide (CO2) was accounted for by indirect emissions (electricity and purchased steam).
  • The volume of water discharges was 73% of the total uptake of water.
  • Solid and liquid fossil fuels, which are characterised by their greater environmental impact than natural gas, represent about 3% of all energy sources used.
  • In 2008 the quantity of non-hazardous waste was 93% of all waste produced.

Steel cord

The data reported below refer to the five production units of Pirelli Tyre S.p.A. that make steel cord. In line with previous Group environmental reports, the following performance and environmental indicators for the last five years were used and examined for this business unit as well:

  • water consumption (expressed in m3/tonne of finished product)
  • energy consumption (expressed in GJ/tonne of finished product)
  • waste production (expressed in kg/tonne of finished product) and the percentage of recycled waste
  • equivalent emissions of CO2 and NOX (expressed in tonnes/tonne of finished product and kg/tonne of finished product)

Summary of STEEL CORD

 

2004

2008

% Diff. 2008/2004

Water consumption [m³/tonne FP]

11.12

9.40

-15.5%

Energy consumption [GJ/tonne FP]

11.28

11.76

4.3%

Waste [kg/tonne FP]

165.24

183.37

11.0%

Recycled waste as total of waste [%]

52.51

51.37

-2.2%

CO2 emissions [tonnes/tonne FP]

1.14

1.19

4.4%

NOX emissions [kg/tonne FP]

2.41

2.37

-1.7%

The following should be noted in regard to the performance reported in the chart above:

  1. Following revision of the method used to account for energy consumption, energy consumption and carbon dioxide and nitrous oxide emissions from 2004 to 2007 have been recalculated.
  2. Performance in 2008 was impacted by the current economic crisis and differs significantly from the trend for the last four years. The energy sector, including atmospheric emissions, was the most subject to external action since it does not depend in linear fashion on production. These emissions totalled a little less than 195,000 tonnes.
  3. In 2008, 85% of carbon dioxide (CO2) was accounted for by indirect emissions (electricity and purchased steam).
  4. Solid and liquid fossil fuels, which are characterised by their greater environmental impact than natural gas, represent about 0.3% of all energy sources used.
  5. The volume of water discharges was 76% of the total uptake of water.
  6. In 2008 the quantity of non-hazardous waste was 64% of all waste produced.

Finally, the dielectric oils containing PCBs and PCTs with concentrations higher than 50ppm totalled about 8 tonnes for the Tyre Sector, representing a reduction of 48.8% from 2004. There were about 8.4 tonnes of ozone depleting gases, used in Tyre Sector refrigeration plants, representing a reduction of 14.7% from 2004.

PRODUCT ECO-SUSTAINABILITY

In 2001 the study Life Cycle Assessment of an average European car tyre (Prè Consultants B.V. on behalf of BLIC, 2001) highlighted the substantial environmental impact of a common tyre during its useful life, which is far greater than its impact during the other two phases, production and end of life. According to this prestigious publication, about 90% of this impact is attributable to fuel consumption due to the friction between the tyre and the road surface, while the remaining part reflects the impact of the results of this friction (i.e. tyre debris). It has been estimated that during its life cycle, a tyre produces debris that represents between 10% and 14% of the tyre’s weight.

The impact of these debris particles is still being studied at the international level.

The Pirelli Group is monitoring this issue through a continual exchange of information and experience with other tyre manufacturers, by participating on the specific working group set up by the World Business Council for Sustainable Development, as previously mentioned.

In order to minimise the environmental impact associated with tyre use, Pirelli is constantly engaged in the design and development of compounds and product lines that, by using new materials, innovative internal structures and different tread designs, can reduce rolling resistance while guaranteeing the same durability of the tyre.

Pirelli is actively developing and using a series of new, increasingly ecological materials for compounds. In 2009, rice chaff resulting from the processing of raw rice will be introduced as one of the components used to make tyres. The use of this natural product will enable further reductions in the use of synthetic substances, thereby helping to reduce the environmental impact of tyres.

Green Product: the Pirelli Cinturato

Environmental friendliness, safety and performance are the key features of the new Cinturato, whose innovative compounds, structure and tread patterns ensure lower consumption and carbon dioxide emissions, greater durability and improved safety characteristics in both wet and dry conditions.

In particular, the new Cinturato, available in tread sizes P4, P6 and P7 (dedicated to the premium car segment) and featuring ECOIMPACT on the sidewall, can reduce rolling resistance by 20% and energy consumption by 4%, while increasing overall mileage by 30%. The tread contains no aromatic oils, which is a critical element for the environment due to the abrasion that tyres undergo while rolling.

Cinturato

The removal of aromatic oils from the tread compound anticipates the applicable European regulations that will come into force in January 2010. The tread pattern also offers improved acoustic comfort, by reducing tyre noise levels both inside and outside the vehicle.

More details on the performance of the New Pirelli Cinturato are provided below:

Lower fuel consumption and CO2 emissions

The new Cinturato cuts rolling resistance by 20%, thus providing savings of up to 4% in terms of fuel consumption and harmful emissions. Rolling resistance is the opposing force of the tyre to vehicle movement, i.e. energy dissipated while driving.

Together with mechanical resistance and air resistance, rolling resistance impacts fuel consumption and carbon dioxide emissions. Rolling resistance depends on factors both outside (vehicle speed and weight, type of road surface, air temperature and tyre pressure) and inside the tyre, such as structure, compounds and tread pattern. In designing the new Cinturato, Pirelli has made changes to these factors, introducing innovative solutions covered by Pirelli patents.

Better durability: thousands more miles

The tread compound of the new Cinturato has been reinforced with specific ingredients to extend the durability of the tyre without sacrificing grip characteristics. In addition, the tyre geometry has been completely redesigned, from sidewall to tread, in order to strike the right balance between rolling resistance, durability and safety. The average life of the new Cinturato in terms of distance has increased by 30%. This means that the average motorist will now replace his or her tyres every four years instead of every three.

Removal of harmful substances

Pirelli has eliminated aromatic oils from the new Cinturato’s compounds, before the applicable European Directive comes into force. The impurities present in these types of oils consist of polycylic aromatic hydrocarbons, which are potentially harmful to human health.

Enhanced safety and performance

This is achieved by improved braking on wet and dry surfaces. Safety, which along with high performance has always been the hallmark of Pirelli research and was already brought to maximum levels by the Cinturato back in the 1950’s, is the other key parameter according to which the new model was designed. The Pirelli P4, P6 and P7 guarantee greater safety under all weather conditions. In particular, they offer improved road hold when cornering on wet surfaces and, most importantly, shorten braking distances. On wet surfaces, the stopping distance is reduced by 11%, while on dry surfaces the braking distance is also significantly reduced as compared with other tyres.

Cinturato 2.JPG

The “Ecoimpact” icons on the sidewall of the Pirelli Cinturato.

The new Cinturato will be manufactured at plants in Bollate (Italy), Izmit (Turkey), Manresa (Spain), Carlisle (UK), and several leading car manufacturers have already chosen it to fit it as standard equipment on their most popular models.

The website www.pirelli.it/cinturato is dedicated to its safety and eco-sustainability features, to which the reader is referred for more information.

Green product: K-PRESSURE™ Optic

Normal use of a car whose tyre pressure is 20% less than its nominal pressure can cause fuel consumption to increase by up to 3% (with a consequent increase in air pollution). Studies by the U.S. National Transportation Safety Board have shown that for every 0.2 bars of under inflation, there is an average increase in fuel consumption of 1%.

Furthermore, tyre pressure that is 20% below what it should be causes irregular wear on the tyre tread and consequently increases wear and tear by 25%, which translates into a 30% reduction in the lifetime of the tyre.

This is precisely why a tyre pressure monitoring system needs to be installed on the car.

Pirelli recently presented the new K-Pressure™Optic, a tyre pressure control system dedicated to the replacement part market. Consisting of a sensor installed in place of the normal valve cap, it can detect insufficient pressure, thereby assuring motorists’ safety.

The simplest, surest and most economical way to increase the life of one’s tyres, reduce gasoline, diesel or gas consumption and reduce the pollution caused by particulates released in the atmosphere is to inflate the tyres on one’s car to their proper pressure (i.e. the pressure specified by the car maker, which is normally indicated in the relevant section of the vehicle user and maintenance manual) and constant, periodic controls.

Green product: Truck innovation

The following chart shows the innovative environmental performance of the Truck Series 01.

Performance

Green Tyres: The goal for the period 2009-2011

The Company’s goal is to have “green” tyres represent 40% of total tyre sales by 2011.

Green products

PIRELLI ECO-INNOVATION FOR END-OF-LIFE MANAGEMENT OF TYRES (ELT)

As previously mentioned, a tyre’s end-of-life phase makes a small contribution to the overall environmental impact of the entire life-cycle of the tyre and has a decidedly lower impact than those stemming from the use and manufacturing phases. Among the various final disposal options, burial in a landfill is by far the least desirable in terms of environmental compatibility.

Since 2003, European Union Directive 1999/31/EC prohibits disposal in landfills of entire end-of-life tyres (ELTs), and of fragmented ELTs since July 2006.

Pirelli has been dedicated for years to research on the management of ELTs, considering the major environmental benefits resulting from their recovery and recycling.

Through cooperation with Pirelli Labs, a number of possibilities have been developed for ELTs in terms of recovery of the raw materials that comprise them (“material recycling”), and recovery in the form of high-energy fuel (“energy recovery”), as a valid alternative to the use of fossil fuels.

This can include:

  • the use of ELT granules in the production of sound insulation products (described in the section dedicated to Pirelli Labs);
  • the production of powder to be used in the tyre production process (described in the section dedicated to Pirelli Labs);
  • the use of ELTs to produce CDR-Q, a fuel derived from high quality waste (described in the section dedicated to Pirelli & C. Ambiente S.p.A.).
Tyre recycling diagram