A Safety Management System organised and certified to meet OHSAS 18001 standards has long been in operation in the Tyre Sector (which also comprises steel cord production plants). Following implementation of the system at the new plant in Slatina, Romania, an objective set in 2008 for 2009, the operating units were certified under this standard have climbed to 21 out of a total of 23 plants. In the particulate filters sector (Eco Technology), implementation of the management system is currently being assessed at the Bumbesti, Romania plant. The process that would lead to certification of the Milano Bicocca site was temporarily suspended following internal reorganisation. The Safety Management System implemented at the Pirelli Tyre production units has been developed on the basis of centrally drafted common procedures and guidelines. This has enabled the use of a "common language" within the Group, in terms of the key elements of occupational safety management and a uniform shared mode of operations. This system has also been replicated for the sites of other companies outside the Tyre Sector that might decide to implement a management system.

Pirelli decided many years ago to adopt the same standards of safety worldwide for machines, installations and work environments as those in force at its European facilities, which are regulated by specific EU directives. This decision has resulted in the installation of machines and equipment in emerging countries with safety features that are not required under local law but rather in compliance with European standards.

The principles of the adopted excellence system are based on a consolidated process, named PDCA (plan, do, check, act):
Plan
— Define the corporate organisation for management of safety issues and management methods (procedures, operating instructions, etc.).
— Identify and assess the specific significance of all aspects regarding worker health and safety, defining improvement objectives to reduce their significance. Do
— Implement what is planned. Check
— Periodically audit actual performance of the planned activities and their effectiveness. Act
— Subject the management system to periodic effectiveness reviews to verify achievement of the assigned targets and define subsequent ones.

The Excellence in Safety project was launched in 2009, aiming to introduce safety culture in factories, which consequently does not base the wellness of individuals only on the application of rules, but leads those individuals to "sense" this issue as a form of responsibility first and foremost towards themselves.
The project, which was implemented in collaboration with Dupont, an international leader for activities of this type, was undertaken at the new industrial centre currently being constructed at Settimo Torinese. That centre will serve as a benchmark for other Group plants both in terms of occupational safety and in terms of technological applications and savings. Conclusion of the project is scheduled for 2011, and the programme envisages involving the entire population of workers who will be assigned to the site.

The principles and guidelines for Excellence in safety have already been distributed to other Group operating units.

In 2009, additional measures were implemented for changing internal culture, including creation of the Safety Bulletin newsletter, training courses for comprehending, controlling and modifying behaviour, entitled "BBS, Behaviour Based Safety," and periodic announcement of important events through the usual channels of internal communications.

In 2009 Pirelli officially joined the "Safe and Healthy Workplaces" campaign as partner of the European Agency for Safety and Health at Work (EU-OSHA).

The Campaign addresses a different issue every two years, being dedicated in 2008 and 2009 to Risk Assessment. Its objective was to promote a participatory approach to risk assessment, based on consultation and the involvement of everyone present at the workplace, so that all hazards would be accounted for, not only on the basis of theoretical principles but also through actual knowledge of the environmental conditions and situations that have a negative impact on workers.

The commitments made by the Group with EU-OSHA during this Campaign have ranged from promoting the risk prevention culture through internal and external communication channels to organisation of ad hoc meetings at Pirelli sites with the participation of Agency representatives.

Pirelli's commitment with the European Agency will continue during the two-year period 2010-2011 as part of the new campaign, focusing on safety in maintenance work.

The initiative Pirelli HSE Campus was launched at the beginning of 2009. It offers a catalogue of courses and seminars given at Group operating units by qualified Company personnel. This programme targeted managers in order to provide them with skills and knowledge about the best operating practises. The campus offered about 100 hours of classroom instruction, with about 150 persons participating at the plants in Turkey, Italy, Germany, Egypt and China. Both the importance of this initiative and internal satisfaction with it have encouraged increasing the number of training hours and workers involved in the HSE Campus, with simultaneous refinement of the system used to monitor the hours dedicated to it and the number of participants (see paragraph "Objectives for 2010-2011").

In parallel with the definition of specific common guidelines and procedures for drawing up and implementing management systems, the Pirelli company intranet contains a web-based management system for "Health, Safety and Environment Data Management" (HSE DM), created and operated at corporate level by the Health, Safety and Environment Department. This system permits the monitoring of HSE performance and the preparation of a wide variety of reports that are required for management and operational purposes. In particular, the HSE-DM system collects all the information regarding accidents that take place in factories (accident analysis, adopted corrective measures, etc.) and, if the dynamics of the specific case are significant, all plants are not only provided with the information but also urged to conduct an internal audit as to whether conditions similar to the ones that caused the injury exist at their plants too and define any corrective measures. This information system is used to pool the solutions adopted by the various sites and share those that are considered the best.

In 2009, the HSE DM system was extended to Pirelli Broadband Solutions, and starting from 2010 it will be gradually extended to other production sites, and then to other non-industrial sites.

The accident frequency index (FI) (the ratio of the number of reported accidents to the number of hours actually worked) in 2009 fell overall by 15% from 2008. However, the severity index (SI) increased by 19% due to worse performance in the Tyre Sector (industrial) and certain significant events that occurred at companies classified as "Others".

The information is also provided by business, i.e. Pirelli Tyre, Eco Technology and Others. The Others category is comprised of several companies that are grouped together according to the type of activity performed or their size. This group includes Pirelli RE, Pirelli Labs, PBS and Pirelli & C.

The trend for the frequency index at Pirelli Tyre industrial was particularly significant. It fell by 20% from the previous year and by 32% over the 2007-2009 period. The values reported for Others are impacted by the occurrence of certain significant events (fracture). Consequently, the frequency index rose to 1.99 (a 27% increase from 2008) and the seriousness index rose sharply, to 0.49 from 0.18 in 2008.

To better understand these data, it should be kept in mind that the SI was calculated by considering all calendar days (excluding the date of the accident) between the injured person's work interruption and the employee's return to the factory as "lost," i.e. the actual days necessary for complete rehabilitation. The calculation of the aforementioned indices does not include "in itinere" accidents, which will be separately discussed in the following table and that show a significant decrease from 2008.

The following table illustrates the principle indicators of the companies belonging to the Pirelli Group. As previously mentioned in the introductory section, all information is processed on a final basis for the Group. Calculation of the indicators refers to the activities performed by both industrial and office employees. The indicators referring to frequency and severity for external entities cannot be calculated, insofar as it is not possible to monitor the hours that are actually worked or the days that are actually lost.

No Pirelli employee or employee of outside contractors working at the Group's operating sites suffered a fatal accident in 2009.

Mention of the internal benchmark plants must be made in regard to Pirelli Tyre industrial activity. In particular, the Slatina Tyre and Slatina Steel Cord sites (both in Romania) had the lowest frequency index, i.e. 0,16.
Just as worthy of mention are the Settimo Veicoli Industriali (Italy) and Celikord (Turkey) plants, whose improvement trend in the frequency index for the period 2006-2009 exceeded 75%.

As shown in the table, the Frequency Index of occupational diseases at the Company fell over the three-year period, to 0.27 in 2009.



Improved definition of the cases required revision of the calculations made in previous years, resulting in a revision of the indices for 2007 and 2008 as well. A refinement in the definition of the cases attributable to "occupational disease" together with internal information activities regarding them resulted in a revision of the indices for 2007 and 2008, which were erroneously higher (0.51 in 2007 instead of 0.49) or lower (0.21 in 2008 instead of 0.38) than they actually were.

In 2009 the Frequency Index of new cases of occupational diseases reported at Pirelli Tyre was 0.34, down 11% from 2008 and 30% from 2007.

The decrease in hours worked (the parameter used to calculate the index) recorded in 2009, did not have a significant impact on the Frequency Index.

The largest investments for 2009 were made at Pirelli Tyre. In 2009 health and safety investments by Pirelli Tyre totalled Euro 10 million.



The System for Identification and Assessment of Improvement Opportunities, introduced in 2008, made it possible to target the distribution of expenditure more effectively. Operational start-up of the computerised management system in 2009 further improved the capacity of assigning economic resources, based on the concept of priority and number of persons that will benefit from the measure.

The expenditure made targeted improvements on machines and plant and, more in general, workplace environment as a whole (e.g. improvement of microclimate and lighting conditions, changes in layout for ergonomic improvement of activities, measures to protect the healthfulness of infrastructure, etc.).

These expenditures were complemented by safety related expenses that are essentially attributable to environmental monitoring (i.e. sampling and analysis, consultancy studies, etc.), the purchase of personal protection equipment (e.g. safety boots, gloves, safety goggles, etc.) and collective protection devices (e.g. better protection of machinery, suction systems and measures to improve the workplace environment not covered by specific expenditure projects).

Pirelli has operated infirmaries for decades in its production plants, with nurses and doctors available to provide all employees with medical care during working hours. These facilities provide first aid care, advice on health problems unrelated to work and health supervision for workers exposed to specific hazards.
For example, the Bicocca-Milano, Italy infirmary provided a total of more than 20,000 medical services to a resident population of about 2,000 employees. Healthcare promotion campaigns developed in line with local programmes also make use of these facilities (see paragraph "Initiatives for the Internal Community" and the followings).