00:04No warnings from Italy-based tire producer Pirelli, announcing last month instead that a new 1.2 billion dollar investment
00:11at its U.S. manufacturing hub in Rome, Georgia, will move forward as it continues to bet big on the
00:18U.S. auto market.
00:20So joining me now to discuss this and more in a CNBC exclusive is Marco Tranchetti, executive chairman at Pirelli.
00:27Marco, it's wonderful to have you on the show.
00:29Welcome to you. Thank you. Happy to be with you. So you're investing more money into more production here in
00:38the U.S.
00:39Why are you doing that and why are you doing that now? The U.S. is the largest market for
00:45high tech tires.
00:46So call the high end tires. And it's also for technology in general the largest market.
00:52We have 20 percent of our turnover in the U.S. and the market represents 40 percent of the global
00:59market for high tech products.
01:01So that's why. That's as simple as that. So we invest 1.2 billion to produce 6 million tires in
01:09the U.S.
01:10Did tariffs or trade dynamics factor into the decision to invest here specifically?
01:17No, we invest specifically there also because of cyber tires, so-called cyber tires.
01:23So we are able to provide information directly from the tire to the controlled electronic control of the cars to
01:33provide real-time information about the grip, the ground is wet.
01:37So our technology is unique. So that's why America is the right, is the right market for us.
01:45I remember learning a number of years ago that tire usage, tire demand could actually be seen as an economic
01:52indicator,
01:53not only on the consumer side and how people are using their automobiles, but also when it comes to things
01:58like trucking and demand for goods to be moved on the roads.
02:02So in light of that, what are you seeing in the U.S. and in other parts of the world?
02:07What we see, Antina, is that the iron market is still growing.
02:13The standard product market is slowing down. It's slowing down everywhere in Europe, in U.S. and China.
02:22In U.S., there is a lot of imports, and so we see that there is a competition from the
02:29imports, and that happens also in Europe.
02:33And that's one of the reasons why the local production has some problems.
02:39But the consumers are attracted by inflation, and so for the time being, we see a slowing down everywhere.
02:50It takes a lot of petroleum products to make tires as well.
02:53Have you been impacted by what we've seen in the energy markets this year?
02:58We have been impacted, obviously, by the cost of energy.
03:01So we have 18 factories globally, and there are costs that are unexpected, well unexpected.
03:10And then, obviously, we have to play with prices in a balanced way, because, again, consumers, they have less money
03:20in the pocket.
03:21So we have to – we continue to grow in any case, because the iron segment is still consistent.
03:28And we are supported by the technology we have.
03:31We have developed it thanks to the Formula One, and now also to GP1 in the motorbike.
03:37So I think that in a difficult time, we have the proper technologies, and we are in the right segment.
03:44And finally, just to circle back to this investment in the U.S., Formula One is gaining in popularity so
03:52quickly here in the U.S.
03:53You supply tires to the most sophisticated automobiles in the world, race cars in the world.
03:59How much is the opportunity around Formula One and sports factoring in as well?
04:05It's key for us.
04:07So we are part of 250 races around the world, but the most important is Formula One.
04:13We are the sole supplier since 2011, and we have a contract until 2028.
04:21Technology there is at the top.
04:23So what we do in Formula One is useful also for the cars in the streets, because we transfer the
04:33technology directly to the cars.
04:36And the stress and the need of technology of Formula One is really amazing.
04:43Okay.
04:44Marco Tronchetti of Pirelli, it's wonderful to have you on.
04:47Thank you for joining me.
04:48Grazie mille.
04:49Grazie mille.
