AKRON-It's the end of an era for Akron. Michelin North America announced June 17 it will relocate its Michelin Americas Small Tires (MAST) business unit from Akron to Greenville, S.C., cutting nearly all ties to what once was the ``Tire Capital of the World.''
The move, which will be completed by mid-1995, means more than a loss of jobs for Akron. It signifies the end of the B.F. Goodrich tire era in the city.
B.F. Goodrich was the first firm to manufacture pneumatic tires in the U.S. when it set up tire production in 1895, 25 years after the company's founding in Akron as a rubber hose business by Dr. Benjamin Franklin Goodrich, a Civil War veteran.
From that humble beginning, Goodrich went on to become one of the largest tire companies in the world.
In 1986, B.F. Goodrich merged its tire operations with those of Uniroyal Inc., creating Uniroyal Goodrich Tire Co., which took over the former B.F. Goodrich world headquarters building in downtown Akron.
Two years later, BFG sold its 50-percent share in U.G. Tire to a New York investment firm-Clayton & Dubilier Inc.-and got out of the tire business altogether. Clayton & Dubilier also held a large stake in Uniroyal Holdings Inc., which in turn owned the remaining 50-percent of U.G. Tire.
In 1990, Michelin acquired U.G. Tire from Clayton & Dubilier for $1.5 billion-$690 million in cash and the assumption of $810 million in debt.
Now, following Michelin's decision to consolidate its operations in Greenville, the last of the former B.F. Goodrich tire operations, including U.G. Tire, will leave the city, with the exception of a small 45-person research and development facility located in the Akron suburb of Mogadore, Ohio, that supports BFG-brand racing.
A Michelin spokesman said the relocation will eliminate job redundancies and reduce travel, telephone, postage and facility operating costs. The consolidation also will permit better response to customers, since everyone will be in one location, he said.
Michelin employs about 400 at the Akron headquarters of MAST, the business unit responsible for the U.G. Tire manufacturing plants as well as marketing and selling all of the company's passenger and light truck tires.
Between now and next August, when the Akron facility is expected to close, Michelin will reduce that number by about 165 through relocation, attrition and retirements leaving about 235 employees. Of those, 190 will be transferred to Greenville, while 50 jobs will be eliminated.
About three-quarters of the employees affected are in marketing and sales, with the remainder in areas such as human resources, consumer relations and information services.
David Shaub, COO of MAST and president of U.G. Tire, said the company's decision to leave Akron didn't seem to take employees by surprise. ``There has been an awful lot of movement underfoot,'' he said, referring to the many moves that have occurred in Akron since Michelin's acquisition.
In the employees' minds, the question was ``not if, but when'' the company would move, he said.
Michelin employed 900 in Akron shortly after purchasing U.G. Tire, but has pared that number through retirement, transfer or layoffs.
The announcement caught analyst Harry Millis of Fundamental Research Inc. in Cleveland by surprise. He said Michelin had indicated to him about a year ago that the current setup, with MAST in Akron, was effective and that the unit would stay in the city.
The logic of creating the MAST group in Akron made a lot of sense, Mr. Millis said. Leaving MAST there indicated that Michelin would give equal presence to the Uniroyal and Goodrich lines, along with the Michelin brand.
The danger in moving the unit to Greenville is that ``Michelin, intentionally or unintentionally, will dominate,'' he said. ``The same thing would be true if Goodyear moved Kelly-Springfield into Goodyear's headquarters (in Akron) and out of Cumberland, Md.''
However, he acknowledged that the move makes sense from an economic standpoint.
Michelin will provide separation assistance to Akron employees who choose not to relocate or are not offered the opportunity to relocate, the company said.
To accommodate those who are relocating, Michelin will construct a $5 million building behind its Greenville headquarters. Completion is set for July 1995.
The Michelin spokesman said the move out of Akron is unrelated to a cost reduction plan announced last summer to eliminate 2,500 management and labor positions in North America by the end of 1994. That number will wind up closer to 3,000, he added.
Since Michelin acquired U.G. Tire in 1990, the work force has been scaled back from about 32,000 to its current 26,000, the spokesman said.
Michelin will continue to lease the former Uniroyal Goodrich headquarters in Akron from B.F. Goodrich through 2001, but is looking to sublease the facility, the spokesman said.