PARIS-Groupe Michelin fulfilled its earlier turnaround projections for fiscal 1994 by posting a net profit on near-record sales of $12.1 billion (67.2 billion French francs con-verted at the average annual exchange rate). For its net profit of $245 million, Michelin credited the effects of its three-year cost containment and austerity program, which resulted in nearly $500 million in savings through the end of last year.
Michelin expects earnings this year and next to continue improving as the full effects of the program are realized, although spokesmen gave no predictions.
The company's U.S. subsidiary, Michelin North America, represented 35.6 percent of Groupe Michelin's 1994 sales worldwide and was in the black during the year, including a break-even performance by Uniroyal Goodrich Tire Co. A significant move forward is being achieved in the consolidation of distribution points to about a dozen, a spokesman said.
Groupe Michelin intends to build upon its success, announcing plans for a new plant in Europe-probably in France-incorporating the firm's ``C3M'' flexible manufacturing process, and revealing it expects to complete negotiations this year on a manufacturing venture in China.
These projects, along with several expansions and modernizations already announced in North America and France, are part of $730 million in capital investments planned this year-a 67-percent jump from last year.
As much as $240 million of the reduction in operating costs in 1994 was attributable to lower personnel costs, Michelin said. The employment reduction programs of the past few years are now largely completed-total employment is about 120,000-but employment will continue to be monitored closely and ``leaned out'' where possible.
In France, where the company's work force was most heavily hit by these reductions, workers at two truck tire plants went on strike April 8-11 and a demonstration was held at Michelin's headquarters in Clermont-Ferrand, April 12 to call attention to the need for new contract negotiations.
Union representatives said Michelin workers have received wage increases twice in the past year, 1 percent last October and 1.2 percent in March, but had waived agreed-upon wage increases in 1993.
In response, Eric Bourdais de Charbonniere, Michelin's financial director, pointed out the recently reported profit is only 2 percent of sales, still quite a bit lower than Goodyear and Bridgestone Corp.