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October 23, 2001 02:00 AM

Michelin to close 3 European plants, cut 3,632 jobs

Bruce Davis
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    PARIS (Oct. 23, 2001)—In light of uncertain economic conditions next year, Group Michelin has announced three plant closings in Europe and an early retirement program in France that will result in 3,632 job cuts and an additional $180 million in charges against 2001 earnings.

    In addition, the company is putting employees and investors on notice that it does not rule out “additional steps to adjust production capacities.”

    For the third quarter of fiscal 2001, Michelin saw sales edge up 1.9 percent, to $3.57 billion, while nine-month sales were up 3.6 percent, to $10.5 billion, despite a 2.4-percent drop in unit volume. Earnings were not released at this time.

    In North America, the company claimed it gained market share in both the original equipment and replacement passenger tire markets, and it recouped nearly all its lost market share in the truck tire aftermarket. Michelin said it expects to cut annual operating costs by nearly $135 million next year and in 2003, and by an additional $135 million starting in 2004.

    In line with its ongoing cost reduction program, Michelin will shut one German and two English facilities during 2002, resulting in 948 job losses.

    In England, Michelin will close its Burnley truck tire by March and Stoke-on-Trent steel cord and mold repair workshops by September, idling 732 workers. These decisions are considered part of Michelin's “competitiveness improvement plan” initiated two years ago.

    In Germany, Michelin will close its St. Ingbert semi-finished products plant, leading to approximately 950 job losses. The St. Ingbert plant originally was a Pneumatiques Kleber facility that previously also made farm and light truck tires.

    The decision to close the English plants is not related to plant performance but is a function of plant size in relation to Michelin's long-term strategy, the company said. In both instances, the investment needed to increase capacity would be prohibitive; current production can be accommodated at less cost in larger plants and achieve economies of scale for the long-term.

    Michelin's other plants in the British Isles—a truck and bus tire plant in Ballymena, Northern Ireland, a passenger tire plant in Dundee, Scotland, and a truck tire retreading operation at Stoke-on-Trent—are all unaffected by these announcements

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