CLERMONT-FERRAND, France (Oct. 3, 2007) — Group Michelin is proposing closing a plant in France and restructuring its operations in Spain to strengthen its competitiveness in Europe.
Restructuring details were presented this week to the tire maker's French employees and will entail capital investments of $2.85 billion for modernization and new equipment.
In France, Michelin proposes closing the passenger tire plant in Toul operated by its Pneumatiques Kleber subsidiary. Michelin estimates manufacturing costs there are 50 percent higher than in competitors' plants despite “significant” investments over the past few years.
Michelin said the 37-year-old Toul plant makes mid-range car tires, the market for which is strongly challenged by low production cost countries. In addition, this market also suffers from overcapacity in the sizes made in Toul.
Michelin said it will commit to “do everything possible” to help each employee find a new job. The firm will offer each affected employee two job opportunities at one of Michelin's 16 other French factories. The company lists 800 employees at Toul, which has a nameplate capacity of 20,000 units a day.
In Spain, Michelin will modernize and reorganize its plants to enhance their competitiveness. The Spanish projects will require nearly $460 million, Michelin said. The company employs 7,000 at four plants in Spain.
Part of the Spanish project will involve reconfiguring the 73-year-old Lasarte factory to specialize in high-performance motorcycle tires. Michelin will invest about $70 million there to phase out passenger tire production and build up motorcycle tire capacity. When completed, the plant will export 90 percent of its production.
Michelin said it expects to entail significant non-recurring costs from the project. The impact of on the group's 2007 results will be divulged later.
Overall, Michelin expects the projects will create new jobs—perhaps as many as 4,000 in France and more than 600 in Spain.