PARIS—Group Michelin plans to cease tire manufacturing in Colombia and Algeria by year-end, actions that led the company to report $133 million in non-recurring expenses in its half-year consolidated financial statements.
In Colombia Michelin intends to continue to service the market through its Michelin Colombiana sales force, while in Algeria it plans to sell that business to an Algerian private industrial group that will take over the marketing of Michelin-brand tires in Algeria and help find jobs for the plant's 600 workers.
Michelin cited losses of more than $150 million in Colombia over the past 15 years and the plants' insufficient size for its decision to close a truck tire plant in Chusaca and passenger tire plant in Cali. The closings affect about 460 workers.
Michelin said it is offering personalized socio-economic support to the workers affected to help them find new jobs.
At the same time, Michelin said it will expand its sales force in Colombia to more than 60 and will continue to work with its existing “solid” distribution network.
The tire maker acquired the plants and associated sales and distribution assets in September 1998 with its purchase of Industrias Colombiana de Llantas S.A. (Icollantas), an independent company at that time which had been a BFGoodrich licensee for many years before that.
In Algeria, Michelin said its decision to cease production and sell the business is based on the unit's lack of competitiveness—tied to its small size and location, which does not allow for expansion.
Algiers-based Groupe Cevital will take a 67-percent stake in the business initially and eventually take over 100 percent, Michelin said. Financial terms were not disclosed.
The company has had a plant in Algeria since 1963, but it was mothballed from 1993-2003 because of political turmoil in the one-time French colony. Michelin listed capacity at that plant as 9,400 metric tons per year.