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November 16, 2018 01:00 AM

Michelin: U.K. plant closing could yield $52M in annual savings

Shahrzad Pourriahi, European Rubber Journal
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    LONDON — Group Michelin expects to book a $182 million charge against earnings to cover costs associated with closing a tire plant in Dundee, Scotland, but cutting that high-cost facility could yield annual productivity gains of up to $52 million by 2021.

    Michelin recently notified workers at the plant it intends to close the 47-year-old plant by 2020, although it's still working with the Scottish government on a potential rescue plan for the plant and the 845 workers employed there.

    In a presentation at a Nov. 14 UBS conference in London, the French tire maker said the planned closure would carry with it $182 million in non-recurring costs in 2018 and $65 million in "cash outs" during fiscal 2019 and 2020.

     Productivity gains would start with $26 million in 2020 and increase to an annual figure of $52 million from 2021 onwards, according to the presentation.

    Michelin blamed declining demand for the smaller-sized tires produced at the plant and increasing imports of low-cost products from Asia for its decision to close the facility.

    The Dundee site manufactures only 16-inch rim diameter and smaller tires for passenger cars.

    The plant is rated at 25,000 tires a day.

    Dundee is the last Michelin tire plant in the United Kingdom. The company has one factory still in Great Britain, in Stoke-on-Trent, England, that produces truck retreads, tire molds and steel cord.

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