EDINBURGH, Scotland — Group Michelin has confirmed its decision to end manufacturing at its Dundee, Scotland, plant by 2020, while committing to help establish major new activities at the site.
Under a deal announced Nov. 30 by the Scottish government, the French tire maker will work with national and local government agencies and other partners to develop the site.
An agreement to that effect is to be signed before year-end by the Scottish Government, working group partners and Michelin group management.
Michelin will, however, proceed with plans to cease manufacturing at the 47-year-old plant by mid-2020, after talks with Scottish government officials failed to yield alternatives to closing, which will affect 845 employees.
"Despite the offers of further Scottish Government support, structural market changes mean that the continued manufacturing of tires at the Dundee site is not viable," Derek Mackay, Scotland's economy secretary, said.
The goal now is to transform the site into a location for manufacturing, re-manufacturing, recycling and low-carbon transport, Mr. McKay said.
While noting that jobs would be lost with the closing of the tire plant, trade union Unite welcomed the joint proposals to develop the Michelin site on the basis that it will remain a significant manufacturing site.
"There are some exciting proposals which will ensure the site retains a manufacturing base and well-paid jobs will be created based on future technologies," Bob MacGregor, Unite regional industrial officer, said.
Scottish Enterprise CEO Steve Dunlop will lead the transformation project. Michelin's input will be led by Jerome Monsaingeon, a former managing director of its subsidiaries in Europe and the Far East and most recently of its tire retail unit ATS Euromaster.
Michelin notified employees at the plant on Nov. 6 of the closure plans, citing declining demand for the smaller-sized tires produced at the plant and increasing imports of low-cost products from Asia "have made the plant unsuitable and its conversion [to produce other types of tires] is not financially viable."
The company expects to book a $182 million charge against earnings to cover costs associated with the closing, but said cutting that high-cost facility could yield annual productivity gains of up to $52 million by 2021.