Canada pledges $80M to aid Michelin tire plant upgrade

BRIDGEWATER, Nova Scotia — Michelin Group's plan to invest $225 million in its tire manufacturing facilities in Canada will be supported by close to $80 million in federal and provincial aid, company and government officials said at a ceremony held March 14 at the Bridgewater plant.

Speaking to the assembled company executives, government officials and hundreds of plant workers, Canadian Prime Minister Justin Trudeau said his government worked closely with the Nova Scotia provincial government to come up with a package of public funds and incentives that helped secure the investment.

"I think you know that a big international company like Michelin, that has plants and fabrication facilities all around the world, has choices and options," he said during the announcement, noting that he and Nova Scotia Premier Tim Houston worked together to show Michelin that "we're willing to invest in the future of Michelin here in Nova Scotia and Bridgewater."

Trudeau stressed during his remarks that ultimately the quality of the employees' work was the key to Michelin's decision to expand in the province.

The federal government is providing roughly $34 million (C$44.3 million) in assistance through its Strategic Innovation Fund to Michelin to support the tire maker's plans to shift its factories in Nova Scotia toward producing tires for electric vehicles (EVs).

Nearly half — $104 million — of the investment is earmarked for the Bridgewater passenger and light truck tire plant, which will add more than 70 positions to the workforce there. Employment there is listed as 1,148 employees at last report.

In his remarks, Houston said Michelin's decision to invest in the Canadian operations is a testament to Nova Scotia's strong business environment.

Michelin stands to benefit from the province's newly increased Capital Investment Tax Credit, which could represent tax savings of nearly $50 million (C$61.3 million) over five years, based on the planned investment of $225 million.

The Capital Investment Tax Credit is a refundable corporate income tax credit that provides credit for capital costs of new equipment used primarily in manufacturing or processing goods for sale or lease, farming or fishing, logging, storing grain or harvesting peat

"You are the competitive advantage that Canada has," Houston said. "The quality of the work that is done here and in plants like it across the country is the one thing that continues to be the strongest selling point as we draw in investments from around the world," he said.

Michelin employs about 3,600 people at its plants in Bridgewater, Granton and Waterville. Andrew Mutch, president of Michelin North America (Canada) Inc., said overall the investment is expected to create more than the 70 new jobs at the Bridgewater plant, but the total number is still be calculated.

The investment, the largest single capital expenditure in the Canadian operations in decades, will cover the installation of new technologies and equipment at Michelin's plants in Nova Scotia in a bid to respond to "market evolution," including converting production to tires for the growing electric vehicle (EV) segment and larger rim-size tires for passenger and light truck vehicles, as well as truck tires with improved fuel efficiency.

The factory upgrades are expected to take at least three years, with some aspects stretching into 2027 before they're completed, Mutch told Tire Business.

Upgrading the Bridgewater plant will involve expanding the 50-year-old factory's footprint by 165,000 square feet, Mutch said.

Overall production capacity is not expected to increase much, Mutch said, because much of the investment is targeted at converting existing capacity to larger rim-diameter tires and other newer tire types. In such cases, unit capacity often doesn't change much, although rubber throughput does increase.

An important aspect of the project will be converting a great deal of the manufacturing processes in the factories to electric power, Mutch said, especially the curing presses, which for the most part use steam power.

Parallel to converting equipment in the factories will be Michelin Canada's increased use of electric power as part of its drive toward reduced overall energy consumption and increased use of renewable energy, he said. At his point, though, the company is still evaluating its options as to whether to invest in on-site power generation — such as wind or solar — to complement drawing power from Canada's electrical grid.

Michelin North America Inc. Chair Alexis Garcin said during the ceremony that the expansion allows his firm to adjust to a market where up to half of new passenger vehicles will be either hybrid or electric by 2030.

"That's why these investments are critical, so that we can seize massive opportunities as the markets transform," he said.