KARLSRUHE, Germany — Citing the negative impact of low-cost imports, inflation and rising production costs, Group Michelin plans to close factories in Karlsruhe and Trier, Germany, and phase out truck tire and semi-finished product production in Homburg, Germany.
The restructuring measures will impact 1,410 employees at the facilities, which are to cease industrial activities by year-end 2025, Michelin said.
The company also plans to relocate its customer contact center for Germany, Austria and Switzerland to Poland from Karlsruhe, affecting 122 additional jobs.
The 52-year-old Homburg plant employs 843 in the production of medium truck/bus tires and semi-finished products, including 480 in truck tire retreading and related operations, which will continue for the foreseeable future.
With 479 employees, Michelin's 93-year-old Karlsruhe plant is focused on the production of tires for small and medium-sized trucks and semi-finished products.
These two plants were rated at 4,000 and 5,000 units a day at full capacity.
The Trier plant, meanwhile, employs 88 in the production of bead cores for passenger tires.
Michelin's remaining factory in Germany, a passenger tire plant in Bad Kreuznach, will not be affected by these rationalization measures.
Michelin closed a passenger tire plant in Hallstadt, Germany, in 2021, impacting 850 workers at that time.
Word of these closings come just weeks after Goodyear disclosed it intends to close factories in Fulda and Furstenwalde, Germany. Goodyear's actions will affect 1,750 workers.
"This unavoidable decision was very difficult for us," Maria Röttger, CEO of Michelin's Europe North Region, said, noting that the market conditions cited are leading to structural over capacities and underutilization of the affected production sites.
"The commitment of our employees, the internal progress made within the company and the investments made in the affected activities in recent years can no longer compensate for the strong competitive pressure. Our priority now is to support our employees as much as possible and to accompany them individually into a new future."
Michelin elaborated on its reasons for the rationalization by noting the the market share of budget tires — mainly from low-wage countries — increased by 11 percentage points during the 2013-22 time frame, at the expense of the premium and mid-price segments. Michelin did not identify which countries it meant by "low-wage" nations.
This development led to a decline in the premium segment and thus to a loss of market share, Michelin said.
In addition, recent health and geopolitical crises and their impact on energy, logistics and raw material prices — along with a high inflation rate — put additional strain on Germany's competitiveness as an industrial location.
In July 2023, natural gas prices in Germany were more than twice as high as in 2015, while the price of electricity was up 51%.
Such factors have a "direct and unfavorable impact" on industrial operations, Michelin said, including the ability to export products made in Germany.
Michelin is also pursuing a strategy of producing closer to the markets it serves, in part to enhance customer service with a more environmentally friendly and efficient logistics chain. This contributes to the decreasing emphasis on exports.
Michelin said its priority is to provide individual support to the 1,532 employees affected, helping them find new employment. The company will provide those employees with a "comprehensive package" of measures.
The company has begun deliberations with the works councils at the individual sites and the IGBCE trade union on implementing operational changes as well as evaluating possible alternatives for the future use of the affected sites with an eye toward the creation of new jobs.
