Michelin giveth, Michelin taketh away – French investments, retreading plant closure

Tuesday 1st March 2016 | 0 Comments

Being environmentally-friendly and financially sound hasn't stopped retreading from losing ground to cheap, imported new tyres
Being environmentally-friendly and financially sound hasn't stopped retreading from losing ground to cheap, imported new tyres

In what it calls a “series of decisions that adapt its industrial and service activities in Clermont-Ferrand,” French tyre maker Michelin has announced the closure of a retreading facility at its headquarters site and a further 164 job cuts in its Engineering operation. At the same time, the company has outlined plans to invest €90 million into projects at three Clermont-Ferrand locations.

As stated in the upcoming March 2016 issue of our Retreading Special, sales volumes for retreaded tyres in Europe have decreased by a quarter since 2007, and growing competition from imports of new tyres from China mean this trend doesn’t look likely to reverse any time soon. In light of this development (which Michelin refers to as the “retreading crisis”) and the current overcapacity within Europe’s retreading sector, Michelin says it is being “forced to rationalise its industrial base by focusing its retreading activities on a limited number of sites.”

A cull of Michelin’s retreading facilities within the region has already begun. Last November, the tyre maker announced the phasing out of retreading operations in Alessandria, Italy and the closure of its smallest retreading plant in Europe, the Pneu Laurent facility in Oranienburg, Germany. This second plant currently operates at 50 per cent capacity, and following its closure later this year all remaining activities will be shifted to Michelin’s Avallon retreading plant in France. The Stoke-on-Trent operation is safe for the time being, as at time of announcing the above two closures, Michelin confirmed its commitment to retreading there.

The newly-announced closure will see retreading at the Combaude site in Clermont-Ferrand cease by the end of 2017. Michelin intends to wind down and close the facility without implementing any compulsory redundancies, instead redeploying the facility’s 330 employees, including 266 production workers, to other industrial sites in the Clermont-Ferrand area under a Michelin “internal reclassification plan.” This plan will see each affected employee offered several “comparable positions” in the local area. “The strong recruitment needs of other plants in the Clermont-Ferrand area, which need to hire 400 production workers over the next three years, will facilitate these internal redeployments,” writes Michelin in a statement. “In addition, voluntary early retirement plans will be offered to people nearing retirement.”

Redundancies also affecting Michelin Group Engineering

At present, Michelin’s Engineering operation has 2,400 employees worldwide, 970 of these in Clermont-Ferrand. After a several month-long study, Michelin reports it is reorganising the Engineering operation by creating a Manufacturing Engineering entity that will be globally managed from the Carmes site in Clermont-Ferrand.

According to Michelin, the aim of this new organisation is to “improve the development and deployment of the Group’s industrial processes.” The teams located in Clermont-Ferrand will focus on the global management of activities, the coordination of developments in processes and the development of projects in conjunction with the company’s Technology Center in Ladoux.

The reorganisation will result in 164 job cuts by the end of 2018, all based in Clermont-Ferrand, but again without any compulsory redundancies. A voluntary internal mobility plan will be offered to the affected engineering employees. Anyone choosing this functional mobility plan will be able to move into new positions at a Clermont-Ferrand site or in the area. The internal mobility plan will be supplemented by a voluntary early retirement plan for those nearing retirement.

€90 million in new investments for Clermont-Ferrand

The changes in Clermont-Ferrand aren’t restricted to closures and redundancies. As stated in the industrial competitiveness strategy that Michelin launched in France three years ago, the company intends to focus its Clermont-Ferrand sites upon high added value activities that have a strong degree of technological content, in particular by exploiting synergies with its global research and development centre in nearby Ladoux. With this in mind, Michelin is engaging in a new €90 million investment programme to finance equipment and advanced processes on its sites in Cataroux, Combaude and Gravanches.

The Combaude site will specialise in the role of supporting the development of new products. The facility’s industrial and technical innovation foci, particularly in regards to the design of curing moulds and high technology textile reinforcements, and the development of specific tools for manufacturing processes, will be strengthened. It will also continue to operate its logistics activities.

The Cataroux site will benefit from major investment to finance new production processes to develop the production of racing tyres and their components, and also to strengthen its industrial missions in support of research and development activities.

The Gravanches site, which manufactures high performance car and van tyres, will receive investment to further increase the highly technical nature of its products.

Development of other ‘support’ services

Other Michelin Group ‘support’ services in Clermont-Ferrand will also gradually adapt their organisations over time. Michelin describes the transformation of its business lines into service activities and the retirement of numerous people working in its central services over the next few years as a “challenge for the Group in terms of skills, training and developing people.” Prior to commencing any job cuts, Michelin will participate in GPEC (jobs and skills management) negotiations with union organisations.

As required by law, Michelin will present an employment protection plan to employee representative bodies at a special meeting of the central works committee and the Clermont-Ferrand works committee held on 16 March. Michelin management will present its proposals for measures to support employees at the Combaude retreading plant and for those employees affected by the reorganisation of the Engineering operation. Through its GPEC negotiations with the unions, Michelin aims to “anticipate and manage the changes in business lines and skills” for the Group’s French employees until 2019. These negotiations will begin in early April 2016.

“Adapting Michelin’s activities in Clermont-Ferrand is part of the Group’s commitment to drive its strategy for competitiveness and industrial change in a spirit of responsibility towards its employees and the territories where it operates,” writes Michelin. “By strengthening the positioning of its Clermont sites on to industrial and service activities with high added value, Michelin intends reaffirming its anchorage in Clermont-Ferrand, the historic cradle of the company.”

To finance these restructuring projects, the Michelin Group will enter a provision of approximately €55 million euros in non-recurring expenses in its accounts to 30 June 2016.

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Category: Company News