Michelin shakes up European operations as competition bites
PARIS (Reuters) - French tyre company Michelin said it plans to close some European plants and boost production at others in a reorganisation aimed at coping with tougher competition and the impact of years of economic crisis in the region.
The company said on Tuesday it would book a one-off impairment charge of about 280 million euros ($307 million) this year to finance the restructuring, which will cut 578 jobs in Italy, 180 in Germany and 860 in the United Kingdom over the next four years.
Michelin added that it would invest 265 million euros to modernise production facilities and its logistics network in the UK and Italy.
"The competitive environment and the economic crisis of the past few years have lastingly affected the European tyre market and, in particular, the market for new and retread truck tyres," Michelin said in a statement on Tuesday.
Its shares eased 0.7 percent to 91.35 euros by 1500 GMT but are up 22 percent so far this year, compared with a 29 percent rise for German rival Continental AG.
Michelin employs over 65,000 people at 40 production sites in Europe representing 40 percent of the group's business. The tyre maker is cutting costs and focusing on higher-end products as it faces a mounting challenge from cheaper Chinese rivals.
The group said in late July that price cuts in response to tougher Asian competition were taking a bigger toll on earnings than expected.
In Italy, Michelin said it would boost production at its Cuneo passenger car and light truck tyre site, as well as at its Alessandria new truck tyre plant. However, it said it would close its Fossano site in late 2016 due to overcapacity.
Michelin said it would ramp down its Ballymena truck tyre factory in Northern Ireland, which employs 860 people, by mid-2018. Production is expected to increase by 30 percent at its Dundee car tyre plant in Scotland.
The company's Pneu Laurent site in Oranienburg, Germany, will close at the end of next year because of "serious difficulties experienced on the European retread market", Michelin added. It employs 180 people.
Michelin also said it would take a 75 million euro one-time impairment charge after postponing a project to build Earthmover tyre capacity at its Chennai plant in India, because of a severe drop in demand for large industrial tyres.
(Reporting by James Regan and Leigh Thomas; Editing by Mark Trevelyan)
