Against the back of a challenging automotive sector in Europe, French tyre maker Michelin (plans to close two of its French factories, affecting 1,254 workers.
The 135-year company cited high costs, worsening competitiveness of Europe, notably due to inflation and rising energy prices, and cheap Asian competition as reasons for the closure of its Cholet and Vannes sites in western France by early 2026. It added, “the decision had become unavoidable given the structural transformation of the passenger car & light truck and truck tyre markets and worsening competitiveness of Europe”.
The company stated: “in fact, over a decade, market share of entry-level passenger car & light truck and truck tyres has increased by 9 and 11 points, respectively, taking away share from the corresponding premium segments, which have fallen by 11 and 8 points (Source: Roland Berger: May 2023 for Truck tires and June 2024 for Passenger car & Light truck tires). This situation has led to structural production overcapacity at some of Michelin’s passenger car & light truck and truck tyre plants in Europe”.
Michelin’s announcement comes just weeks after unions at Europe’s largest car manufacturer Volkswagen warned of planned plant closures and peers including Peugeot-maker Stellantis issued hefty profit warnings.
Meanwhile, Germany’s Schaeffler, another major automotive supplier, said it would lay off 4,700 people.
Michelin’s move has outraged French labour unions. The hardline CGT called on all Michelin workers to go on strike, while its more moderate peer CFDT urged management and the government to revisit the closures and seek alternatives.
“We assessed our options but couldn’t find any alternatives to (closing) these two sites” Michelin Chairman Florent Menegaux told newspaper Le Monde, adding: “The only constant at Michelin is that it’s always on the move.”
French Prime Minister Michel Barnier said he regretted Michelin’s decision and said affected workers must be helped with all available means.
“The automotive sector is in a difficult spot and not only in our country,”, Barnier said, adding that Europe must protect its auto industry against “unfair” foreign competition with stronger action and less “naiveté”.
Industry Minister Marc Ferracci called for a European “emergency plan” to save the sector, saying he would work towards formulating policy proposals at the EU level in the coming weeks.
Labour unions had already alerted workers to the possible closure of the sites in Cholet, which mainly manufactures smaller light truck tyres and Vannes, which makes metal tyre frames and has 299 employees.
Staff at Michelin’s Cholet site, which employs 955 people, later on Tuesday voted in favour of strikes to protest the planned closure, a union source told Reuters.
It has already halted production at both plants through Nov. 11 to give management and the unions time for group and individual discussions with employees, it said, recording a provision of approximately EUR330 million in non-recurring expenses in its consolidated financial statements as of Dec. 31.
Michelin announced last year the closure of two German heavy-duty truck tyre sites and last month lowered its annual profit forecast due to a more marked slowdown than expected in the auto market in the third quarter.
The company says France is a core and strategic country for the group, where it invests continuously and employs nearly 15,000 people at 15 manufacturing plants.