Clermont-Ferrand,France - Group Michelin wants to close a plant in France and restructure its operations in Spain to strengthen itscompetitiveness in Europe.
Restructuringdetails were presented this week to the tyre maker's French employees and will entail capital investments of $2850 million (€ 2022 million) for modernisation and new equipment.
In France, Michelin proposes closing the passenger car tyre plant in Toul operated by its Pneumatiques Kleber subsidiary. Michelin estimates manufacturingcosts there are 50 percent higher than in competitors' plants despite â€œsignificantâ€ investments over the past few years.
Michelin saidthe 37-year-old Toul plant makes mid-range car tyres, the market forwhich is strongly challenged by low production cost countries. In addition, this market also suffers from overcapacity in the sizes madein Toul.
Michelin said it will commit to â€œdo everything possibleâ€ to help each employee find a new job. The firm will offer each affected employee two jobopportunities at one of Michelin's 16 other French factories. The company lists 800 employees at Toul, which has a nameplate capacity of 20 000 units a day.
In Spain, Michelin will modernise and reorganise its plants to enhance theircompetitiveness. The Spanish projects will require nearly $460 million, Michelin said. The company employs 7000 at four plants in Spain.
Part of the Spanish project will involve reconfiguring the 73-year-old Lasartefactory to specialise in high-performance motorcycle tyres. Michelin will invest about $70 million there to phase out passenger tyreproduction and build up motorcycle tyre capacity. When completed, the plant will export 90 percent of its production.
Michelin said it expects to entail significant non-recurring costs from the project. The impact of on the group's 2007 results will be divulged later.
Overall, Michelin expects the projects will create new jobs-perhaps as many as 4000 in France and more than 600 in Spain.