Michelin to invest $1.06 billion in French operations

ERJ staff report (RPN)

Clermont-Ferrand, France – Michelin will invest $1.06 billion (€0.8 billion) in France in the next six years to streamline production in an effort to enhance efficiency and strengthen the competitiveness of its French operations, reports Bruce Davis of Rubber & Plastics News.

The investment includes $290m (€219m) in the research and development centre in Clermont-Ferrand to "maximise our power of innovation and shorten development;" $190m (€143m) to improve off-the-road tire production at two plants; and $160m (€121m) to consolidate truck tire capacity at Joue-les-Tours at the truck tire plant in La Roche-sur-Yon.

Separately, Michelin said it plans to cease tire production at a plant in Hussein Dey, Algeria, before the year ends and sell that business to Groupe Cevital, an Algerian private industrial group.

The moves will create about 234 net new jobs short term, Michelin said, and about 1,700 new hires over the six-year period.

A key element of the plan involves specialising its industrial sites in France involving similar activities to develop industrial clusters around specific products to heighten their efficiencies and therefore their competitiveness to export.

In truck tires, Michelin plans to phase out production at the 53-year-old plant in Joue-les-Tours by mid-2015 and consolidate output at the 41-year-old factory in La Roche-sur-Yon. In effect, that will double capacity at La Roche to 1.6 million units a year, about three-fourths of which are to be exported to markets outside of France.

Michelin is budgeting $132m (€99m) for La Roche to cover new equipment and engineering. The move will create 170 jobs at the plant, where employment at last count was 644.

The Joue-les-Tours factory will be converted to the production of semi-finished tire components, Michelin said, predominantly wire fabrics and curing bladders used in other Michelin plants. The transformation will eliminate 710 of the plant's 930 jobs, but Michelin said it will offer 480 displaced workers jobs at other plants in France and would offer the remaining 250 early retirement.

Parallel to this action, Michelin said it would offer "career transition" training to those unable or unwilling to accept a transfer and "is committed" to helping, through its Michelin Development subsidiary, create 730 jobs in the Tours region, where the affected plant is located.

In the earthmover tire sector, Michelin will upgrade and expand plants in Montceau-les-Mines and Le Puy-en-Velay. It plans to invest $125m (€94m) through 2019 at the 44-year-old plant in Montceau to expand annual capacity 40 percent beyond the 21 000 metric tons listed there.

The project will create 160 jobs on top of the 1,000-plus employed there now.

In Puy, the firm will invest $66m (€50m) to boost capacity by 33 percent, thereby creating 90 jobs.

Two other smaller projects are $59m (€44m) to boost capacity for semi-finished products at Montceau-les-Mines (creating 64 jobs) and $11m (€8.3m) to modernise the Troyes agricultural plant and increase production by an undisclosed amount.

Michelin is budgeting $343m (€258m) toward general improvements across all of its French operations and will invest $290m (€219m) at its R&D center in Clermont-Ferrand for a "deep modernisation" of the operations there, including construction of new buildings and renovations of existing ones.

Michelin did not say whether the R&D investment would result in new jobs.

The Clermont-Ferrand modernisation will overlap with a $135m (€102m), six-year modernisation of the firm's 47-year-old R&D center complex in Ladoux, France, that started in mid-2011.

The Ladoux project encompasses several aspects, including razing most of the center's existing structures and replacing them with a modern, 721 000 square foot (67 000 square metre) structure that will put a number of diverse R&D activities now located in separate buildings under one roof.

The Ladoux operation will house 1,600 workers.

Michelin said it will list $178m (€134m) in "non-recurring expenses" in its first half fiscal 2013 accounts to fund the projects.

In Algeria, Michelin said its decision to cease production and sell the business is based on the unit's lack of competitiveness, which is tied to its small size and location, which does not allow for expansion.

Algiers-based Cevital will take a 67 percent stake in the business initially and eventually take over 100 percent, Michelin said. Financial terms were not disclosed.

Michelin described Cevital as Algeria's largest employer and a leader in the markets in which it competes. Cevital will take over the marketing of Michelin-brand tires in Algeria to ensure the brand's presence there and has pledged to find work for all of the plant's 600 workers.

Michelin has had a plant in Algeria since 1963, but it was mothballed from 1993-2003 because of political turmoil in the one-time French colony. Michelin listed capacity at that plant as 9,400 tonnes per annum.