(Bloomberg) -- Michelin plans to cut 11% of its French workforce over three years as the tire maker slashes costs and moves more aggressively into new markets in the face of Chinese competition.
Although no factories will be closed, a revamp will lead to as many as 1,200 job losses at plants and 1,100 positions in services, the manufacturer said Wednesday. The reductions will come through early retirement and voluntary redundancy and boost competitiveness 5% a year, it said.
Michelin cited “profound” structural shifts in the tire market led by a massive influx of low-cost tires as it explained the cutbacks. Making its French operations more efficient is key to compete in the future, the company said.
Cie. Generale des Etablissements Michelin has long complained about cheap imports from China that have upended the global tire trade. The European Union has imposed tariffs on some tires and wheels from the Asian country, and Michelin has also responded by moving into more high-end and specialized products. An acquisition spree in 2018 brought a Canadian maker of farm and snowmobile tires into its fold along with a U.K. conveyor-belt producer.
Michelin rose 0.3% in Paris as of 2:04 p.m. local time, giving the company that's based in the French city of Clermand-Ferrand a market value of about 19 billion euros ($23 billion).
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While Chief Executive Officer Florent Menegaux wants France to remain a “key country” in the strategic transformation of Michelin, the French government has put pressure on companies not to shed jobs during the pandemic.
Michelin's cuts hand Paris yet another blow after Japanese rival Bridgestone Corp. said last year it would shut its factory in Bethune, France. Michelin said in 2019 it would close its French plant in La Roche-sur-Yon, and shutter a site in Bamberg, Germany.
The pandemic has led to a deep slump in car sales across Europe, forcing some auto manufacturers to rely on state-backed loan guarantees and furlough programs to get through the crisis.
Michelin's Menegaux is pushing to develop more sustainable tire materials and improve its recycling efforts. The company is planning to build a hydrogen fuel-cell factory in Saint-Fons, France with car-parts maker Faurecia SE. It's also moving toward industrial-scale production of a non-toxic resin.
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