Michelin has told its 858 employees at the Bamberg site in Germany of its intention to close the plant, a move the regional government describes as regrettable.
The Bamberg site, opened in 1971, mainly manufactures Premium 16-inch passenger car tyres, a market segment characterised by both a sharp decline in global demand and “extremely strong competition” from Asian manufacturers.
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Since 2013, the Michelin Group has invested EUR60m (US$66m) to address this market development and gradually adapt the site’s production.
However, these efforts can no longer compensate for the structural transformation of the passenger car tyre market in Europe, says the manufacturer, adding: “No economically viable industrial alternative is possible in this context.”
The decision comes after a consultation phase with the works council in accordance with German legislation.
“This is a regrettable decision by the management,” said Bavaria Economics Minister, Hubert Aiwanger, in a statement from Munich put through a basic translation service. “The Ministry of Economy will actively engage and speak with all stakeholders.
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By GlobalData“We want to help create new jobs. The Michelin employees and their families need a new perspective.”
For its part, a Michelin statement added: “The priority of the Michelin Group is now to provide the employees of the factory and the Bamberg region with the most effective support possible to enable them to face the consequences of this difficult decision.
“Michelin will implement a complete and personalised support programme for each of the factory’s employees, including, in particular, the use of a transfer company, assistance for retirement as well as internal and external mobility. Negotiations with labour organisations will take place to define how these measures will be implemented.
“The Group commits to setting up a revitalisation programme to transform the site. This project, developed in partnership with local public and economic stakeholders, will have to take into account, and be part of, the region’s development priorities.”
To finance the operation, Michelin will record a provision of around EUR167m in non-recurring expenses in its consolidated financial statements as of 31 December, 2019.
The news follows the French tyre manufacurer’s plans to close its Dundee plant in 2020 with the loss of 845 jobs.
