Analysts Applaud Michelin Deal

The cost cutting agreement signed by Michelin and USWA is a “significant achievement,” according to Deutsche Bank analysts. The recently finalised contract will see Michelin reduce the labour costs associated with its four unionised US plants, and 4500 unionised staff, by some $60 million dollars.

The analysts suggest that this policy highlights how the management is determined to reduce costs further, even though the savings agreed so far only represent 3 per cent of the company’s operating profit. Furthermore, analysts predict that this “achievement” means that labour cost savings in Europe will become a major factor behind future profit margin improvement.