Michelin Restructuring in US?

Michelin North America (MNA) says it will indefinitely layoff some 390 to 520 union workers at its 43-year-old Opelika, Alabama, tyre plant. The layoffs, said the company, are the result of a 30 per cent to 40 per cent production cutback at the plant which came about in response to the tough environment faced in the North American mass market segment.

The Alabama layoffs, said MNA, will come in the fourth quarter of the year. The plant produces broadline tyres under the BFGoodrich and Uniroyal brand names, as well as private and associate brand passenger and light truck/SUV lines.

With the closure of Kitchener plant (Canada) a few months ago, the group has reduced its North American workforce by 1,600 (8 per cent) and passenger tyre production by almost 10 million (12 per cent). This is the second tyre plant – and second former BFGoodrich plant – that MNA is winding down. In February, MNA announced that it was closing its Kitchener, Ontario, plant, which also produced broadline passenger and light truck/SUV tyres. That union plant is scheduled to close by 22 July.The recent developments led Deutsche Bank analysts to question whether or not the French company is beginning a restructuring phase in North America.

MNA said the cutbacks were necessary due to “intense cost pressure due to imports from competitors in lower-cost countries.” But the USW union said Opelika’s problems are “not a productivity issue,” according to Ron Hoover, USW executive vice president. “It’s about marketing and that’s why we’re working to secure the long-term viability of the Opelika plant by negotiating capital investment expenditures that will enable Opelika to upgrade the products it produces.”

MNA is currently in negotiations for a new master contract with the United Steelworkers (USW), which represents the Opelika plant. MNA was recently set as the USW’s target company in its efforts to establish a pattern contract agreement for the tyre industry.