Despite rising power costs, Michelin investing in German factory

It invested 20 million euros there in 2012, and Michelin will continue investing in its Bad Kreuznach plant in Germany to improve its responsiveness to market demands. Plant manager Cyrille Beau told local newspaper the Rhein-Zeitung that the continued investment would cover several projects, including the conversion of a production line to 18-inch tyres. As of next year it will solely produce tyres in this rim diameter.

Beau commented that tyre markets have become very volatile in the last four or five years and for this reason the Bad Kreuznach plant must be able to respond more quickly to changes, such as the abovementioned production line conversion. However he added that German government policy may hamper its efforts to remain competitive; according to Beau, upcoming electricity price increases in Germany brought about by an increase in the renewable energy surcharge (from 5.277 cents to 6.240 cents per kilowatt hour) will “hurt” as each extra cent of surcharge adds some 400,000 to 500,000 euros to the Bad Kreuznach plant’s annual costs.

“Continual electricity price increases mean it will be harder to compete with other plants in Europe, both those within the company and our market competitors,” he noted. “At the moment this explosion in electricity prices is only happening in Germany.”