Michelin Comes With New Agreement for Its French Plants image

Michelin plans to implement new rules at its facilities in France, aimed at adjusting capacity and avoiding lay offs, as Europe’s auto market is expected to drop for the sixth consecutive year.

Michelin’s new agreement has already been accepted by 3 out of its 17 plants, and it includes rules such as additional days of work for its employees to compensate for the unworked days when production is at a low level, according to CEO Jean-Dominique Senard.

“I’m very happy with this agreement,” Senard said following the company’s shareholders meeting in Clermont-Ferrand, where it’s based. “It would be wonderful to have it signed by all remaining factories.”

The tiremaker’s strategy is to expand more outside Europe and to produce more specialty tires for large vehicles, trying to offset loss in its home region. Michelin’s plants in Europe are now working at 50%-60% capacity for truck tires and 70% for light trucks and passenger cars. The company does not plan to close any plant in the region and says the solution to overcapacity would be an increase in labor flexibility.

A shutdown is “not on the agenda yet,” Senard said. “All the options are under scrutiny. I don’t know how many factories there will be in Europe in 20 years. What I know is that those that will be there will be competitive.”

Source: businessweek.com