Groupe Michelin has begun steps to close its truck tire plant in Budapest, Hungary. According to Michelin, the closing is necessary "in response to the adverse trends and aggressive competition in the European truck tire market, which remains volatile and 23% down on its historic peak in 2007."
The company says the decision "reflects the fact that extending the facility is no longer possible, due to its location in an urban setting, and that improving its competitiveness would require excessive upgrading with new equipment."
Truck tire production at the facilty will be terminated in mid-2015. The plant manufactures Taurus, Riken and Kormoran brand tires. Production will be reallocated mainly to the Michelin facilities in Olsztyn, Poland; Zalau, Romania; and Karlsruhe and Homburg, Germany.
The closure will leave Michelin with three facilities in Hungary:
1. a high performance passenger tire manufacturing plant in Nyíregyháza;
2. a logistics center in Vác, which serves countries in central and southern Europe; and
3. a strategic raw materials marketing unit in Tuzsér.
In addition, Michelin will continue to manage its entry-level car tire operations from Budapest, and maintain all of its Hungarian sales operations.
As part of the information and consultation process, Michelin says it will offer individual support measures to each of the 512 concerned employees.
Michelin also will meet with local authorities to discuss possibilities of reconverting the site in accordance with their urban development projects, and intends to help develop business activities likely to create jobs in the region.
To finance the project, Michelin will book a 39 million euro provision ($52.8 million based on the May 6, 2014, exchange rate) for non-recurring expenses in its first-half 2014 accounts.