Michelin announces plant closing in 2009

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Groupe Michelin plans to close a plant in Toul, France, within two years. At the same time, the company is planning to reorganize its plant in Spain.

The company recently presented the projects to its Works Committees.

As part of the closing of the Toul plant, the group says it will commit "to all necessary measures to help every employee to find a new job quickly and revitalize the affected regions."

In addition, Michelin wants to improve competitiveness in Spain. As part of the project, Michelin wants to specialize production at the Lasarte site.

Here is the Michelin press release on the subject.

"This project constitutes a new phase in Michelin's industrial strategy in France and in Spain. Its objective is to continue to strengthen the group's competitiveness in Western Europe, earmarking significant investments to modernize plants.

"In France, the Toul factory produces mid-range passenger car tires, a market very strongly challenged by low production cost countries which have massively invested in this specific segment for the past five years. In addition, this market also suffers from overcapacity in the tire sizes manufactured in Toul.

"Despite significant investments in Toul over the past few years and the streamlining of industrial processes, production cost are over 50% higher than those of its competitors and the plant is no longer competitive.

"The group commits to do everything possible to help each employee to find a new job. Two job opportunities in one of the Michelin group's 16 French factories will systematically be offered to each employee. Michelin will provide those wishing to remain in the area with all the support necessary to help them find a new job rapidly or start a professional project.

"In Spain, a production modernization and reorganization program will be implemented to improve our plant's competitive edge. Specifically, the Lasarte site will specialize to become a world-class production center for high performance motorcycle tires which, in time, will export 90% of its production."

Michelin will allocate 50 million euro to modernize the plant, which will end passenger car tire production by the end of 2008.

These reorganization projects will entail a significant non-recurring cost. Their impact on the group's 2007 results will be communicated at a later date.

Michelin also confirmed its French tire production development objective (a 7% increase by 2011). In addition, an investment of 2 billion euros is earmarked plant and equipment modernization in western Europe.

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