France-based tyre manufacturer Michelin has revealed plans to shut down two factories and cut over 1,500 jobs in Germany, citing increased costs and competition from more affordable imports. The decision is part of Michelin’s strategy to address challenges arising from budget truck tyres sourced from low-wage countries and escalating production expenses in Germany.
Factory Closures and Job Reductions
Michelin disclosed on Tuesday that it will cease production at its Karlsruhe and Trier sites by 2025. Additionally, the production of certain products will be halted at the Homburg site. The company also announced the closure of a customer service centre in Karlsruhe, serving Germany, Austria, and Switzerland, with operations being transferred to Poland. In total, 1,532 workers will be affected by these measures.
Factors Behind the Decision
The tyre manufacturer attributes its decision to the competition posed by budget truck tyres from countries with lower labour costs and the increasing production costs in Germany. Michelin also pointed to recent health and geopolitical crises, which have elevated operating costs, placing additional strain on Germany’s competitiveness as an industrial location.
Economic Challenges in Germany
Germany’s industrial sector has been grappling with challenges such as high energy prices, inflation, and rapidly increasing eurozone interest rates for over a year. The country’s manufacturers have faced the negative impact of the Ukraine war, coupled with Moscow’s decision to reduce gas exports, particularly affecting those industries reliant on Russian energy.
Union Criticism and Company Response
The IGBCE union expressed criticism of Michelin’s decision, deeming the job cuts as “wrong.” The union asserted that Michelin is prioritising profit maximisation over the well-being of dedicated and highly qualified employees. The tyre manufacturer, in response, justified its actions based on the need to navigate a competitive market environment and address the economic challenges faced by its operations in Germany.