Paris (AFP)

Closing of a plant in Germany, worries for the future of a site in the West of France: the competition of the low-cost tires coming from China pushes the Michelin manufacturer to reduce its capacities in Europe.

The French group announced Wednesday the closure by 2021 of its plant in Bamberg (southern Germany) which employs 858 employees to produce car tires. The same day, the president of the company Florent Menegaux acknowledged that the factory of La Roche-sur-Yon (Vendée), specialized in tires for trucks, was "in a very worrying situation" while its 650 employees s 'worry about their future.

While the two sites are aimed at two very different markets, they share the pressure of new Chinese competitors that are flooding Europe with low-cost products. Despite its high-end positioning and financial results that remain very good, the group Bibendum is forced to abandon market share.

The Bamberg site, created in 1971, "mainly produces premium tires for 16-inch passenger cars, a segment of the market characterized by both a sharp drop in global demand and extremely competitive Asian manufacturers, "said the group in a statement.

He says he tries to limit the impact for employees. "Michelin will propose a complete and personalized system for each employee of the site", including "early retirement measures, as well as measures to support internal and external mobility" and has provisioned approximately 167 million euros to finance the operation.

- "Fear for the future" -

"This is an absolute shame," replied AFP Sascha Spörl, representative of the German union IG BCE (Mines, Chemistry, Energy). According to him, Michelin was committed to maintaining this Bamberg site until December 2022. "It's a breach of contract," he said, adding that a "legal procedure" was going to be considered against Michelin.

Michelin's strategy in Western Europe is to move upmarket, including tires over 17 inches, while the size of car tires tends to grow in Europe. In Bamberg, 60 million euros were invested to develop these ranges of tires, which now represent half of the volumes of the site, but adaptation efforts were not enough.

A spokesman for the manufacturer Clermont-Ferrand, joined by AFP, explained that alternatives to closure had been considered: continue production of larger tires in Bamberg, which accounted for half of the volumes, but those would have been too weak to be competitive; or allocate the full capacity to these products, but the group had no outlet for such volumes.

"We are not surprised, it is only the beginning and the announcement of the closing of the site of La Roche-sur-Yon should unfortunately not delay.The management says it has no solution, but without saying its real intentions for the moment, "reacted Michel Chevalier, CGT central union representative.

"When the market is not there, the big groups decide to close so as not to be overproduced.This is scary for the future of the sites in France and Europe.We ask the question of how to have an industry competitive in Western Europe vis-à-vis other Asian sites and Eastern Europe ", said Laurent Bador, CFDT Central Trade Union Representative.

More and more European motorists are turning to first price products, on which Asian groups have specialized. In the 16-inch tires, the entry-level has increased by 16% in ten years, when the high-end has declined by 20%, according to Michelin.

The former boss of the manufacturer Jean-Dominique Senard, now president of Renault, Wednesday summarized the problem at a hearing in the National Assembly. "Between 2012 and 2018, the market share of Chinese tires in Europe rose from 5% to 30%," he warned, highlighting the challenge posed to manufacturers.

© 2019 AFP