Europe auto struggles lead to cuts at Michelin, Germany's Schaeffler

French tyre company Michelin said Tuesday it would close two French plants by early 2026 and German parts maker Schaeffler announced 4,700 job cuts, the latest signs of struggles in the European auto industry.

The Michelin plants in Cholet and Vannes in western France employ more than 1,250 people.

"It is the collapse in business that has led to this situation, and I want to say to all these employees that we will not leave anyone by the wayside", Michelin CEO Florent Menegaux told AFP in an interview.

The closure had become "unavoidable" due to competition from Asian tyre makers as well as the "worsening competitiveness of Europe", notably due to inflation and rising energy prices, the French group said in a statement.

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"This decision has been made as a last resort."

The group vowed to support the two regions affected by the closure by creating "as many jobs as those eliminated."

The company said it would support its employees, including with job offers in other companies or within the group, or early retirement.

Michelin's trade unions, concerned about the future of the two sites, had broken off talks with management.

The Cholet plant employs 955 people who mainly manufacture light truck tyres.

In recent years the light truck segment "has seen a significant decline" in Europe, "with a drastic reduction in production volumes" and no prospect of recovery, said Michelin.

The Vannes site employs 299 people who mainly produce metal reinforcements such as cables, which are then used to manufacture car tires in countries including Spain and Italy.

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In recent years production volumes have been declining at the plant due to changing demand from truck tyre plants in Europe, said Michelin.

The group is going through a difficult year with a slowdown in the new vehicle market.

Michelin had already closed its La-Roche-sur-Yon site in western France in 2020, and is preparing to close two plants in Germany by 2025.

Michelin will halt production at the two sites until November 13 "to give management and the unions time to propose collective and individual discussions with employees."

The Michelin Group currently employs nearly 19,000 people in France, including 9,000 in manufacturing in 15 production plants.

In Germany, Schaeffler said it would cut 2,800 jobs at 10 sites in Europe's biggest economy.

Five sites elsewhere in Europe will be impacted, with two set to be closed entirely, Schaeffler said, without disclosing where.

The cuts were in response to "the challenging market environment, the increasing intensity of global competition, and ongoing transformation processes affecting the automotive supply industry," the company said.

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Schaeffler, which specialises in making bearings for the automotive industry, currently has about 120,000 employees in 55 countries.

Source: AFP