CLERMONT-FERRAND, France (Sept. 19, 2008) — Michelin won't build a new tire plant in Mexico as originally planned because of overall lower product demand in North America.
The company disclosed Aug. 28 it decided not to proceed with construction of a passenger and light truck tire facility located in the city of Silao in the Mexican state of Guanajuato. The tire maker announced in August 2007 it planned to invest up to $740 million at the proposed site though 2014 and employ as many as 1,300 people at full capacity.
Construction was to begin late this year, and production—Michelin-brand products, including sport-utility vehicle and high-performance tires—was expected to start sometime in 2010. The decision to cancel the project is final, a Michelin spokeswoman said.
The plant was intended to produce tires for the North American market, but diminished demand in the region forced the company to make a difficult decision, she said. The firm had planned for the facility, when fully developed, to be on par with its larger North American tire factories in Greenville, S.C.; Ardmore, Okla.; and Tuscaloosa, Ala.
Productivity gains and additional investments in the existing North American plants will enable Michelin to respond to continued strong demand for high-performance and large-diameter tires. The company will make incremental changes in capacity for those tire lines as needed, and reveal its intentions when the plans are completed, the spokeswoman said.
Previously announced capital improvement projects—including a $350 million plan unveiled in summer of 2007 to upgrade several manufacturing plants in South Carolina by the end of 2011—will continue with no changes, she said.
Despite the decision to not expand there, Mexico remains an important manufacturing base for Michelin, the company said. It has invested more than $200 million in its Queretaro plants during the past two years, creating more than 100 jobs.
The firm has its Mexican headquarters, a passenger and light truck tire facility and a tread pressing plant in Queretaro, where it employs more than 800.