MILAN, Italy (Feb. 12, 2009)—Pirelli Tyre S.p.A. will cut about 1,500 jobs in Europe by 2011 in line with plans to move more production to lower-cost plants and concentrate higher profit products at its higher-cost plants.
The plan to shift production is prompted by the global economic slowdown, according to Pirelli CEO Francesco Gori. The 1,500 jobs represent about 15 percent of the firm's work force in Western Europe, or the equivalent of one factory.
Gori said Pirelli should be less affected by the economic malaise than some of its competitors because the slowdown is being felt less in the developing markets of China and South America, where Pirelli is strong.
Pirelli has 61 percent of its passenger car capacity in low-cost areas, Gori said, and aims to increase that to 71 percent by 2011. In the truck sector 878 percent of capacity is in low cost areas, which will move to 89 percent by 2011.
Gori's comments came as Pirelli reported its fiscal results for 2008.
Gori said Pirelli will have to cut inventories, so production output likely will be even lower than the overall 12-percent decline in sales volume anticipated this year.
In passenger cars, Gori said demand for OE tires will drop 25 percent in 2009, while replacement demand would be down by 8 percent, resulting in a total decline of 12 percent.