NORWOOD, N.C. —Michelin North America Inc. is investing $11.3 million to consolidate its aircraft tire manufacturing operations by adding retreading capabilities at its Norwood facility and closing the retread plant located in Kansas City, Mo.
The project will include the relocation of the Kansas City operation—which retreads radial and bias-ply aircraft tires—to Norwood during the second half of 2010, adding aviation tire retreading to complement new aviation tire manufacturing at the site.
Greenville, S.C.-based Michelin will create 74 jobs—primarily production positions—in North Carolina to be phased in over the next 18 months, with the expansion slated for completion by the end of 2011.
The 380,000-sq.-ft. Norwood facility, established in 1986, employs 320 people. Michelin North America employs 20,900.
Ninety jobs at the 67,000-sq.-ft. Kansas City site, operated by Michelin since 1989, will be affected, said Rich A. Kornacki, Michelin executive vice president and chief operating officer, specialty tire product lines. The site will close permanently during the first half of 2011, he said.
Michelin makes tires for commercial planes, military jets and the Space Shuttle at its Norwood site, and the addition of aviation tire retreading is the “perfect complement” to its current North Carolina operations, said Dick Wilkerson, the company's chairman and president. The primary aircraft markets Michelin serves utilize new and retreaded tires.
“This expansion will improve the efficiency of our aviation tire business and help us serve our customers even better in the years to come,” Wilkerson said.
The consolidation of retread and new bias-ply tire production under one roof not only will make Michelin's aviation product line more efficient but also allow the company to take advantage of significant economies of scale, helping it to support its long-term emphasis on reducing production costs, Kornacki said.
The move also should improve the synchronization of the firm's supply chain as Norwood is closer to Michelin's semi-finished plants, he said.
In recent years, demand for tires in the aircraft sector has tracked the commercial airline market, and as demand for air travel decreased, so did demand for those tires, Kornacki said. As the commercial airline segment now is showing slight improvement, the demand for tires is showing similar improvement as well, he said.
The decision to move the retread operations from Kansas City, despite the financial benefits, was not an easy one, Kornacki said. Michelin “understands and appreciates the hard work and contributions” of its employees there, he said, and is working one-on-one with affected workers to detail the severance package, including pay and extended benefits.
In North Carolina, the company will accept applications for the new Norwood positions as early as this month, with 50 of the 74 jobs expected to be filled by the end of 2010. Potential employees wishing to apply should contact the N.C. Employment Security Commission, Michelin said.
In addition to the Norwood plant, Michelin also owns two Oliver truck tire retreading facilities in Asheboro and Salisbury, N.C. Those plants are not involved in the aircraft tire product line business, Kornacki said.
The North American unit's largest footprint is in the Carolinas, including its headquarters, its research and development center, and nine major manufacturing plants, which together employ more than 8,200 people.