GRANTON, Nova Scotia—Michelin North America Inc. plans to phase out nearly all tire production at its Pictou County, Nova Scotia, car and light truck tire plant over the next 18 months, resulting in about 500 job losses.
The tire maker said the move is in response to a continuing shift in the North American car tire market to larger size tires and the limits of the existing plant.
"The market has changed dramatically since the plant was built in 1971, and the company is changing with market demands," said Grant Ferguson, president, Michelin North America (Canada).
"Market demand for small car tire dimensions, such as the 14-, 15- and 16- inch tires produced at the Pictou County plant, is diminishing. Investment costs to upgrade the 43-year-old plant for larger car tire production are not cost-effective."
Michelin will phase out production at the 43-year-old plant in two phases. It will eliminate production of small-dimension car tires by June 30 this year, affecting about 200 employees, the company said, and then phase out the remaining capacity by June 30, 2015.
Despite the phase-out of tire production, the Pictou County plant will remain open, producing some high-performance tires and tire membranes and continuing as a rubber-compounding site, supplying other company factories.
Michelin lists employment at the plant of slightly more than 1,000, with an annual capacity of nearly 40,000 metric tons. All impacted hourly or salaried employees will have an opportunity to continue working for Michelin, the company said.
"We have a long history of manufacturing here, and we care deeply about the well-being of our work force and the community," Ferguson said. "We will continue as a significant manufacturing employer in Pictou County with our remaining operations on site, and we will continue to invest in Nova Scotia."
Phasing out most tire manufacturing at Pictou County will not affect Michelin's other two Canadian tire plants in Bridgewater and Waterville, Nova Scotia, the company said.
Severance packages are available for all impacted employees.
"We will work closely with all Michelin Pictou County employees affected by this decision to assess their situation and to help determine their best option and their choice moving forward—whether they will be able to retire, transfer to another position or transfer to another Michelin location in Nova Scotia," Ferguson said.
In spite of the production cuts, Michelin said it remains committed to Nova Scotia, where it plans to invest $66.5 million in its three Nova Scotia plants, Ferguson said, including projects at Bridgewater to extend wire capacity, ongoing investments in the Waterville plant for X-One wide-base truck tires, and $10 million for improvements to the rubber mixing operation at Pictou County.
At the same time, Michelin Canada said it is launching Michelin Development, a community development program to assist in creating new jobs in the small business sector in the neighboring communities of Colchester, Pictou, Antigonish and Guysborough counties.
Michelin Development will provide low-interest business loans and small business expertise to eligible applicants. More information on this program will be released later this spring.
Michelin Development has been implemented in other situations, Ferguson said, and has helped 84 small businesses over the last eight years grow, resulting in more than 1,300 new jobs. Among these projects was one in Canada in 2006 to aid workers at the BF Goodrich tire plant in Kitchener, Ontario.