CLERMONT-FERRAND, France—Michelin is reorganizing its operations into 10 regions and 14 business lines, an initiative that will result in roughly 1,500 job cuts in France and 450 in the U.S.
The "in-depth transformation" is geared at boosting growth by adapting the firm's operations "to meet the evolving demands of its customers and employees," Michelin said, as well as "improve [its] reactivity and maintain competitiveness, enabling it to smoothly meet future challenges."
The French tire maker expects the initiative; to improve customer satisfaction, empower its management teams, simplify operating modes and digitalize the group.
Under the new format, Michelin will have 10 regions which will be given operational responsibility: Africa/India/Middle-East; South America; Central America; North America; Eastern Asia and Australia; China; Central Europe; Northern Europe; Southern Europe; and Eastern Europe.
Additionally, 14 unnamed business lines would develop offers for each customer category and build strategy for the group, Michelin said.
In the new format, eight operational divisions—research and development; service technology development; manufacturing; supply chain; marketing and sales support; purchasing; operations quality assurance; and corporate and business services—will support regions and business lines.
Regarding the job cuts, Michelin said it expects to about 1,500 jobs to go in France through non-replacement of most of the 5,000 French-based employees who are retiring from or otherwise leaving the group by 2021. This will include a net loss of 1,000 jobs at operations in Clermont-Ferrand, the firm's headquarters.
In the U.S., Michelin is targeting a reduction of about 450 positions in "central functions" between 2018 and 2021. The large majority would result from natural attrition and retirement, the company said.
The company anticipates 1,500 employees will be leaving the company during this period, but just 1,050 will be replaced, yielding the net job loss.
The impact will be partly offset by the start of new activities at Clermont-Ferrand and other French sites, Michelin said, which will create 250 jobs, including highly qualified roles in the fields of high-tech materials and digital technology.
Michelin said the reorganization would not directly impact its production plants worldwide.
The company also intends to relocate 290 employee and manager positions in other countries where the group is operating.
To finance this project, Michelin said it plans to record a provision in non-recurring charges in the company's fiscal 2017 consolidated accounts.