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March 08, 2023 01:29 PM

Michelin still mulling over exit scenarios from Russia

European Rubber Journal Report
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    Michelin_Davydovo-main_i.jpg
    Michelin photo
    Michelin's factory in Davydovo, Russia

    CLERMONT-FERRAND, France—Michelin is still working on different exit scenarios from Russia more than eight months after announcing its decision to dispose of all its operations in the country.

    In its financial report for 2022—issued Feb. 13—the French tire maker said that "at December 31, 2022, Russian subsidiaries are still controlled by the Group."

    Michelin suspended all of its industrial operations in Russia and exports to the country in March last year.

    At the end of June, it disclosed plans to exit Russia due to the "technical impossibility" of resuming operations, in particular due to procurement difficulties.

    In its latest results statement, Michelin reported that it was still working on the exit scenarios, which included sale to a third-party.

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    Michelin Russia employs around 1,000 people, including 750 at the Davydovo plant, located about 62 miles (100 kilometers) from Moscow.

    With production capacity of 1.5 million to 2 million tires per year, mainly for passenger cars, the facility represents 1 percent of the group's worldwide capacity in this segment.

    Most of the output from Davydovo consists of mass-market sizes, intended primarily for the Russian market.

    Michelin's sales in Russia, across every segment, accounted for around 2 percent of the consolidated total in 2021.

     

    Raw materials

    Before Russia's unprovoked attack on Ukraine, Michelin said that it, like other tire makers, sourced certain raw materials from Russia for its European production plants.

    Given the subsequent procurement issues and supply chain disruptions, the group stopped production at some of its European plants for a few days in March.

    Michelin, thereafter, deployed alternative sourcing solutions to address future risks of supply chain and production interruptions.

    "As a result, since the end of the first semester of 2022, none of the group's operations are dependent on any Russian sourcing," Michelin said in its 2022 financial statement.

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