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EU tire giant to cut production in crisis-hit Germany

The country’s competitiveness as an industrial location has been undermined, Michelin said

French tire giant Michelin will slash over 1,500 jobs in Germany by 2025, as competition from lower-wage nations and soaring energy prices make production in Western Europe unprofitable.

Michelin will fully shut down plants in Karlsruhe and Trier and discontinue some products at its site in Homburg, the company announced in Frankfurt on Tuesday. The decision will affect 1,410 employees in total. The Karlsruhe factory, Michelin’s oldest in Germany, was founded in 1931.

A further 122 jobs will be lost at the customer contact service in Karlsruhe, which will be moved to Poland, the company said. The operation supports clients in Germany, Austria, and Switzerland, an area where Michelin employs some 8,000 people, according to its website.

“The commitment of our employees, the progress made within the company and the investments made in recent years in the affected activities can no longer compensate for the strong competitive pressure,” Maria Rottger, president of Michelin’s Northern Europe region, explained.

German trade union IG BCE said it will not “simply accept” the plans and will look for alternative solutions.

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The firm noted that “recent health and geopolitical crises” had pushed up operating costs, putting “additional strain on Germany’s competitiveness as an industrial location.”

Germany has grappled with increasing economic problems since the EU chose to no longer buy cheap natural gas from Russia in response to the Ukraine crisis. The decoupling was reinforced in September 2022, when explosions sabotaged the undersea Nord Stream pipelines which delivered Russian fuel directly to Germany. Berlin has yet to identify the perpetrators of the attack, which Moscow claimed was likely masterminded by the US.

Some German politicians are urging the government to reconsider its antagonistic stance towards Russia, citing the economic damage their nation has suffered.

“The economic sanctions are hurting us more than Russia,” Klaus Ernst, an MP from The Left party, said on X (formerly Twitter) on Monday.

“The result is skyrocketing energy prices, a sharp decline in production in the energy-intensive industry and a shrinking economy in Germany,” he added, calling for energy supplies to be ramped up, including from Russia, in order to rein in prices.

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Earlier this year, US tire maker Goodyear revealed plans to shut down two factories in Germany, which will cut around 1,750 jobs. As part of its rationalization plan in Europe, the Middle East, and Africa, it will permanently close its facilities in Fulda and Furstenwalde.

November 29, 2023 at 03:08PM

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