French tire giant The Michelin Group said it is going to cut 1,950 jobs worldwide by 2021 in an effort to reorganize its regional operations. The company expects to slash 1,500 jobs in France, mostly by not replacing workers when they retire. It also announced an additional 450 jobs would be jettisoned in the U.S.
The company said it will replace only 3,500 of the 5,000 French employees expected to leave or retire by 2021. Most of the cuts will come from its historical base in the central city of Clermont Ferrand, with hundreds of more throughout the rest of France.
In the U.S., the 450 job cuts will take place between 2018 and 2021. The company said the “large majority” of these losses will come through attrition and retirement.
On March 16, Michelin began a global reorganization project to, “boost growth by adapting…operations to meet the evolving demands of…customers and employees.” The company maintains the reorganization will, “improve the Company’s reactivity and maintain competitiveness, enabling it to smoothly meet future challenges.”
Three months later, the company has released further details of what that will look like. The new organization will be made up of 10 new regions: Africa/India/the Middle-East, South America, Central America, North America, Eastern Asia/Australia, China, Central Europe, Northern Europe, Southern Europe, and Eastern Europe.
Michelin will also incorporate 14 “business lines” that will “develop offers for each customer category.” These lines will, “have a key role in building the strategy of the group and would steer their business results in their respective customer segments.”
Michelin Group’s new project will also include eight operational divisions to provide support for the regions and business lines. Divisions include research and development, supply chain, marketing, and sales, among others.
The restructuring announcement comes despite Michelin reporting strong financial results for 2016. In fiscal 2016, the company announced that net profits increased 43% year-over-year to €1.7 billion (US$1.8 billion) and over €1 billion in free cash flow. The company’s €750-million share buyback program was completed over the 2015-2016 period and its dividend increased to €3.25 per share from €2.85 per share.
Jean-Dominique Senard, chief executive officer, said, that 2016, “represented a successful milestone in our strategic roadmap,” with growth outpacing the markets once again. Another year of similar growth is now expected for 2017.
“The Michelin Group Presents Its Global Reorganization Project To Better Serve Its Customers,” Michelin Group, June 22, 2017.
“Financial Information for the year ended December 31, 2016,” Michelin Group, February 14, 2017.