Michelin Cutting Thousands Of Jobs

Due to an increasingly unstable economy, tire giant Michelin said Monday that it is laying off 7 percent of its U.S. workforce.

Saying it faces with a downturn in tire markets and the need to increase its long-term competitiveness, Michelin North America, Inc., headquartered in Greenville, S.C., said in a release that the 2,000 job cuts are part of a company-wide plan to reduce about $200 million in annual operating costs.

Since announcing its intentions to cuts costs in April, Michelin has said that job reductions were "highly probable." Monday, company confirmed its intention to reduce its North American workforce by about 2,000 jobs by the end of 2003.

Michelin North America chairman and president Jim Micali said in a release that the company expects most of the reductions through normal attrition and voluntary severance programs.

He said that the cost reduction would allow Michelin to "improve its ability to weather the inevitable down cycles of the industry."

"We need to position ourselves for the future and cannot wait for the markets to improve," Micali said. "We must get leaner and increase the focus on our core business so when the markets do improve, Michelin can take advantage of every opportunity."

Originally, the company had planned to reduce its annual costs by $125 million.

But given the continued decline in the market, Michelin says it decided that an additional $75 million was necessary for long-term competitiveness.

As a result, the company will reduce its annual operating cost by $125 million by year-end 2002 and by another $75 million by year-end 2003.

Michelin North America employs 26,500 people and operates 23 plants in 19 locations across the United States. It manufactures and sells tires for every type of vehicle from cars to giant earth-movers to the space shuttle.