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Michelin Begins Shutdown of Americas Plants Due to COVID-19

Michelin North America, Inc., will begin a temporary, phased shutdown of some of its tire production facilities in the United States and Canada due to the broad effects of COVID-19.

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The company said the phased suspension of some manufacturing will begin immediately and, based on the current outlook, will last for at least two weeks. The affected production currently excludes vital and critical tires for the country’s economic continuity. Distribution and logistics activities will continue to support customers through existing inventories, the company says. Michelin is monitoring conditions closely and has established contingency plans in preparation to adjust as the situation evolves.

The company said it will continue to follow closely all guidelines and directions from state, local or provincial governments, with the goal of limiting the spread of the virus and consequences of the pandemic for employees, customers and partners.

“We continue to work with our service providers to manage continuity in our customer activities,” Michelin said. “While we are facing some supply chain disruption, our components, semi-finishes and products are still able to circulate. As the situation changes we will make adjustments to our production accordingly. It is still too early to assess any possible impact this situation could have on our industry long-term.”

The Michelin Group said in a statement released March 19 that global passenger car and light truck tire markets are down 9% year-on-year and the truck tire market is down 16%, according to Michelin market data as of the end of February 2020.

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The Group is taking “all the measures required to safeguard the health of its employees” and has decided to close its production facilities in the European countries most affected by COVID-19 for at least one week, the statement said. The Group said its guidance for 2020 will also be revised due to the economic effects of the COVID-19 crisis.

“Now that the global economy is in the midst of a systemic crisis, the Group’s 2020 guidance is no longer relevant, without any possibility at present of assessing the potential impact,” the statement says. “The Group is taking all of the initiatives required to attenuate as much as possible the negative consequences of the crisis on segment operating income and free cash flow. In addition, the Group has the sources of financing in place to deal with the uncertainty surrounding the crisis.”

The Group will update its annual tire market forecast when it releases its first-quarter revenue figures.

For more coverage on how COVID-19 is impacting the tire industry, click here.

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