Michelin Pursues Its Competitiveness Improvement Strategy in France, Spain

Michelin commits to help each concerned employee to find a job and to revitalize the regions affected

10/03/2007 -- Michelin presented the Works Committees with a project in France to stop production in the Toul plant in 2009 and a project in Spain to improve competitiveness in all Spanish plants and to specialize production at the Lasarte site. Furthermore, the Group commits to all necessary measures to help every employee to find a new job quickly and revitalize the affected regions.

This project constitutes a new phase in Michelin’s industrial strategy in France and in Spain. Its objective is to continue to strengthen the Group’s competitiveness in Western Europe, earmarking significant investments to modernize plants.

In France, the Toul factory produces mid-range Passenger car tires, a market very strongly challenged by low production cost countries which have massively invested in this specific segment for the past five years. In addition, this market also suffers from overcapacity in the tire sizes manufactured in Toul.

Despite significant investments in Toul over the past few years and the streamlining of industrial processes, production cost are over 50% higher than those of its competitors and the plant is no longer competitive.

The Group commits to do everything possible to help each employee to find a new job. Two job opportunities in one of the Michelin Group’s 16 French factories will systematically be offered to each employee. Michelin will provide those wishing to remain in the area with all the support necessary to help them find a new job rapidly or start a professional project.

In Spain, a production modernization and reorganization program will be implemented to improve our plant’s competitive edge.

Specifically, the Lasarte site will specialize to become a world-class production center for high- performance Motorcycle tires which, in time, will export 90% of its production. € 50 million will be allocated to modernize the plant. The project also involves ending Passenger car tire production by the end of 2008, as the site is no longer competitive because it is too small.

Michelin will offer a number of specific measures which, given the age of the workforce, will mainly involve early retirement.

These reorganization projects will entail a significant non-recurring cost; its impact on the Group’s 2007 results will be communicated at a later date.

Michelin confirms its French tire production development objective (a 7% increase by 2011). In addition, significant investments are planned to modernize plants and equipment: € 2 billion in Western Europe, including €1.15 billion in France and € 320 million in Spain. The Group will also continue to hire between 2007 and 2011 (more than 4,000 people in France and over 600 in Spain).

Source: Michelin

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