BFGoodrich to shut down Kitchener tire plant
BFGoodrich is closing its tire plant in Kitchener, Ont., resulting in the loss of 1,100 jobs.
Goodrich, a unit of French-based Michelin North America (Canada) Inc., said it will shut the plant on July 22 and move operations to plants in Alabama and Indiana.
The announcement comes a week after the Nova Scotia government gave Michelin $10.8 million to expand its tire plant in Waterville, N.S., creating 75 jobs.
The company makes BFGoodrich, Uniroyal and private-brand tires in Kitchener, mainly for the U.S. market.
BFGoodrich said it has made significant investments in Kitchener, as well as at its three other North American plants. But the demand for mass-market tires is shrinking, leaving the company with too many facilities. To make it worse, BFGoodrich is facing intense competitive pressure from low-cost imports.
"The decision to close the Kitchener plant was very difficult," said Guy Pekle, president of Michelin North America (Canada) Inc. "The competitive nature of today's tire industry requires the company to invest and maintain production in the plants that can compete successfully in an increasingly difficult global market."
The company will move its business to the plants in Tuscaloosa and Opelika in Alabama, and Fort Wayne, Ind., giving them the capacity utilization they need to maintain their competitiveness.
Michelin said its other plants in Canada will not be affected by the shutdown in Kitchener. It has three smaller plants in Nova Scotia which employ about 3,500. The Kitchener plant has had a turbulent history with its unions.
United Steelworkers director Wayne Fraser said the closing would be a terrible blow to the community, and a decision that should be reversed.
"It is outrageous that the company has never discussed alternatives with the union and simply dropped a bomb on the whole city," Fraser said. "It is a mean-spirited terrible way to treat workers, their families and the whole community."
"This plant makes money," Fraser said. "They told us that they were making more tires than they ever did before and productivity's been the highest it's been at that plant for as long as they can remember . . . and today they dumped the bomb on those workers and their families."
"It is our intention to sit down with the company as soon as possible and explore every available option for saving production at the Kitchener plant," he said, adding "this is a productive facility with a talented workforce, many with more than 20 years working for the company. They deserve respect and an opportunity to save their jobs."
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Ironically, Fraser had gloated on the union website as late as Thursday morning that it had forced Michelin to give concessions.
"Our members in Kitchener took on Michelin (last year) when they demanded concessions in wages, benefits and jobs," he said. "We brought our chain of locals together and forced Michelin back to the table. Our size made us stronger and brought us power at the bargaining table."
"We were successful in representing workers, particularly in the tire industry where we are the dominant union," he said.
Several analysts said they were not surprised to see the plant close.
"The tire industry has had overcapacity for years," commented Dennis DesRosiers, head of DesRosiers Automotive Consultants in Richmond Hill, Ont. "It's one of the maturest of mature industries: it's basically a commodity."
Carlos Gomes, a Scotiabank economist specializing in the auto industry, observed that North American vehicle production has deflated from a peak of 17.7 million units in 2000. "We moved down to 16.3 million in North America in '05, and I'm expecting about 16 million for 2006, so that's probably one of the main reasons."
This level of production would mean a decline of almost seven million new-car tires compared with 2000 levels, he said.
The closure is one of many in Canada this year as the manufacturing sector contracts. Companies in the forestry, aerospace, automotive and machinery sectors are restructuring as they cope with cheap imports, a rising Canadian dollar and soaring costs for energy, transportation and raw materials.
In the last 10 days alone, Ford Canada has announced the closure of half its St. Thomas, Ont. auto assembly plant with the loss of 1,200 jobs, while farm equipment maker John Deere, pulp and paper giant Bowater, hospital equipment maker Hospira and others have shut down Canadian operations, with the loss of another 1,000 jobs.