The European auto industry faces turbulent times, with French tire giant Michelin announcing the closure of two factories in France by early 2026, and German automotive parts maker Schaeffler revealing plans to cut 4,700 jobs.
Michelin attributed the closures to intense competition from Asian tire manufacturers and Europe’s deteriorating competitiveness, exacerbating factors like inflation and soaring energy costs. The company emphasized that this was a last resort measure.
To mitigate the impact, Michelin pledges to create as many new roles in the affected regions as those being eliminated. The company also committed to supporting its employees through job placements in other companies or within the Michelin group, as well as offering early retirement options.
The Cholet plant, with 955 employees, specializes in manufacturing light truck tires. However, Michelin notes a significant decline in this segment within Europe over recent years, with no signs of recovery.
The Vannes site, employing 299 people, primarily produces metal reinforcements used in car tire manufacturing at other plants across Europe, including Spain and Italy. Declining demand from these European truck tire plants has led to lower production volumes at the Vannes facility.
Michelin is navigating a challenging year marked by a slowdown in the new car market. The company already closed its La-Roche-sur-Yon site in western France in 2020 and is preparing to shutter two plants in Germany by 2025.
Meanwhile, in Germany, Schaeffler announced plans to cut 2,800 jobs across 10 sites, with five additional sites elsewhere in Europe also impacted. Schaeffler confirmed that two sites will be completely closed, but details about their location remain undisclosed.
Schaeffler, a leading manufacturer of bearings for the automotive industry, attributes these job cuts to the challenging market environment, intensified global competition, and ongoing transformations within the automotive supply industry.
Interview Between Time.news Editor and Automotive Industry Expert
Time.news Editor: Welcome to our special feature on the current state of the European auto industry. Today, we’re joined by Dr. Lena Müller, an expert in automotive economics and supply chain management. Dr. Müller, thank you for taking the time to speak with us.
Dr. Lena Müller: Thank you for having me. It’s a critical time for the industry, and I’m glad to discuss these pressing issues.
Editor: Let’s dive right in. Recently, Michelin announced the closure of two factories in France, citing heavy competition from Asian manufacturers and other economic challenges. What does this say about the current landscape of the European auto sector?
Dr. Müller: Michelin’s decision is quite significant. It highlights the intense pressure European manufacturers face from lower-cost Asian competitors. As labor and production costs rise in Europe—due in part to inflation and soaring energy prices—it becomes increasingly difficult for companies to maintain profitability. This situation could lead to more companies reevaluating their production strategies, which may include factory closures or shifting operations abroad.
Editor: You’ve mentioned inflation and energy costs. Can you elaborate on how these factors specifically impact companies like Michelin and Schaeffler?
Dr. Müller: Certainly. Rising inflation affects the entire cost structure for manufacturers—materials, wages, and even logistics become more expensive. On top of that, Europe has been grappling with energy shortages and high costs, which have disproportionately affected industries reliant on energy-intensive processes. For a company like Michelin, whose production lines depend on consistent and affordable energy, these challenges can stifle their competitive edge against Asian firms, which often benefit from cheaper labor and energy.
Editor: Schaeffler’s announcement to cut 4,700 jobs also raises concerns. What does this mean for the workforce in the industry?
Dr. Müller: It’s undoubtedly concerning for the workforce. Job cuts like those at Schaeffler not only impact the employees directly but also ripple through local economies. When major employers reduce their workforce, it can lead to decreased consumer spending in those areas. This scenario raises important questions about how the industry can evolve to retain talent and remain competitive, particularly as we shift towards more sustainable practices and technologies.
Editor: Speaking of sustainability, many companies are pivoting toward electric vehicles (EVs) and greener technologies. How might this shift influence the challenges facing traditional manufacturers like Michelin and Schaeffler?
Dr. Müller: The transition to EVs presents both an opportunity and a challenge. While there’s a chance for growth in new markets, the initial investment required for R&D and production can be steep. Traditional manufacturers that cannot adapt quickly may find themselves at a disadvantage. Companies need to balance their investments in new technologies while addressing current market pressures—this is a delicate tightrope and one that requires strategic foresight.
Editor: What policies or measures should European governments consider implementing to support the auto industry during this time of transition?
Dr. Müller: Governments could play a pivotal role by incentivizing innovation and supporting a transition toward sustainable practices. This might include subsidies for R&D in EV technology, incentives for workforce retraining programs, or financial aid to ease the manufacturing costs that are currently stifling competitiveness against Asian manufacturers. Additionally, fostering a collaborative environment between government, industry, and academia could yield innovative solutions to these challenges.
Editor: As we conclude, what advice would you give to consumers concerned about the future of the European auto industry?
Dr. Müller: I would encourage consumers to stay informed and supportive of local manufacturers where possible, as this can bolster the economy. Additionally, being aware of and participating in discussions about sustainability and the transition to electric vehicles is crucial. This industry is evolving, and consumer preferences will play a significant role in shaping its future.
Editor: Thank you, Dr. Müller, for sharing your insights today. The challenges are indeed significant, but with informed strategies and support, the European auto industry may navigate these turbulent times.
Dr. Müller: Thank you for having me. It’s important to stay optimistic while remaining realistic about the challenges ahead.