The Courier & Advertiser (Perth and Perthshire Edition)
Baldovie manager blames market changes plus ‘cheap Asian imports’
Michelin Dundee has been caught between a rock and a hard place as the European tyre market has structurally changed.
The Baldovie factory produces tyres in the 16-inch diameter range and below, among the smallest the group produces globally.
However, that sector of the market has been hit by two issues.
Firstly, there is a trend among car manufacturers to specify and fit largerdiameter tyres – typically 17-inch and 18-inch wheels – for both aesthetic and wider, road handling reasons. A midrange family hatchback comes fitted with 17-inch tyres as standard.
Secondly, the economic dynamics of the smaller tyre market have also changed in recent years.
Michelin has cited a flood of cheap imported stock from Asia into the European market as being a major disruptor.
The tyre group is currently offering a range of 16-inch car tyres for sale through its website.
The cheapest 16-inch version of the Primacy 4 tyre is advertised on the portal at a recommended retail price of £89.99, while the firm’s award-winning CrossClimate+ range debuts at £99.99 for a 16-inch product.
Slightly cheaper options of both products are available via resellers.
However, the budget market is offering products with similar specifications to the cheapest Primacy 4 tyre from as little as £38.80 fully fitted.
Those market forces meant the Dundee factory needed to adapt its strategy or risk becoming obsolete.
Factory manager John Reid said two options had been explored but neither had proven viable.
The first option was to retool the Dundee site and allow it to produce larger tyre sizes.
That fell down on two grounds: the significant capital investment it would
require to upgrade production lines and the fact that Michelin already has capacity elsewhere within its European network to produce such tyres.
The other option was to continue producing its current tyre range and go head-to-head with the new market entrants.
However, the cost of producing a tyre in the UK means it is prohibitive when compared to manufacturing in Asia, which has a significantly lower cost base.
Mr Reid said: “The problem we are facing is a significant global market change, so there is a structural change in the European car tyre market which has been driven by cheap Asian imports flooding into Europe.
“And there is the ongoing and growing trend of car manufacturers looking for bigger tyres.
“In Dundee we only produce the 16-inch and below, so we produce the smaller parts of the ranges and it is that very market segment that has been hit hard by these two effects.”