Michelin is considering accelerating American investments to counter the threat of US tariffs as the French tyremaker warns it is no longer economically viable for it to export from Europe.
Florent Menegaux, chief executive, told the Financial Times the company could “reorganise its priorities” to bolster capacity in its US factories should President Donald Trump impose import duties on its chief trading partners.
“When we look at our global investment plan . . . we may have to advance the date for projects in the US and slow down projects elsewhere,” he said.
Menegaux’s comments come as European businesses brace for a potential trade war with the US, with Trump aggressively pursuing protectionist policies since his return to the White House.
Rising trade frictions risk upending industrial companies such as Michelin that depend on global supply chains to source raw materials and sell into markets worldwide.
The group has 35 factories across the US and Canada to supply local markets but it sources rubber and parts for its manufacturing divisions from around the world.
“We can’t guarantee that 100 per cent of all the products, all the components and all the materials we use are produced locally,” Menegaux said.
He cautioned Michelin would not rush into decisions or drastically change strategy but added accelerated investments in its US factories could come at the expense of the company’s historic manufacturing base in Europe.
That would risk controversy in France where the €23bn group is consulting unions over plans to shut down two of its 20 French sites, a move that would affect 1,254 workers.
“The closure decision is the last one we take after having explored all the options possible,” Menegaux said of the planned closures, which shocked France given Michelin’s reputation as a socially responsible employer.
The company introduced a living wage across all its operations in April last year and has maintained its historic headquarters in Clermont-Ferrand, in central France — one of only a few large French corporations not to have its main office in the greater Paris region.
In a punchy French Senate hearing last month, the softly spoken Menegaux laid out the challenges for his business in France and Europe. He said European electricity costs that were on average roughly double those in the US, the arrival of 200 competitors in China in the past 25 years and a hefty tax load in France meant Michelin’s production in the country was no longer profitable.
Repeating his message from the Senate hearing, Menegaux told the FT that Michelin was no longer “able to export from Europe”.
“Historically, Europe was our point of departure to export in the world . . . this exporting base is going to shrink because it’s no longer economical,” he said.
Other French executives have also publicly expressed exasperation with red tape and high taxes in France, as well as EU regulations they say are hurting industries’ competitiveness.
Pointing to a report last year by former European Central Bank president Mario Draghi on the bloc’s “existential challenge”, L’Oréal chief executive Nicolas Hieronimus last week said it was “crunch time” for Europe to boost its competitiveness.
LVMH boss Bernard Arnault, who attended Trump’s inauguration in Washington last month, said he felt a “wind of optimism” in the US compared with the “cold shower” in France, where the government has imposed windfall taxes on large companies and taxes on share buybacks to help plug its budget deficit.
Menegaux said Michelin was waiting for more clarity on the impact of tariffs on his business before taking investment decisions.
Pointing to the tyres the company makes for heavy industrial vehicles, he said: “We have three civil engineering tyre factories in the world, one in the US. But for the civil engineering tyres, there are some semi-finished products that come from all over the world.”
“Are all the tyres and the semi-finished products going to have customs duties? We don’t know,” he added.
Analysts expect Michelin to report an almost 4 per cent decline in sales to just over €27bn.
