Label laws could drive sales boom for tyre plant

Business Editor, Sunday Herald

Sunday 23 September 2012

NEW EU laws on tyre labelling, set to become compulsory in November, may help secure the future of one of Dundee's biggest employers, its manager says.

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By Colin Donald

John Reid, head of Michelin's 900-strong workforce at Baldovie in the east of the city, said the new labels, rolled out since June, will increase customer awareness of the link between tyre quality and performance, favouring the plant's investment in making high-end products.

"People are becoming more and more aware of the impact of tyres now that labelling is out on the market. The customer is much more informed, and as we think we make the best tyres with the best performance, it's an opportunity for us. For the first time customers are forced to look at the label, and think more about what they need. It's not just cheap or expensive anymore."Dundee's largest remaining manufacturer, with an estimated direct financial impact of £45 million on the city, has survived a series of restructurings in recent years, and attracted multi-million pound investment for new lines last November. This was despite strong competition from rival factories in the group, including those close to Michelin's global headquarters in Clermont-Ferrand, France. But in May the plant, which exports 90% of its output, was forced to suspend production in the face of slowed demand, while winning plaudits for its "flexibility model" of industrial relations. The plant's management prides itself on compensating for its distance from main markets with high productivity figures, including "two bumper years" in 2010 and 2011 when it increased daily production from 20,300 to 24,000 tyres a day."The latest investment is about bringing in new machinery, which is very important for longevity. We are now making ultra-low resistance tyres for low fuel consumption, a product for the future. It's a really important investment for us," Reid said. "Our plan for this year was to turn over £7.5m whereas we will actually achieve £5.8m - It's been a huge challenge to absorb that reduced market, but we have managed to do that without unravelling the jobs." Michelin's much-lauded approach has included asking employees to "bank" five shifts, "meaning we paid them [for not working], and they owe us five shifts back when we need to cover absence or training or some special project that would have cost us money."We've had huge support from unions and work force. It's not part of the contract but they accepted unanimously and gave a clear signal that they are flexible to accommodate changes in the market."

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Label laws could drive sales boom for tyre plant

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