Foremost plantation operator and tyre manufacturer in Nigeria, Michelin has announced its decision to pull out from tire production at its plant in Port Harcourt.
The French tire maker, Michelin said yesterday that it will stop the production of tires in Nigeria but did not go into the details of why it is opting out.
Michelin said it told the Nigerian government of its decision on Tuesday. The company as a result is on the look out for reputable companies both locally and international market to transfer its asset in Port Harcourt.
“It was decided that together we would look for a buyer as soon as possible,” Michelin said in a statement. The company further said it would implement “appropriate measures” for workers whose jobs will be affected by its decision to close shop.
“It is a strategic decision related to problems with cost competitiveness at the plant,” the company said. “We already had temporary lay-offs in December and these layoffs have now been extended until the end of 2007.”
Strong global demand for rubber and other commodities has forced up prices, making life more difficult for firms such as Michelin. But the company will continue to operate its rubber plantations in Nigeria. Market sources however told THISDAY yesterday that the Michelin pull out from Port Harcourt is as a result of a mix of two important factors of insecurity in the Niger Delta and the harsh business environment under which manufacturing companies operate. “The spate of kidnapping and killings of foreigners in the Niger Delta is not unconnected with the decision of Michelin to pull out, coupled with the fact that the business environment and state of infrastructure in the country is not particularly encouraging,” the source said asking not to be named.
The closure of the plant by Michelin will throw not less than 1,300 staff into the unemployment market. Competition from Bridgestone and other rivals has hit sales and some staff were temporarily laid off last month as it tried to clear a backlog of stock. Michelin will maintain its rubber plantations in Nigeria, one of Africa’s largest rubber producers.