France-based tire manufacturer Michelin has announced its decision to shutter a tire production plant in Ardmore, Oklahoma, resulting in the layoff of 1,400 American workers. The company attributed this move to the influx of cheap foreign-imported tires from low-wage countries that have inundated the United States market.
The Ardmore plant, which has been a vital part of the community for over five decades since its establishment in 1970, has been primarily engaged in the production of passenger tires. Its impending closure will not only have a significant impact on the local workforce but will also have broader ramifications for supporting industries and local businesses in the region.
In a news release, Michelin executives stated that the decision to wind down production at the Ardmore plant was driven by the rapidly evolving landscape of North America’s passenger-vehicle market. Despite substantial investments in the facility over the past five years to enhance its technical capabilities and competitiveness, Michelin determined that the Ardmore factory would be unable to deliver tires at competitive costs that meet the shifting market demands in the coming years. Moreover, they highlighted that continued investments in modernizing the Ardmore plant could have adverse effects on other U.S. sites within their network.
The initial round of layoffs is scheduled to commence in mid-2024, with a full plant closure planned by the end of 2025. The plant’s closure serves as a grim reminder of the challenges facing American manufacturing plants due to the effects of free trade policies. Michelin’s decision to cease operations in Ardmore is also attributed to its inability to compete with cheap foreign imports, particularly from countries like Thailand, Mexico, and Indonesia, where labor costs are considerably lower than in the United States.
For instance, in Thailand, the largest exporter of passenger tires to the U.S. market, workers earn as little as $10 a day, equivalent to approximately $261 a month. These low labor costs in foreign countries have made it increasingly challenging for American manufacturing facilities to remain competitive in a global market. The United States saw a significant increase in foreign tire imports, with over 164 million passenger tires entering the U.S. market in the previous year, compared to 151 million in 2021. Despite efforts by the federal government to reduce reliance on Chinese imports, China still managed to import 2.7 million passenger tires to the U.S. market in 2022.