Production for the next three years at the site is expected to stand at no more than 5.4 million tyres a year, a level described by the firm as “significantly below capacity”.
Michelin said it is exploring all options to maximise the plant’s efficiency, with restructuring work patterns and reducing its 850-strong headcount among the options that could be examined.
The projected production levels have been blamed in part on cheaper tyres coming in from Asia.
Union leaders said they are working to protect terms and conditions and to maximise jobs on site.
In a statement, a Michelin spokesman said: “Michelin Dundee continues to face extremely challenging trading conditions, primarily due to the influx of cheap tyres from Asia and falling demand for premium tyres in smaller dimensions.
“Production for the next three years is forecast to be a maximum of 5.4 million tyres a year, which is significantly below capacity.
“We are working with employees, unions and the Michelin Group to meet these market challenges.
“We will explore all options to maximise the efficiency of the plant and those options could include restructuring working patterns and reducing headcount.
“Michelin Dundee continues to appreciate the hard work and flexibility of its employees, and we will update them before the end of the year.”
Marc Jackson, senior shop steward with the trade union Unite at Michelin Dundee, said: “Unite the union has been aware over the last few months of the challenging market situation in close dialogue with our European partners.
“The reduction in production will impact the Dundee site more than any other site within the Michelin group, as we manufacture smaller tyre dimensions. Unite have always worked together with Michelin through difficult periods and we will continue to do so.
“We understand this is one of the most challenging periods we have faced as one of the main reasons for the announcement is an influx of cheap imports from Asia.
“At this moment in time our members can be assured that we will be looking to protect their terms and conditions and to maximise jobs on site.
“The union and the company are working hard to deal with these issues and to give the factory the best opportunity going forward and to be as competitive as possible.”