The tyre manufacturer, Michelin, has been accused of “betrayal” after announcing plans to close its factory in Dundee, just 18 months after receiving £4.5m in public funding to safeguard its future.
Some 845 people are employed at the plant, which has been a presence in the city since 1971.
The French firm said that despite efforts to make the factory “economically sustainable,” it was now considered “unsuitable,” with the prospect of its conversion not “financially viable.”
However, unions described the closure as a “hammer blow” and “devastating,” and pledged to fight “tooth and nail” to save the factory.
The impending closure of the plant, which manufactures 16 inch and smaller tyres for cars, is likely to spark a political row.
Only last June, the firm received £4.5m of taxpayers’ money to bankroll an expansion programme, with First Minister Nicola Sturgeon hailing Michelin’s “continued commitment.”
Since 2012/13, it has received a further eight grants from Scottish Enterprise totalling more than £5.2m. The majority came via the business quango’s regional selective assistance scheme.
In a statement issued on its website, Michelin said the Dundee site has “faced serious difficulties in recent years,” with an “accelerated shift” in the market towards what it described as “low cost, entry level products from Asia.”
It stated: “Despite the group’s continuous efforts, and the factory employees’ dedication to making the site economically sustainable through the implementation of several action plans – €70m (£61m) has been invested in recent years to modernise the site – the accelerated market transformation has made the plant unsuitable and its conversion is not financially viable.
“Against this backdrop, the Michelin group has had to announce its intention to employees to close the Dundee factory by mid 2020.
“The priority now is to provide the 845 employees of the factory with the most effective support possible to enable them to face the consequences of this difficult decision.”
It said measures would include enhanced redundancy packages and early retirement, with a “comprehensive plan” to help employees due to be put in place “as quickly as possible.”
Pat Rafferty, Scottish secretary of the Unite union, said: “Unite has been aware of the challenging market situation facing the Michelin group. This has been primarily due to the cheap foreign imports from Asia and as a result falling demand for premium tyres in smaller dimensions, which the Dundee factory specialises in producing.
“If the media reports are confirmed by Michelin, this will be hammer blow for Dundee. It would be devastating and a betrayal of the workforce who have made major changes to working practices at the site in order to secure its long-term future.
“The workforce can be assured Unite will fight tooth and nail to save our factory, we will leave no stone unturned to keep this factory open. Unite will work day and night to ensure that all options remain on the table.”
Shona Robison, the SNP MSP for Dundee, descibrd the news as “deeply upsetting for the city and in particular for the workforce and their families.”
Stating that she would be seeking “urgent clarification” from the company about its plans, she added: “If this speculation is true, I will work with the Scottish Government, Dundee City Council and any others to ensure that we do everything possible to secure a future for the Michelin plant and its workforce.”
Richard Leonard, the leader of Scottish Labour, said: “This is devastating news for the Michelin workforce and their families, the city of Dundee and the wider Tayside community. My thoughts are with them.
“The Michelin factory in Dundee has provided not just hundreds of well paid jobs, but much needed skills and training to a city which has suffered greatly as a result of deindustrialisation.
“It is now key that the Scottish Government does everything it possibly can to keep the factory open and protect jobs. This should include working closely with Michelin, trade unions and the Dundee community to provide urgent clarity on the current situation.
“Scottish Labour stands ready to provide constructive support to help Michelin workers and keep the factory open.”
Last June, Ms Sturgeon announced Scottish Enterprise would commit £4.5m in the form of an environmental protection grant towards a £16.5m investment in the facility, with the company making up the remainder of the funding.
The investment was the latest in a series of major cash injections for the factory in recent years and was expected to secure the workforce for the next 10 to 15 years.
The Scottish Government said the money, earmarked for additional premises and new manufacturing equipment, would pave the way for a new manufacturing technique that would help reduce CO2 emissions by 7,140 tonnes per year.
Speaking while on a tour of the plant at the time, Ms Sturgeon said: “Michelin is a global leader in developing the latest technology and this investment in making the next generation of fuel efficient tyres is another great example of a highly innovative company.
“This commitment and investment in the Dundee site will support the 850 fantastic, skilled workers here to remain at the cutting edge of their industry and help the worldwide drive to the low carbon economy.”
She added: “Michelin’s investment in Scotland is testament to our thriving manufacturing industry and its position as a key growth sector for the economy. Their continued commitment is proof of the skill and value of the Scottish workforce.”
In September, the company - headquartered in Clermont-Ferrand in the Auvergne region of France - said the Dundee factory was continuing to face “extremely challenging trading conditions,” in large part due to the influx from cheap tyres from Asia, and falling demand for smaller, premium tyres.
It said that production was forecast to reach 5.4 million tyres a year over the next three years, a number that was “significantly below capacity.”
It is understood the plant’s peak production capacity exceeds seven million tyres a year.
However, it did not raise the possibility of the factory’s closure, stating only that it would “explore all options to maximise the efficiency of the plant,” which included the prospect of a reduced headcount and restructured working patterns.