PICTOU, N.S. - Michelin Canada is phasing out production of small tires at its oldest Canadian factory, dealing a sharp economic blow to the economy of northern Nova Scotia.
The company said its decision, which will see about half of its 1,000 employees at its plant in Granton, N.S., laid off, is a response to a continuing shift towards larger tires in the North American car tire market combined with the limits of the facility.
"People are in shock," said Andy Thompson, the deputy warden of the Municipality of Pictou County. "You'll not replace those jobs that easily."
Grant Ferguson, president of Michelin North America (Canada), said the company will offer transfers to employees who are willing to work at one of two other Michelin factories in Nova Scotia. Ferguson said he thinks between 100 and 200 employees will decide to take that offer.
Michelin is also offering severance packages and early retirement for employees who don't want to take jobs in the other communities, which are more than 200 kilometres away.
"We have a long history of manufacturing here, and we care deeply about the well-being of our workforce and the community," Ferguson said.
The company said market demand for the 14- to 16-inch tires produced at the Granton plant is diminishing and it's not worthwhile to upgrade the 43-year-old operation.
Michelin said the layoffs will occur in two phases. By June 30, 200 employees will be laid off when a tire manufacturing production line permanently closes. A year later, the remaining tire production activity at the site will be reduced, affecting 300 more people.
The company said the plant will still be operational, including some high-performance car tire production and tire membrane production. It will also still receive a $10-million investment to improve its rubber mixing facilities, Ferguson said.
He said Michelin will also set up a development fund to provide low-interest loans to employees who want to start their own companies.
Thompson said it remains to be seen how Pictou County, a mostly rural region, can maintain its economy, but he believes many former employees will remain and attempt to start fresh enterprises.
"We make things in Pictou County," Thompson said. "We produce things and it's our claim to fame. We'll continue and soldier on."
He said the county is concerned about the possible loss of a key part of its commercial and property tax base, but has yet to hear how severe the impact will be.
Premier Stephen McNeil said he is pleased the company is offering options to the workers, adding that the government will continue to look for ways to encourage Michelin to find alternative uses for the empty part of the Granton factory.
"It's my hope we can continue to work with them to find opportunities to expand that Granton plant again," he said.
— By Michael Tutton in Halifax.
Follow @mtuttoncporg on Twitter.