French tire producer Michelin will close down its truck tire factory in Budapest, Hungary, and relocate the production of its Taurus, Riken and Kormoran tires to its factories in Romania, Poland and Germany.

In Romania, Michelin will produce the tires at its factory in Zalau, while in Poland, at Olsztyn, and in Germany, at Karlsruhe and Homburg. The measure will be applied until the middle of 2015, when production will completely stop at the Budapest factory.

Michelin decided to end production in Hungary on its lack of competitiveness on a difficult market, it said. In order to improve competitiveness of the factory, the group would have needed to invest in new equipment. The decision was also a response to the adverse trends and aggressive competition in the European truck tire market, which remains volatile and 23 percent down on its historic peak in 2007.

“The decision reflects the fact that extending the facility is no longer possible, due to its location in an urban setting, and that improving its competitiveness would require excessive upgrading with new equipment,” the company has said in a statement. This will affect the 512 employees in Hungary, who will be offered individual support measures by Michelin.

Michelin will keep its other production plant in Hungary, at Nyíregyháza, as well as its logistics center in Vác, which serves countries in Central and Southern Europe, and its strategic raw materials marketing unit in Tuzsér.

In addition, Michelin will continue to manage its entry-level car tire operations from Budapest, while maintaining all of its Hungarian sales operations.

In Romania, Michelin runs three factories, at Zalau, Floresti and Bucharest.

editor@romania-insider.com