Michelin jobs bombshell shocks Invest NI after it poured £4.75m into the tyre giant
The Ulster plant will close by 2018 with the loss of 860 jobs
Economic development agency Invest NI has said it is shocked and disappointed by the news of tyre giant Michelin's withdrawal from Northern Ireland.
The agency said it had no idea that a closure of the site was on the cards - and had been in talks with the firm about supporting a further investment in its Ballymena site.
Michelin is to shut down the Raceview Road factory by 2018, leading to 860 job losses in the town. The gradual wind-down and job losses will begin next year.
Invest NI yesterday said it had offered the firm £4.75m in assistance for "capital expenditure and training" since 2007.
And Michelin may have to pay back some of the funds. A spokeswoman said: "There is a potential for clawback that needs to be fully explored."
Nigel Smyth, the Northern Ireland director of the CBI, said the closure was "a blow to the manufacturing sector and to the Ballymena area in particular" and would have an impact on the supply chain and economy as a whole.
He said: "Despite the high productivity at the factory the company has faced a combination of challenging market conditions and has continued to experience very high energy costs, which have undermined the plant's international competitiveness."
High energy costs are one of the main reasons for Michelin's dramatic withdrawal, factory manager John Milsted said.
He said the company had held talks with the Utility Regulator about ways of mitigating its energy costs, estimated at £9m a year.
Mr Milsted said closure had been on the cards for a year and that the decision to close the factory had not been made easily. And he said nothing could have been done to avoid the decision, which will cost the town of Ballymena millions of pounds worth of annual salaries. Mr Milsted said: "This sad announcement for Ballymena and the people concerned is being made due to overcapacity in the European truck tyre market, which has shrunk by 5m tyres since 2007. That, coupled with huge amount of imports coming in from Asia, cheaper imports, led to this decision today."
And he said the large sums of money required to repurpose or replace the machinery in the Ballymena factory meant it was not feasible for it to start manufacturing another form of tyre. "The situation in the European truck tyre market means it doesn't make sense to make that investment," he said. The company's decision to close Ballymena came as it announced a £50m investment in its Dundee plant, along with upgrading of its facilities in Stoke-on-Trent. Mr Wilsted said: "We've said to our employees they are guaranteed a job in the UK or Europe if they relocate." PwC chief economist Esmond Birnie said the closure reflected the perils of Northern Ireland's high energy costs. He said: "It would seem there is a challenge relating to the Northern Ireland business location - the most likely culprit is the relatively high level of energy costs in Northern Ireland."
A spokesman for the Utitlity Regulator said energy was one of a range of factors influencing Michelin. But he added: "It is recognised that a small number of very large energy consumers in NI have electricity costs that are above the EU average but are currently lower than Great Britain or Italy.
"We have visited Michelin to discuss what can be done to reduce energy costs. As well as using our network price controls to keep costs as low as possible, we also have been enhancing the operation of the wholesale electricity market to deliver savings for consumers. We have also facilitated the development of the natural gas market which has reduced bills for Michelin."