UK - Wind power for Michelin's Dundee plant

Michelin, the global tyre giant, is to become the first major manufacturer in Scotland to commit to using renewable energy, with the construction of two wind turbines at its huge Dundee plant. In a battle against being hurt further by rising energy costs, the turbines - which are expected to be operational by July - will provide up to 4MW of power on a windy day, meeting the entire Dundee factory's needs. Over the course of the year it is forecast to provide about a third of the energy needs, cutting electricity bills by about 8 per cent, once running costs are accounted for. UK energy prices have increased considerably since deregulation, which has cost the French tyre company's UK operations millions of pounds. UK managing director Jim Rickard told The Scotsman yesterday: "The cost of energy is making it more difficult to remain competitive. To retain jobs in the UK I have to make it as attractive as possible to invest here. The energy costs are a real negative."

Worldwide, Michelin employs more than 100,000 staff and its French headquarters have said that while European manufacturing would continue, its expansion would be in growing markets further east. Rikard said there was no immediate threat to operations in Dundee - one of Britain's biggest tyre plants - but that company chiefs in Clermont-Ferrand would take a dispassionate view about unprofitable operations. "There's no God-given reason for the company to operate in any region," he said. According to the company, in 2004 electricity cost about 44 per MWh in Dundee, compared with 41 in France and 37 in Spain. Now it is costing the company about 95 per MWh, compared with 62 in France and 61 in Spain.

While the company projects the gap will narrow by 2010 its electricity costs are still expected to be 20 per MWh more expensive in Scotland than its major production areas on the continent. The company's figures also claim the UK cost of gas has grown at twice the rate than at its other western European facilities. In recent months, the cost of gas has risen to such a level the company has reverted to burning heavy fuel in its boilers for steam at Dundee. The wind turbine programme is part of an effort to improve efficiency, without which its UK manufacturing would be closed. "To stay in the game, we've got to save and save," said Rickard. Michelin employs about 3,700 staff in the UK, about 2,500 of which relate directly to manufacturing, making it the largest tyre manufacturer in the UK. Rickard's comments come only a day after Goodyear announced it was cutting more than 1,500 manufacturing jobs in the UK, moving the work to India. Rickard said that was "symptomatic of how tough it is in manufacturing in the UK at the moment".