Overregulation in the European Union is “strangling the economy and industry,” Michelin CEO Florent Menegaux has told Brussels Signal.
The EU also today “lacks a vision”, said Menegaux, whose French multinational is the world’s second-largest tyre manufacturer.
For legislators, “the temptation is more regulation, up to the point where you’re strangling your economy and your industry. I think in Europe we’ve reached that point,” Menegaux said in an interview at the company’s headquarters in Clermont Ferrand, central France, on March 24.
There was a point where better rules had created a competitive advantage for the EU but legislators and regulators had been tempted by early successes to create too much of a good thing. “Regulation is not a competitive advantage when it comes to that magnitude,” he said.
The EU also needed to better understand its purpose, said Menegaux.
“What we lack in Europe right now is a vision for Europe. We had a vision when we built it: that was we need to stop fighting in Europe. Then we have lost momentum,” he said.
Member states had to create a new approach to “how you explain to populations” the EU’s purpose. “If it’s just a giant supermarket is’t not good, it’s not sufficient,” he said.
Ahead of the possible imposition of US tariffs on EU manufactured goods from April 2, Menegaux said his company may have to “reorganise its priorities” to expand its US-based operations.
This though could mean accelerating closures in France, where the tyre group has been consulting unions over proposals to shut down two of its 20 manufacturing sites, which could affect 1,254 workers.
Still, “70 per cent of what we sell in the US is produced in the US”, he said, although rubber and some manufacturing parts were sourced from its facilities elsewhere around the world.
“It is impossible for us to change overnight our supply chains,” he said.
“If you were to say [new US] tariffs would be implemented, we would have to revisit our investment plan and it would take a decade before it’s effective,” the CEO said.
“So the only good move for us would be to change our prices in other markets. Our customers would buy Michelin tyres at more expensive prices,” Menegaux added.
As the US and EU prepared for a possible trade war, Menegaux pointed out “overall, globalisation has been very good for the world” and had helped ” hundreds of millions of people get out of poverty”.
A prominent French business leader, Menegaux has been head of Michelin since 2019. He was appointed to France’s Ordre National du Mérite in 2020.
He is also an outspoken corporate leader. In February, he said France was “killing” its manufacturing industry with taxes that were the highest in Europe.
In January, he told France’s Senate that French manufacturers faced fierce competition from China, as well as staggering energy and labour costs in France.
That situation, he told senators, was worsening fast.
In 2019, he said “if the production of tires cost €100 euros in Asia, it cost €127 in the United States and €134 in Europe.”
But by 2024, the EU-made tyres cost €191 compared with €176 for the US-made equivalent.
All the same, he said, “we have made a real advance in technologies because of pressure from China”.
Competition from China was “not new” and for 15 years “competition [has been] strengthening us, providing they [China] obey the acceptable rules of the game”, although, he added: “Sometimes we debate what is acceptable.”
