This piece of work aims to critically analyse the role of HRM within MICHELIN as the organisation sets to completely shut down its Ballymena tyre factory in 2017 with the first leg of redundancy starting in May 2016. The shutting down of this plant may automatically make 860 employed staff and about 500 contractors redundant.
The announcement of the closure was made on the BBC News on the 18th of November, 2015 by the organisation stating that there is a need to reduce overcapacity by shutting down the Ballymena plant and that the organisation will concentrate in producing Michelin tyres in other plants that are more competitive.
The organisation said it arrived at this business decision because it is cost effective judging by the contextual factors that lead to this decision. These factors will be discussed further on in this report. This report will also analyse the organisations capacity to recognise the economic potential of human capital management and its impact on competitive advantage. Contextual/ internal and external factors of Michelin Ballymena Kew and Stredwick (2005) said external environmental forces such as political processes, demographic factors, government policies, unionisation, labour market and internal factors such as customers, competitors, local labour market, specific technologies and the organisations business strategies plays a role on how organisations operate. According to Mullins (2013) organisations needs to respond to the challenges, risks, limitations and opportunities that are presented by the external environment to the organisation. Kramer and Syed (2012) said organisations can be affected by contextual factors like the global economic crisis of 2008. The contextual factors that affected Michelin’s Ballymena plant includes • Low demand for truck tyres in the UK and Europe (following the financial crisis in 2007) • High logistic cost due to the plant location • High energy prices (Northern Ireland where the Michelin plant is located has the second highest energy prices in Europe) • Increased competition (high influx of tyres from Asia) • Unavailability of high tech machines (Ballymena plant lacks the technology that can make tyres that are fit for the future) • High cost of transporting production materials due to geographical location • The organisation has plants that are more viable and productive in other places in the UK than Ballymena plant In arriving at the decision to shut down the Ballymena plant which will result in the redundancy of 860 employees and 500 contractors, the organisations said it had analysed the general business environment and has come up with …show more content…
Schuler and Jackson (1999) rightly said that organisations HRM activities may also cause changes in the political, legal, social environment of the organisation.
Analysing the general environment in Michelin Ballymena Factory using some parts of the SWOT and STEEPLE Models
STRENGTHS – The organisations strengths include its length of stay in the tyre manufacturing industry. Michelin has been in existence since 1905 and is known for quality tyre production.
WEAKNESS – Inability to compete favourably with new market entrants.
OPPURTUNITIES – Restructuring and modernising warehousing infrastructure and logistics, increase in its production by investing more in its Dundee and Stoke-on-Trent factories so as to transform them into a state- of- the- art factories and to confirm its place in the heart of its European operations. Diversification into other products and tyre types like aircraft tyres and power bikes
The announcement of the closure was made on the BBC News on the 18th of November, 2015 by the organisation stating that there is a need to reduce overcapacity by shutting down the Ballymena plant and that the organisation will concentrate in producing Michelin tyres in other plants that are more competitive.
The organisation said it arrived at this business decision because it is cost effective judging by the contextual factors that lead to this decision. These factors will be discussed further on in this report. This report will also analyse the organisations capacity to recognise the economic potential of human capital management and its impact on competitive advantage. Contextual/ internal and external factors of Michelin Ballymena Kew and Stredwick (2005) said external environmental forces such as political processes, demographic factors, government policies, unionisation, labour market and internal factors such as customers, competitors, local labour market, specific technologies and the organisations business strategies plays a role on how organisations operate. According to Mullins (2013) organisations needs to respond to the challenges, risks, limitations and opportunities that are presented by the external environment to the organisation. Kramer and Syed (2012) said organisations can be affected by contextual factors like the global economic crisis of 2008. The contextual factors that affected Michelin’s Ballymena plant includes • Low demand for truck tyres in the UK and Europe (following the financial crisis in 2007) • High logistic cost due to the plant location • High energy prices (Northern Ireland where the Michelin plant is located has the second highest energy prices in Europe) • Increased competition (high influx of tyres from Asia) • Unavailability of high tech machines (Ballymena plant lacks the technology that can make tyres that are fit for the future) • High cost of transporting production materials due to geographical location • The organisation has plants that are more viable and productive in other places in the UK than Ballymena plant In arriving at the decision to shut down the Ballymena plant which will result in the redundancy of 860 employees and 500 contractors, the organisations said it had analysed the general business environment and has come up with …show more content…
Schuler and Jackson (1999) rightly said that organisations HRM activities may also cause changes in the political, legal, social environment of the organisation.
Analysing the general environment in Michelin Ballymena Factory using some parts of the SWOT and STEEPLE Models
STRENGTHS – The organisations strengths include its length of stay in the tyre manufacturing industry. Michelin has been in existence since 1905 and is known for quality tyre production.
WEAKNESS – Inability to compete favourably with new market entrants.
OPPURTUNITIES – Restructuring and modernising warehousing infrastructure and logistics, increase in its production by investing more in its Dundee and Stoke-on-Trent factories so as to transform them into a state- of- the- art factories and to confirm its place in the heart of its European operations. Diversification into other products and tyre types like aircraft tyres and power bikes