He also insisted that production levels would not fall in the medium term and spoke of “significant investment” in the next few years to add new equipment and upgrade existing plant.

Michelin is one of Dundee’s biggest employers, with almost 1000 workers. The factory makes 6.5 million car tyres per year, all in the 13- to 15-inch range.

Mr Haines said an analysis of the European market for these types of tyre showed a steady reduction in demand was likely over the next few years, although they would still account for more than half of all tyres made by 2010.

There would still be a “healthy, substantial market” and production in Dundee would remain at current levels for the next three to five years, with the output including the Kleber and BFG brands, as well as Michelin.

“We are considered a successful plant, but we have to improve productivity and quality and cut our unit costs to maintain competitiveness,” he said.

One key will be optimising the use of existing capacity and this will see a reduction in the number of shifts per week.

Production staff are presently organised into five teams — three on full-time contracts and two part-time. This will be reduced to four teams — three full-time and one part-time.

The Saturday night shift will be axed, but there will be an opportunity for some part-time workers to convert to full-time, although, again, no-one will be forced to do so.

Mr Haines said the company regretted having to seek redundancies, but these were a necessary part of the overall plan to secure the factory’s long-term future.

The new system will not come into force until January and talks will go on with workers and unions to decide how the new shifts will be organised.

The size of the investment to be made has not been disclosed, but Mr Haines said he regarded it as “a positive sign” for the future.

“The Dundee factory has a clear mission over the next three to five years in the 13- to 15-inch market. We have significant investments being made and we have a long-term vision,” he said.

Staff were informed of the plans yesterday and today.

Mr Haines said, “We have found, so far, that people have been attentive and I think there is a good understanding of the business case.

“There have been a lot of questions about how the four teams will operate and how this will fit in with shift patterns and holidays. We are in the process of deciding on the exact numbers in each team.”

Earlier, MP Stewart Hosie and MSP Shona Robison (both SNP, Dundee East) revealed they are to meet Michelin management tomorrow to discuss the job cuts and other changes at the plant.

Mr Hosie said, “While ordinarily it would be welcome news to learn a major employer in the city was investing heavily to ensure its long-term future, the announcement also means job losses.

“I will be meeting with management to confirm no compulsory job losses will occur. I will also be urging them to make sure it is the case that any workers who volunteer for redundancy get the best package possible.

“In addition, I will be seeking an early meeting with the unions to get their views. We need to work together to ensure no further job losses occur and that the operation remains in Dundee.

Ms Robison said, “Michelin is a treasured employer in the city and while it would appear the job losses are not compulsory, the loss of just one job is a job lost for future generations. At the meeting, I will endeavour to find out if the proposed investment may lead to additional jobs in future.”