Analysts: Brazil Plant Will Help Conti Save 100 million

Following the news that Continental’s Bahia, Brazil plant is officially open, analysts have reported that the company’s decision to increase production in “low-cost” countries could save between 100 and 110 million US dollars. According to Deutsche Bank, this calculation is based on average per worker production of 6000 tyres/annum against “10 times lower” labour costs compared with the US. The report also suggested that the additional transportation/logistics costs incurred are equivalent two US dollars per unit.

In addition to the previously reported opening in Brazil, Continental AG has recently expanded capacity in Malaysia, where the company is aiming to produce 6 million units by the end of 2006, rising to 8 million in 2008. When they were open, Continental’s Mayfield and Charlotte plants produced 5 and 8 million tyres respectively.