Continental Opens Brazilian Factory

Continental AG has just opened its new tyre plant in Brazil and said that it should be operating at full capacity within the next 18 months. “The new low-cost production capacities play a key role in our concept for the future passenger tyre business in the loss-making NAFTA region. At the same time, the capacities allow for profitable growth,” CEO Manfred Wennemer said in a statement released in Germany.

The Camacari plant, built near Salvador in the Brazilian state of Bahia for $260 million, is capable of manufacturing 6 million passenger car tyres annually along with a further 700,000 tyres for commercial vehicles. By the end of this year the plant will be churning out 9,000 passenger car tyres a day and reach 14,000 in the first half of next year, Continental said.

Commercial vehicle tyre production is scheduled to begin in July, with an estimated daily output of 1,000 tyres by the end of 2006 and as many as 1,700 by the end of 2007.

Once full capacity is reached within the next 18 months, the plant should be making more than 18,000 passenger car tyres and another 2,100 commercial vehicle tyres per day.

The new plant continues the strategy, whereby Continental has been able to steadily expand margins in its car tyre business by shifting production from high-wage countries such as Germany and the United States to low-cost emerging markets such as Malaysia and now Brazil.