One-on-One With Conti’s Claudio Boezio

(SA Treads, Douglasdale, South Africa) When we first met Claudio Boezio in early 2005, he had just assumed responsibility for Continental Tyre SA in his role as MD. At the time and by his own admission, he was fortunate to inherit a well-run, stable ‘ship’. But if there’s one thing that remains constant in the tyre industry, it’s change.

The tyre industry has experienced testing times over the past 18 months and tackling these issues has not been easy, but results-oriented Claudio has seen to it that what he terms the company’s biggest resources – its people – have risen to embrace any challenge that has been thrown their way. Allegedly, he has done this largely be empowering his managers and allowing them to step up to the plate with their individual strengths, abilities and areas of expertise. By all accounts, Boezio’s open-door policy and willingness to take a personal interest in every member of staff has reaped immeasurable rewards for the staff and Company as a whole.

We met up with him on the Continental stand at Auto Africa 2006, where he outlined internal developments and shared his views on industry challenges and getting the best out of people.

Claudio, when we last met you indicated that your vision was to keep on ‘steering the ship’ so to speak. I take it this is no longer the case?
That is correct. The market began to shift dramatically during the second quarter of 2005 and 2006 saw a further escalation in imports due to a stronger Rand that indirectly allowed cheap foreign makes to gain a substantial foothold in the market – dynamics that required a greater level of intervention in some areas of operation.

In order to compensate for this influx of imports we were forced to terminate weekend production shifts at our factory so as to decrease production runs, which was not only painful but negatively impacted our bottom line.

Were you required to lay off members of your workforce?
That was the painful part, yes. Regrettably we were forced to terminate more than 100 jobs, something we at Continental find inherently difficult, given our strong employment and job creation ethic.

Do you believe the weakening of the Rand will assist in curbing the infiltration of foreign ‘cheapies’?
According to my data, the incidence of imports has already slowed down. Whether this is due to exchange rate fluctuations, the anti-dumping petition or a combination of both, I cannot say.

From our perspective, we will take whatever breather this brief period will afford, adopt the necessary corrective measures and be better prepared when the next wave of imports hits, which it will.

Any way you look at it this is a tough business, destined to get even tougher as time wears on. It is critical that we the manufacturers identify our areas of strength and develop them if we are going to survive the onslaught.

Lest we forget the any positive spin-offs due to a weaker Rand are offset by higher raw material prices (purchased in US$), particularly with globalization opening up the market and limiting global supply.

Earlier this year in our interview with Apollo and more specifically Pierre Dreyer, he expressed concern over the long-term fate of manufacturing in South Africa. Do you share his concerns?
Manufacturing in general has been under threat for the last 18 months, with the economy running on consumption and consumed imported materials. My concern is how do we as a country hope to grow economically by eradicating manufacturing from the equation? We could land up facing economic disaster.

What is the progress on the anti-dumping petition that was submitted by the South African tyre manufacturers?
Response from government was not what he hoped for and we are currently in the throes of giving voice to some of the irregularities contained in the report. We have no objection to foreign makes coming into the country provided the playing fields are levelled.

Take the Chinese products for example which are landing at about one tenth of the local manufacturing cost. My question is: given material costs by which every player – local and international – is governed, how can this be? Some of these cheapies are landing at such ludicrous prices that local manufacturers can never hope to compete.

We are not asking for protection from the government. We are suggesting that dumping is wrong and that it should be dealt with. The same holds true for illegal imports.

If we don’t concentrate on remaining competitive in our manufacturing processes we can expect further lay-offs. Worse still, local tyre producers could disappear.

Whilst I am not privy to the ins and outs of the textile industry, its demise should serve as a warning. Clearly, decisions that were taken ahead of its collapse proved short-sighted, particularly for a nation with unacceptably high levels of unemployment as it is.

How do you believe local manufacturers can begin to fight back?
We need to ask ourselves: is the entire manufacturing chain – from the raw materials stage right through to retail – efficient? Is our dealer network structure cost effective? More importantly, is it delivering value and meeting the consumers’ needs?

One of your recent articles alluded to the fact that the consumer could very well be absorbing the cost for our flashy shop images, evident throughout most of the retail stores across South Africa. Can manufacturers afford to sustain such expensive infrastructures, particularly when you consider the rapidly shrinking margins on low entry tyre sizes?

Are you looking to streamline your dealer network in any way?
Actually we are. We have decided to dispense with the ContiClub concept and stick with the ContiPartner brand. Where ContiClubs have been established, the stores will continue to flaunt an upmarket image by virtue of their location. We believe there is still room to stratify within the ContiPartner brand where the location demands it without compromising on service levels or incurring the additional expense of carrying two brands.

The exclusive adoption of the ContiPartner brand will also alleviate confusion in the marketplace.

Last year you launched your new range of truck tyres. How has the product been received?
Very well indeed. Investments made on the manufacturing side have improved overall quality and we have seen the results of this in our sales which are steadily rising. We set ambitious targets for ourselves, targets that have not only been met but exceeded.

Currently we are reviewing the overall package on offer to our customers and are also focusing on re-establishing our truck brand after a somewhat marked absence from the truck tyre sector.

Needles to say, the trucking sector provides many opportunities for manufacturers, particularly given an insufficient rail structure at this point in time and therefore our sole reliance on road freight.

What of your alliance with your parent company, Continental AG – how is that working out?
Currently there is a good mix of assistance on both sides, with both parties utilizing central resources and continuing to learn from each other via the inevitable process of globalization. I think the challenge for both entities lies in effectively accessing and sharing our collective knowledge.

What is the biggest challenge facing Continental Tyre SA?
To reiterate, keeping the local manufacturing operation alive.

Name some of your successes over the past 18 months.
I believe abilities and skills were already there. Perhaps where I’ve been instrumental is in harnessing talent and potential and giving it space to grow. The results have been encouraging, with staff turnover low and people rising to the challenge when required to take on extra work and added responsibility.

We have also paid attention to critical factors such as succession planning and employment equity, driven by a greater need and compulsion to contribute to the country’s broader needs.

How would you describe your management style?
I live by the adage ‘teach a person how to fish’, not catch the fish on his behalf. I don’t believe in solving peoples’ problems but in helping them arrive at their own solutions.

I promote the notion of delegating certain tasks to the experts and empowering people to reach their true potential. For this reason I strive to let them get on with their jobs, intervening only when the situation absolutely demands it.

What is the biggest lesson learnt in your position as MD of Continental Tyre SA, personally and professionally?
Patience (laughs). For me the challenge has been to remain true to myself despite my position which naturally conflicts with my inclination to fraternize.

I have also had to learn to ‘sell’ rather than ‘dictate’ my concepts and ideas to my colleagues, particularly as I endorse the notion of people feeling secure enough to challenge my decisions should the occasion call for it.

Lastly, I always strive to remember that as human beings, we are all equal. I might have more responsibility but that does not give me the right to treat people with anything but dignity.

The biggest lesson of all, is that I’m still learning. It’s a never-ending process.