Dear Prime Minister – Conti Asks Tanzania’s Govt. to Aid GTEA

Continental is reported to have requested the government of Tanzania take action to aid the moribund General Tyre East Africa (GTEA), in which the German tyre major holds a 26 per cent share. Furthermore, Conti is said to have informed Tanzania’s Prime Minister, Mr. Mizengo Pinda, that without assistance a complete closure of GTEA may be required by March 31, 2008.

An article that appeared in East African Business Week on March 10 indicates that, according to “reliable information”, Continental wrote to Mr. Pinda in mid-February, asking his government to honour the commitments agreed upon nine months earlier. The country’s sole tyre manufacturer suspended its 400 employees without pay towards the end of 2007, and is said to need at least US$10 million before production can resume. However, Mr. Said Nguba, press secretary to Mr. Pinda, told the business newspaper in early March that he had no knowledge of the letter. “I’m not in office and I’ve yet come across such information,” stated Nguba.

A severance of ties between Conti and GTEA would prove disastrous for the Tanzanian manufacturer – Continental owns the General Tyre brand name and provides GTEA with technical support and training. “If Continental pulls out that would be the end of the name and the machines would not be in use because they are patented,” said GTEA chief executive Deven Lohani, who has been instructed by Continental to continue negotiating further credit from the banks.

GTEA was established in 1969 as a joint venture between Tanzania’s government as General Tire in the US, and passed into Conti’s ownership during the acquisition of General Tire in 1987. The company – when finances allow –manufactures bias-ply tyres for light commercial vehicles, trucks and buses.