Conti’s “hard conditions” too much for General Tyre East Africa

Tanzanian newspaper The Guardian reports its country’s government plans to hand over General Tyre East Africa to Tanzania’s National Development Corporation (NDC) in response to what it calls the “hard conditions” imposed by shareholder Continental AG. The country’s Industry and Trade Minister, Dr. Cyril Chami, is reported as saying talks with Continental, who holds a 24 per cent share in General Tyre East Africa, failed to reach a suitable conclusion. He attributes this lack of success to conditions Continental wishes to impose, such as restricting General Tyre’s activities to its domestic market and just two export destinations – Uganda and Burundi – and that the Tanzanian tyre maker should pay back its outstanding US$3.321 debt to Conti. Continental’s alleged lack of investment plans for General Tyre is another given factor.

“Following these conditions and taking into account that the industry is important for the national economy the government is planning to hand the industry over to NDC so that it can look for a strategic investor to revamp the industry by using raw materials produced within the country,” said Chami.

General Tyre East Africa, which hasn’t produced a single tyre since September 2007, is 76 per cent owned by the Tanzanian government. The company’s current debts are in the vicinity of $20 million, and despite the Tanzanian government’s bold talk of replacing Conti as a partner and resuming production scepticism over the tyre maker’s future remains. In a previous article, published in April 2011, The Guardian reported analysts’ appraisals of the General Tyre facility in Arusha. They stated the machinery installed in the plant was outdated and the factory still utilised outdated tyre manufacturing technologies that had failed to keep up with changing vehicle designs.