Hannover-based Continental AG is a leading automotive supplier and – according to the company – is “the choice of leading car manufacturers, offering award-winning tyres that deliver responsive braking in all weather conditions.”
Continental AG share fell 2.4 per cent today after a Reuters report suggested Conti’s banks oppose a the reverse takeover plan of current owner Schaeffler discussed in the press. According to the news, the biggest problem for the banks is the “significant increase in debt and therefore higher risks” for lending banks. Meanwhile Financial Times Deutschland reported that Continental’s banks are planning to set up a steering committee to represent their interests.
North Carolina’s Pineville Tire & Service Center has changed its named to Carolina Tire & Service Center. In addition, the dealer has added Continental Tire North America as its “preferred tyre vendor.”
Carolina Tire is owned by XL Tire Inc., owned and managed by president and CEOP Jim Seidel, a business that also includes online tyre sales. XL Tire acquired Pineville Tire in late 2008. The Pineville location covers 7,000 square feet and has 13 bays.
“With the growth of population in South Charlotte, the South Carolina border as well as having the new LYNX train nearby, we no longer just service the Pineville area”, said Seidel. “Sales have increased steadily since our acquisition and are in step with our business plans. With our plan on track, we are now searching for another location in the Carolinas.” (Tire Review/Akron)
Negotiations between Continental AG’s French and German management and representatives of the French government and the CGT trade union have, reports Conti, “made a bit of headway.” The respective parties met in Paris on Tuesday May 26 to discuss solutions for the company’s Clairoix facility, and further talks are scheduled for later in the week.
“We entered into a detailed discussion of the offer presented last week and argued for an adequate overall solution that takes into account seniority at the company and further training measures,” remarked Dr. Thomas Winkelmann, who represents Continental’s German management in his role as HR manager for replacement market passenger car tyres in Europe and Africa. “So far, union representatives have concentrated on uniform one-off severance pay for all employees affected. In the next round of negotiations we intend to talk over a detailed package solution.”
Inside sources recently told reporters that Schaeffler Group is considering unravelling its hostile takeover of Continental AG – offering itself up for reverse takeover by Conti. The automotive parts takeover-predator now finds itself pushed into the role of prey as it struggles to manage debts of 11 billion euros. As a result of the potential corporate role reversal, Continental could find itself well and truly back in the driving seat – but will the company be able to execute this move and at the same time exercise some poetic justice?
There is no question that Schaeffler desperately needs to save money. In the first quarter of 2009, the company’s Automotive division recorded a downturn of 33 per cent compared to the previous year, which is now said to have “stabilized” at 25 per cent below last year, while its Industrial division is down around 40 per cent. However, lost sales don’t just mean reduced income. With output not expected to return to 2008 levels for another four years, the company has announced that it has to cut German labour costs by 250 million euros (the equivalent of 4500 jobs). Schaeffler has already cut 5,000 jobs in other countries, but redundancies at home make the automotive supplier very unpopular with the only people who are now realistically likely to help – the state and federal governments.
In the wake of Goodyear announced closure of its Amiens, France plant. Financial analysts have highlighted the ‘positive’ effect this will have on the tyre manufacturer’s “price discipline.” Amien has an annual capacity of approximately 6 million units, and its closure forms part of a Goodyear’s 15-25 million unit capacity reduction plan announced. When you factor in that the Amiens plant has between 800 and 1200 employees, the closure could result in cost savings of around $50 million, according to Deutsche Bank, with $700 million of gross cost savings expected this year.
Goodyear’s announcement follows a number of other capacity closures across Europe including: Continental closing its 8 million unit capacity PCR plant in Clairoix France; Pirelli closing its 4 million unit Maresa Spain factory, Michelin reducing its capacity in France, Italy and Spain by 14 million units. In the US capacity cuts have been even more stark with Cooper reducing capacity by 10 million units in Albany, GA; Michelin cutting 4 million units in Opelika; and Bridgestone eliminating 9 million units in Nashville. This all equates to around 40 million units of capacity reduction in the NAFTA region. And as a result of the supply demand balance, this is likely to “support price discipline” say the analysts.
Kwik-Fits German business Pit-Stop Autoservice is for sale, according to a report on Tyrepress.com’s German sister website Reifenpresse.de. The Pit-Stop chain (which comprises of about 410 outlets in Germany) reportedly has an average turnover of around 300,000 euros per branch and not in the best shape. Certain parties are said to have stated their interest in a purchase, however, so far the bids have only been described as ‘disillusioning.’
The Schaeffler Group and Germany’s IG Metall trade union have reached an agreement regarding employment security. The agreement, signed by IG Metall first chairman Berthold Huber and Schaeffler chief executive Jürgen Geißinger, represents the first practical result of the future agreement between the two parties outlined on February 23, 2009.
According to the terms of the agreement, the threat of redundancies occurring before June 30, 2010 has been eliminated on the proviso that a jointly agreed upon package of staff cost reduction measures are reached. Due to the impact of the economic crisis and its resultant diminished orders and sales, the Schaeffler Group says it must lower staff costs by approximately 250 million euros.
Continental has claimed a world first with the release of its truck tyre division’s “ContiCostCalculator”. This software employs a DEKRA-certified database and enables customers to directly compare the purchase and operating costs of commercial vehicle tyres amongst all main tyre brands. The key aim of the ContiCostCalculator, the company notes, is to help calculate a commercial vehicle’s running costs and show ways to reduce them.
The ContiCostCalculator works out the ideal choice of tyre using the customer’s individual usage figures. The cost-saving potential compared with similar tyre products is calculated and the improvement in economy is shown. The application not only takes the kilometre costs and the fuel consumption into account for the overall calculation, it also covers additional income from the increased payload that a lower tyre weight makes possible.
Continental Tire North America has released a new online training programme it says responds to the training and technical information needs of commercial vehicle tyre dealers. Called “Engage360 Untamed Innovation”, the programme is available in the commercial vehicle section of the company’s interactive training website for tyre dealers. According to Engage360 training manager Amy Spears, Engage360 Untamed Innovation allows dealership personnel to learn the basics about the construction of Continental premium commercial tyres, review product technical information and become certified as a Continental Commercial Tire Specialist.
Continental Industrial Tire, a division of Continental Tire North America, named Equipment Depot, located in Irving, Texas, as the 2008 Dealer of the Year. Ed Fritz, Equipment Depot executive vice president, received the award at the Material Handling Equipment Dealer Association Convention, held at the JW Marriott Desert Spring Resort in Palm Desert, California, on 2-6 May.
In its first year as a Continental Industrial distributor, Equipment Depot became Continental’s largest aftermarket distributor in North America, according to the tyre-maker. Joe Pauli, Continental’s US BUIT market manager, presented the award. “Equipment Depot has embraced the concept that industrial tires are the fastest wearing part on today’s forklifts,” said Phil Lannon, Continental’s U.S. Business Unit Industrial Tire sales manager. “We are pleased to award them the 2008 Dealer of the Year and consider them one of our most valuable aftermarket distributors.” (Tire Review/Akron)
It appears the tables have turned for Continental and Schaeffler. According to Reuters, sources with “knowledge of the matter” report Schaeffler is considering a plan to sell a large piece of its business to Conti in order to address its sizable debt. The ball bearing manufacturer is struggling with debts of close to 11 billion euros and has announced plans to reduce annual labour costs by 250 million euros – a sum equivalent to the laying off of 4,500 employees.
While Continental and the German IG BCE union arrived at a compromise regarding the company’s Hanover-Stöcken truck tyre factory, Germany’s Bild-Zeitung reports the decision to suspend production has far from won the universal admiration of employees. The paper records “indifference, anger and disappointment” amongst the affected employees – close to 430 of whom will be let go by next year at the latest.
“We have been taken for a ride,” one employee was quoted as saying. “As ‘little people’ we can not at all appreciate what this compromise brings.” Another said: “Unions and works councils are so weak, we feel betrayed. I have worked my fingers to the bone for 20 years – all for nothing.”
According to Marangoni, the partnership agreement it signed last year with Continental, involving the launch of the new range of ContiTread precured tread strips, is now fully operational. The agreement with the Marangoni Group allows resellers of Continental truck tyres, who already provide, or are interested in providing a cold retreading service, to use original ContiTread patterns manufactured at Marangoni’s Ellerbrock factory in Germany and take advantage of the technical and logistic support offered by the Italian group’s European platform. The agreement also contributes to the Continental Group “ContiLifeCycle” project in markets where the ContiRe program has not yet been established, or where a cold-retread product is also required.
Discussions on the EU Commission’s plans to introduce a tyre label continue, and Conti claims that experts are still sceptical about the problems involved. The manufacturer has also voiced its own concerns, highlighting some potential issues that could make it difficult for consumers to understand the label.
The manufacturer notes it already has tyres in its portfolio that easily meet the proposed high threshold values, however Conti says it still recognises a distinct need to clarify what will be implemented in terms of threshold values and certification, and points to a particular need to ensure the label signage contains clear graphics. All suggested designs to date, the company adds, have been hard for the consumer to understand, especially those indicating braking distance on wet roads. Continental comments that this particular graphic is “hardly recognisable as such”. A further Conti concern is that so far no agreement has been reached on a precise and meaningful measuring process for braking characteristics.
Michelin has once again signalled its interest in rival Continental’s tyre division, reports Reuters Germany. Michelin Group managing partner Michel Rollier is quoted as commenting at the company’s May 15 Annual Shareholders Meeting “we won’t remain on the sidelines during discussions about Continental.” He added that Michelin was not currently engaged in any talks with the German company.
Conti has declined to comment on the matter, and Reuters quotes a person familiar with the situation as saying “nobody is working towards a sale of the tyre business.”
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