At its meeting on August 23 the Supervisory Board of Continental AG decided upon the appointment of Dr. Karl-Thomas Neumann as new Executive Board Chairman, effective September 1. Neumann has been a member of the Continental Executive Board since October 2004 and is succeeding Manfred Wennemer, whose request to be granted early release from his mandate effective August 31, 2008, was previously accepted by the Supervisory Board.
After more than a month of talks and controversy, on August 21 Continental AG announced it has entered into what it calls a ‘far reaching investment agreement’ with Schaeffler KG, Mrs. Maria-Elisabeth Schaeffler and Mr. Georg F.W. Schaeffler. The agreed upon deal sees Schaeffler increase its offer to 75 euros per Conti share, however this “new chapter in its Corporate history”, to quote Continental, will be one without CEO Manfred Wennemer; Mr. Wennemer has asked the Conti supervisory board to release him from his responsibilities by August 31, 2008. The supervisory board has agreed to this request, noting great respect for Wennemer’s achievements. His successor will be appointed in the immediate future.
In order to focus more on core business Continental intends to sell its fuel supply business unit. As part of the company’s Powertrain Division, this business unit produces fuel transport and tank bleeding systems, and Conti reports that it is both profitable and a market leader. In spite of this, it must go: “As this business is not among the core activities of the division, which focuses on components for motors and powertrains, we have decided to sell it after an in-depth analysis,” explained Dr. Karl-Thomas Neumann, the Continental Board Member responsible for the Powertrain Division.
Dr. Neumann mentioned that a key element of Continental’s strategy is active portfolio policy: “This means that we always continually assess both the possible acquisition of companies as well as options for selling company units. We take into consideration the market position and size of a business, its sustainable profitability, its strategic positioning and how much the current unit counts towards the core business of the company,” he explained.
The Powertrain Division of Continental AG is to be restructured worldwide in an attempt to make the most of its production facilities within a two-year period and address production cost issues. According to Continental this restructuring programme is the result of a thorough analysis it conducted into the division’s strengths and weaknesses.
“We offer a broad range of products and we are convinced that they hold significant market potential that we will be able to fully exploit in the near future,” commented Continental Executive Board member Dr. Karl-Thomas Neumann. “But to achieve this we have to ensure that we are properly structured. We will undertake a global restructuring programme with the aim of optimising production within a period of around two years and achieving a much better balance between high-cost and low-cost locations.
Continental AG reports its new year has got off to “a very convincing start”, and adds that, contrary to stories appearing in the media, it sees no reason to reopen negotiations with Siemens over the VDO unit. Furthermore, the company holds a positive outlook for its 2008 targets. “We shall set forth our streak of success,” stressed CEO Manfred Wennemer on March 14. “In the first two months our sales and results far exceeded our forecasts and were well ahead of the previous year’s figures. We reaffirm our prognosis: Overall sales of more than 26.4 billion euros; a consolidated EBIT margin of 9.3 per cent before amortisation from the purchase price allocation and before integration and restructuring expenses. In addition we assign the very highest priority to cutting away at our debt. As planned, we shall apply our robust free cash flow to the reduction.”
Continental AG reports its new year has got off to “a very convincing start”, and adds that, contrary to stories appearing in the media, it sees no reason to reopen negotiations with Siemens over the VDO unit. Furthermore, the company holds a positive outlook for its 2008 targets. “We shall set forth our streak of success,” stressed CEO Manfred Wennemer on March 14. “In the first two months our sales and results far exceeded our forecasts and were well ahead of the previous year’s figures. We reaffirm our prognosis: Overall sales of more than 26.4 billion euros; a consolidated EBIT margin of 9.3 per cent before amortisation from the purchase price allocation and before integration and restructuring expenses. In addition we assign the very highest priority to cutting away at our debt. As planned, we shall apply our robust free cash flow to the reduction.”
Continental AG may be looking at renegotiating its 11.4 billion euro acquisition of the Siemens VDO unit. Reuters has reported that a “source close to the matter” gave the news agency this information on March 12.
Reuters quotes the source as saying “In the Powertrain division, there are significant problems” – apparent confirmation of an article published that day in the Hannoverschen Allgemeinen Zeitung newspaper. The source added that Conti “would have to negotiate with Siemens because Siemens did not sufficiently inform Continental before the acquisition.”
Following Continental’s acquisition of Siemens VDO, and the divisional reordering that followed, Dieter Rogge has been named as head of Continental’s new Powertrain Division which employs around 27,000 people. With more than 60 sites throughout the world, the Division is one of the three new automotive divisions within Continental, the international automotive supplier. Powertrain brings together innovative and efficient system solutions affecting every aspect of a vehicle’s drive train and is divided into the following business units: Gasoline Systems, Diesel Systems, Electronics, Transmission, Sensors, Hybrid Electric Vehicle, Turbochargers and Actuators, Motor Drives & Fuel Supply.
Continental has wasted no time getting down to business following the completion of the company’s acquisition of the Siemens VDO Automotive unit. Day one of the “new Continental” was December 5, and Continental Executive Board chairman Manfred Wennemer travelled to Regensburg in Germany’s south, where the unit has its headquarters, to meet with the company’s newest colleagues.
“We warmly welcome the employees from the former Siemens VDO Automotive AG. By consolidating forces, we will forge our Continental into one of the world’s foremost automotive suppliers,” said Mr. Wennemer in his address to the unit’s employees, just one day after the official conclusion of the 11.4 billion euro purchase. “Following exhaustive preparation we can now tackle the integration with a flying start.
“It will take us another two to three months, however, to make a series of key decisions,” he added. “This gives us enough time to thoroughly examine data that antitrust laws have so far barred us access to. This applies in particular to information concerning sales, earnings and the number of employees by product group and plant. In the final analysis, the plans required for the operative business and especially for production will form the basis for the generation of synergy effects, paving the way for the emergence of a better and more efficient corporation from two top-notch companies as well.”
On the basis of planning to date, Continental anticipates net synergy effects in the order of at least 170 million euros as of 2010. “From what we know at the moment, we would be disappointed if it remained at this conservatively estimated sum. The amount will presumably be higher. We will be able to provide more details in the next ten weeks,” stated Wennemer.
The number of divisions under the Continental AG umbrella has increased from four to six; three of the existing divisions, Passenger and Light Truck Tires, Commercial Vehicle Tires and ContiTech, remain unchanged by this reorganisation and remain the respective responsibilities of Dr. Hans-Joachim Nikolin, Manfred Wennemer and Gerhard Lerch. The company’s old Automotive division and the Siemens VDO Automotive unit together form three new divisions:
Chassis & Safety – headed by Dr. Ralf Cramer under the Board responsibility of Dr. Neumann, this division is positioned to provide technology solutions for brake and chassis systems, the networking of active and passive safety systems, and sensors. The division has more than 27,000 employees at over 65 locations worldwide and reports more than 5 billion euros in sales.
Powertrain – this division is headed by Dieter Rogge, also under Dr. Neumann’s Board responsibility, and offers products and system solutions for powertrain, engine management, injection technology, sensors, actuators and hybrid technology. According to Conti, the division lays claim to worldwide market and technology leadership in the area of economical and eco-friendly driving. More than 27,000 people are employed by the Powertrain division at approximately 70 locations worldwide, and the division generates more than 5 billion euros in sales.
Interior – the new Interior division, headed by Helmut Matschi under the Board responsibility of Manfred Wennemer, positions itself as a worldwide market and technology leader for information management with systems that provide a link between the vehicle and the driver and passengers, between different vehicles, and between the vehicle and the infrastructure in which it operates. The division generates more than 6 billion euros in sales and employs more than 33,000 people at approximately 70 global locations. “Viewing ourselves as information managers in vehicles, we intend to optimise the flow of information,” said Mr. Wennemer regarding the division. “We will develop new functions that establish a link with the vehicle surroundings and present information in a way that motorists can grasp intuitively.
Dr. Karl-Thomas Neumann, Executive Board member in charge of corporate-wide technological development and the new Chassis & Safety and Powertrain divisions, stressed that with its expanded global operations and stronger product portfolio, the new Continental will be able to greater profit from future key auto industry trends: “Our innovative force and core competence cover precisely those automotive industry megatrends that will clearly dominate the upcoming years – safety, sustainability and Information”.
“In the Chassis & Safety division, we intend to integrate high-quality components in the area of brake systems, sensors and chassis to form a safety concept – called ContiGuard – that will make for zero crashes and injuries in the future. We are likewise well placed with respect to “zero emissions”, as envisioned for the future. We have, for instance, set standards with precise and highly efficient piezo injection systems for diesel and gas engines, as well as with hybrid drive solutions or roll-resistance-optimised tyres. In the Powertrain division we are determined to live up to our motto “Experience passion-driven mobility” by offering innovative products and system solutions that make diesel- and gas-engine vehicles more economical, reliable, powerful and eco-friendly,” said Dr. Neumann.
Continental now counts itself amongst the top five automotive suppliers worldwide and, based on 2006 figures, generates annual global sales in excess of 25 billion euros. The corporation currently employs approximately 150,000 people at nearly 200 locations in 36 countries.
As of late 2008 Continental will begin sourcing engine and transmission control units for customers in the NAFTA region from a new facility in Costa Rica. On October 17 a groundbreaking ceremony was held for the new plant, situated near the capital San José. In attendance were Henner Cnyrim, head of electronics plants Continental Division Automotive Systems, Dr. Sami Krimi, future head of the Costa Rican plant and Mayoress of Alajuela Joyce Zurcher. A reception was then held by the President of Costa Rica, Oscar Arias Sánchez, and Minister of the Presidency, Rodrigo Arias Sánchez, along with customer representatives.
The US$61.5 million Conti invests in the facility will give them 16,000 square metres of production and office space that will house 350 employees, and the new plant will specifically manufacture control units and transmission systems for passenger cars built in the NAFTA region. By 2011 the company plans to expand the workforce to 550 and to increase the size of the plant.
Bridgestone Turanza EL42 tyres have been selected by Lexus as OE for North American models of the company’s all-new LS 600h L luxury hybrid sedan. The specific tyre fitted as one of the options to the world’s first full V8, all-wheel-drive hybrid vehicle is the all-season Turanza EL42 in size P245/45R19 98V, a tyre Bridgestone Firestone North America Tire believes will deliver the sleek styling, low noise and outstanding performance in dry and wet conditions prerequisite on a vehicle that has a US market starting price in excess of $100,000.
The 2008 Lexus LS 600h L powertrain combines a 5.0-litre V8 petrol engine with two powerful electric motors that reduce emissions by 70 per cent compared with a vehicle fitted with a conventional engine – earning it a Super Ultra-Low Emission Vehicle (SULEV) rating. “Bridgestone Firestone is proud to support vehicles that minimise fuel use and environmental impact,” said Michael Martini, BFNAT president, Consumer OE Tire Sales.
According to news published by French daily Les Echos, French automotive components manufacturer Valeo is conducting exclusive talks with German component maker Leoni regarding the potential sale of Valeo’s electrical wiring business.
The electrical wiring business unit generates annual sales of 545 million euros and employs 12,000 staff. The sale of this unit would reportedly enable Valeo place a greater focus upon its core businesses; comfort enhancement, driving assistance and powertrain efficiency.
In the month following being granted consent to acquire the VDO Automotive division from Siemens, Continental AG has busied itself becoming acquainted with the new workforce and sharing its vision of VDO’s future within the company. According to Conti executive board chairman Manfred Wennemer, his company is interested in ensuring the larger Continental that emerges from the purchase of VDO can fully appreciate what the component manufacturer has to offer, and integrate this into Conti’s existing structure.
Wennemer has travelled to VDO’s production sites, including its headquarters in the Bavarian city of Regensburg, and has used these visits as an opportunity to reassure VDO workers that the company they work for will maintain its own identity. When the integration of VDO is complete Continental’s automotive parts division will be reorganised into three units; security-related parts, powertrain components, and information and entertainment systems. Wennemer indicates that at least one of these divisions will have their headquarters in Regensburg, and no distinction will be made between VDO and Continental employees when making personnel decisions.
“The Continental system will not necessarily win,” Wennemer said. “What will win is the best system and the best man for the job.”
Having just been given the nod to proceed with the largest acquisition in its 136 year history, Continental AG is set to become one of the top five worldwide automotive suppliers. Following the July 25 granting of consent from the supervisory boards of both Continental and Siemens, the 11.4 billion euro purchase of the latter’s VDO Automotive division was approved subject to permission from antitrust authorities.
Based on 2006 figures, the combined annual sales of Continental and Siemens VDO Automotive AG will reach around 25 billion euros, and the resulting company will boast a global workforce of close to 140,000 employees. “Together Continental and Siemens VDO Automotive AG, two companies rich in tradition and endowed with an enormous performance capability, have the once-in-a-lifetime opportunity to forge a global frontrunner in the automotive supplier sector,” said Continental Executive Board chairman Manfred Wennemer. “By joining forces, pooling our innovative prowess and allying our leading positions worldwide in key market segments like safety, chassis, powertrain systems and telematics/infotainment, we are extremely well placed to take on the global competition and to profit from all mega-trends in our branch of industry.
On July 5 wheel and automotive parts manufacturer Hayes Lemmerz International announced the sale of Hayes Lemmerz International – Wabash, Inc., a wholly-owned subsidiary that operates its Wabash, Indiana facility, to Harvey Industries LLC, a privately held company based in the US. Under the terms of the agreement, Harvey Industries has acquired all assets of the subsidiary. The financial terms of the transaction remain undisclosed.
The Wabash facility employs about 325 employees and manufactures intake manifolds, cylinder heads, water pump housings, and cast iron exhaust manifolds. “This transaction will further enhance Hayes Lemmerz’ goal to strengthen our financial position and to focus on initiatives in select geographic regions that will improve the growth of our company,” said Curtis Clawson, Hayes Lemmerz president, CEO and chairman of the board. “At the same time, this transaction will provide the Wabash facility the opportunity to grow with Harvey Industries.”
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