Continental Expands Tire Production in Low Cost Countries for NAFTA Market

Hannover, Germany-based Continental AG is building a new tire plant in Brazil while planning to expand its production basis in Malaysia together with its joint venture partner Sime Darby. “With this forward-looking decision, we are continuing to broaden our activities in high-growth markets as well as expanding our production at low cost locations,” according to Continental’s Executive Board Chairman, Manfred Wennemer.
Plans are to invest 150 million euros in the first phase, with investments for the total project totaling more than 250 million euros. By 2008, this will create an additional annual capacity of 7 million passenger tires and 700,000 tires for commercial vehicles. This increase will serve mainly to supply the NAFTA region, where the number of tires produced in low cost countries is to date still very low. With these measures, this share should increase initially to more than 30 percent. Wennemer pointed out that, in keeping with this strategy, the corporation is still looking hard for a cooperation partner in China. “We are of course also staying on top of things in China.”
“The new economical capacities are just what we need to turn our passenger tire business around in the NAFTA region and to attain profitable growth,” stressed Martien de Louw, Continental’s Executive Board Member responsible for Passenger Tires. “We assume that the market in the NAFTA region will grow by eleven percent to 382 million passenger tires by 2008. We are getting ready now to deal with this growth.”
Even before production gets started in the new plant in Camacari in the Brazilian state of Bahia at the end of 2005 or beginning of 2006, Continental Sime Tyre will start its manufacturing operations in Alor Star, Malaysia. At the same time, expansions are underway in Kuala Lumpur with the focus on tires for commercial vehicles.
“We are holding talks here with our joint venture partner, Sime Darby, and are confident that, together, we will continue to broaden our very successful business activities,” said Dr. Hans-Joachim Nikolin, Continental’s Executive Board Member responsible for Commercial Vehicle Tires. He announced that after completion of the passenger tire plant in Camacari, a plant for commercial vehicle tires will also be built there, with production starting at the end of 2006 or beginning of 2007. More than 1000 jobs will be created in Brazil and about 200 in Malaysia.
The Continental Corporation has a present worldwide workforce of 69,000.