CTNA now produces a third of its parent company’s total passenger and commercial tires, Dan Harvey reports.
Continental AG, a leading international automotive industry supplier, is making deep and well-defined tracks in the American markets through its subsidiary, Continental Tires North America (CTNA).
Based in Charlotte, N.C., CTNA is the vehicle upon which the Germany-based parent company extended its tire production across the Atlantic. Continental AG demonstrates strong commitment in this direction. In the past year, CTNA expanded its production of commercial vehicle tires for its United States market via a $78 million investment into a tire-manufacturing site located in Mount Vernon, Ill. Provided by the parent company, this sizeable investment will help CTNA increase local production of commercial vehicle tires and help it better serve its U.S. markets. The physical expansion should be completed by the end of 2008. By then, Continental AG anticipates that 90 percent of the tires sold by CTNA in the United States will come out of U.S. production facilities.
MEETING A GROWING DEMAND
Expansion of U.S. manufacturing capabilities addresses two major issues. First, it is designed to meet the growing demand of Continental AG products in North America. Second, it will free up the capacity at other global regional sites, especially in Europe and Asia, where, up to this point, output has partially covered the needs of the U.S. market.
Continental AG’s two tire divisions – passenger and light truck tires and commercial vehicle tires – had previously designated an investment ranging between $70-$100 million for the Mount Vernon facility. The additional $78 million will bring to Mount Vernon more than $160 million, indicates CTNA Chief Executive Officer Matthias Schönberg. “We are experiencing strong growth in the North American market, particularly with the new product lines we have launched, and to support the demand for our new tires, the company decided to invest heavily into the Mount Vernon facility,” he says.
CTNA’s parent company, the Hanover, Germany-based Continental AG, is a leading supplier of brake systems, chassis components, vehicle electronics, tires and technical elastomers. In 2002, the company, which has an 87,000-plus global workforce – realized sales of $20.2 billion. As far as tires, it generates product for cars, light- and heavy duty-trucks, motor homes, SUVs, and agricultural and industrial vehicles, such as bulldozers and loaders.
Established in 1871, Continental grew to become Europe’s second largest automotive supplier (it ranks fourth in the world) and has demonstrated extensive expertise in rubber, tire and brake technology, driving dynamics control, electronics, sensor systems, and telematics. Its employees work in production facilities, research centers and test tracks in 37 countries.
The company divided itself into four divisions: automotive systems, passenger and light truck tires, commercial vehicle tires and ContiTech. Continental’s passenger and light truck tire division develops and manufactures tires for compact, medium-size and full-size cars, SUVs and light trucks, vans and recreational vehicles. It is the top tire producer in Germany and the second-top producer in Europe. In its 21 international plants, the company produces more than 90 million passenger car tires and more than six million commercial vehicle and two-wheel tires each year.
WHEELS ACROSS THE AMERICAS
With approximately 6,500 employees, the CTNA subsidiary has evolved into a major North and South American supplier to the OEM and replacement tire markets, selling products under the Continental, General Tire, Euzkadi, and Semperit brand names. It also sells tires under private brand names.
CTNA, formerly Continental General Tire, got to where it is today by acquiring General Tire in 1987 and TEVES in 1998. The General Tire acquisition gained Continental AG entrance into the North American tire industry. “At the time of the purchase, we were located in Akron, Ohio, but then, in 1998, we relocated to Charlotte,” informs Schönberg. “Since then, we have expanded our marketing footprint, and we’re now managing North and South American markets out of our North Carolina headquarters for the Continental AG tire business.”
CTNA operates four North American tire-manufacturing plants. Along with the North Carolina and Illinois sites, it has facilities in Bryan, Ohio and San Luis Potosi, Mexico. “We produce all kinds of tires, but we have been very strong in tires for SUVs as well as light truck tires,” reports Schönberg. “Also, our tire products encompass a complete range, with all-season tires and summer and winter tires.”
These manufacturing plants produce one-third of the parent company’s total passenger and commercial tires. Percentage-wise, North American sales break down into passenger, original equipment (25 percent); passenger, replacement business (34 percent); private brands (5 percent), truck tires (29 percent), farm and earthmover tires (5 percent) and others (2 percent).
CTNA supplies passenger car tires to OEM customers that include BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota and Volkswagen. Commercial vehicle tires are delivered to customers such as Caterpillar, John Deere, Freightliner, Mack and Volvo.
MEETING CUSTOMER NEEDS
As a major link to the German-based Continental AG, CTNA offers several key product differentiators to its customers. “We grew up with the German auto industry and, as such, we have based our tire manufacturing on performance and safety,” says Schönberg. “In addition, our products are eco-friendly.”
CTNA’s international background proves very beneficial to its customers. “In America, we’re able to understand the products they need,” says Schönberg. “We can apply our German engineering background and know-how toward increasing performance and safety, as well as developing eco-friendly products. That makes us unique.”
In the North American automotive industry, among both the OEMs and the consumers, there is increased awareness as far as safety regulations, Schönberg explains. “Consumers are more aware of the importance of having a safe car and, in turn, having a car updated with the most modern safety products,” he says. “They are also becoming more conscious of environmental issues. They want to respect the environment and are much more concerned about reducing fuel consumption.”
CTNA products meet these concerns, he indicates: “Our tires are optimized for reduced rolling resistance, which goes toward reduced fuel consumption and, in turn, reduced CO2 emissions. Those are the kinds of trends we continually respond to in our research and development activities.
CTNA’s current and future trends not only involve the huge investment in the Mount Vernon plant, but investments in its Mexican and Brazilian facilities as well. “Basically, we’re looking to meet the strong demand that we have found for our products,” says Schönberg. “In the past 18 months, we have revitalized our General Tire brand, and we are going to launch new products in the light-truck area, where the elements of safety and rolling resistance, as well as the demand for more fuel-efficient tires, have become more relevant, according to consumer demands.”
On both sides of the Atlantic, as well as throughout the rest of the world, Continental AG and CTNA seek to meet the changing needs of both consumers and automobile manufacturers. To this end, they have developed a broad product range appropriate to a wide range of applications and environmental conditions. The companies’ high rankings demonstrate their success in meeting these goals.