Conti raises stake in Ecuadorian tyre maker

Cuenca, Ecuador -- Continental Tire North American Inc. has increased its ownership of Compania Ecuatoriana del Caucho S.A. (Erco) to a majority stake and plans to use the company as a base to expand its presence throughout the Andean region.

Conti did not say what its stake in Erco is or what it paid to raise it.

Prior to this, Conti owned a 42-percent share of the company, originally established in 1962 as a subsidiary of General Tire & Rubber Co. Continental A.G inherited the ownership in 1987 with its purchase of General Tire.

As a Conti affiliate, Erco sells Continental-, General- and Barum-brand tyres in Ecuador and throughout the Andean region, which includes Bolivia, Chile, Columbia, Peru and Venezuela.

Besides a tyre plant in Cuenca, Erco operates a rubber plantation and a retreading plant in Ecuador and a number of retail chains throughout the region.

Matthias Schoenberg, CEO of Conti's Americas tyre businesses, said Continental will enable Erco to improve its product portfolio, as well as its visibility throughout the region, and Continental can expand our business and fully utilise the opportunities in these growth markets, through a complete footprint in the Andean region.

Erco has experienced 15- to 20-percent growth annually for the past four years, Conti said without disclosing the firm's sales. Erco has 1,600 employees in its businesses, which include 120 retail stores throughout the region.

Conti puts Erco's share of the Ecuadorian market at about 45 percent and 11 percent for the Andean countries overall.

Increasing its stake in Erco fits into Conti's strategy for the Americas, Schoenberg said. Last summer it opened a sales office in Argentina. Conti manages its Latin American operations, except for Mexico and the Andean Region, out of its operations in São Paulo, Brazil.

Erco recently added capacity for radial truck tyres at its plant in Cuenca in a $15 million investment. It also makes passenger and light truck tyres there.

From Rubber & Plastics News (A Crain publication)