Continental to close Clairoix and Hannover plants

ERJ staff report (RD)

Hanover, Germany - Continental AG plans to close two of its tyre manufacturing plants to bring production in line with lower demand. Conti's Hanover plant will cease all tyre production as of 31 Dec, 2009, affecting around 780 jobs. Production at its Puchov plant in Slovakia will be reduced by 20 percent, in total reducing production throughout Europe by 27 percent, the company said 11 March.

The company's plant in Clairoix, France, is planned to close, as it has the highest production costs of any car passenger tyre factory in Europe, the company said. Continental said production would be reduced in two steps and would not be completely discontinued before 31 March, 2010. The closure will remove 8 million units of passenger and 1.4 million units of truck tire capacity annually. The Clairoix plant employs 1120 staff.

Continental expects its tyre plants in Europe will fall short of full capacity by 15 million passenger car tyres, and around 1.7 million commercial vehicle tyres, in 2009.

Dr, Hans-Joachim Nikolin, Continental executive board member in charge of tyre division, said that the commercial vehicle OE equipment tyre business declined by 20 percent in Europe in Q4 2008, falling further in the first two months of 2009. Nikolin also said that the European commercial vehicle tyre replacement market and OE business declined by 15 percent and 20 percent respectively in Q4 2008, with the latter falling by more than 30 percent in the first two months of 2009.

“Since the downturn set in last fall, we have managed to avoid taking trenchant measures by resorting to other instruments at our disposal - production flexibility and the reduction of surpluses on working time accounts, longer plant vacations, the capping of contracts for temporary workers and shorter working hours for core staff,” said Nikoli. “Unfortunately, in the face of a stubborn slump in demand of this great magnitude, the short-term measures at our disposal are no longer sufficient,” he added.

“We have studied various options and concluded that the competitiveness of the tyre divisions can be maintained only by closing the two plants with the highest costs - and these are the passenger tyre plant in Clairoix and the commercial vehicle tyre plant in Hanover,” says Dr. Nikolin. “It has not been easy for us to present these plans to those concerned. Regrettably, there is no alternative. It goes without saying that we shall do everything to provide the employees affected far-reaching assistance,” he concluded.

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Press release from Continental AG