Continental to stop passenger tyre production, lay off over 300, at Stöcken

By Liz White, ERJ staff

Hanover, Germany-Continental AG has announced that it will be reducing staff by roughly 10 percent at its Hanover-Stöcken plant by the end of 2006 and will stop making passenger car tyres at the plant. The layoffs affect 320 employees in tyre production, the German tyre maker said in a 22 Nov statement.

Referring to lower than expected growth rates, Conti chairman Manfred Wennemer said, "This was not an easy decision for us to take and was preceded by meticulous analysis of various courses of action."

"Unexpectedly weak growth in passenger tyre sales … left us no other choice in the end but to schedule discontinuation of passenger tyre production in Stöcken" from 31 Dec 2006, he added.

Conti will also cut back the number of shifts at other plants to cut costs, continued Wennemer.

Wennemer stressed Continental's fundamental strategy-to deal with weaker markets in cost-intensive sectors by filling capacity at low-cost plants and cutting capacity at high-cost plants.

Continental produces over 105 million passenger tyres a year, mostly at factories with an annual capacity of at least eight million units. Hanover-Stöcken, with annual production of about 1.3 million passenger tyres, is Continental's smallest and also its most expensive passenger tyre plant overall, the company said.

This plan rescinds this year's plant agreement on longer working hours at equal pay for this sector of production. Via this agreement,"management had envisioned a much stronger market development and seen in this a possibility to give the plant a further chance," said Karlheinz Evertz, who oversees worldwide management of passenger tyre production.

But, he added, "Regretfully, in just a short time it became evident that this assessment was not sustainable. Had the market development been foreseeable at an earlier point in time, the agreement would not, of course, have been concluded," he stressed.