Conti adds detail to Malaysian expansion

Kuala Lumpur -- Continental-Sime Tyre Sdn Bhd has confirmed its plans to expand two factories in Malaysia, and added more details. Conti-Sime chief executive officer Dieter Saar confirmed most of the details in the Business Times story (see link below), but added that the announcement marks the elevation of the Malaysian factories to Continental's global manufacturing network.

Saar said that some of the export figures given in the Business Times story were incorrect, and added that Conti-Sime would now be exporting much more, but the majority of exports would be to other Conti subsidiaries, as the Malaysian operations became more fully integrated into Conti's international manufacturing and logistics systems.

Saar said Continental has been steadily improving the quality and work practices at the factories to meet Continental's international standards, and the new investments recognise the achievement of the workers and management in meeting those standards.

He added that the factory in Alor Star is being expanded in capacity but more importantly, the modernisation goes through the whole plant, with older technology being replaced with modern Continental systems. The factory will get new mixers, Continental building machines, segmented moulds and presses and start making compounds and tyres using silica fillers for low rolling resistance tyres.

Saar added that the company recently announced a new tyre in the Sime brand using this modern technology. That tyre is not only S- and T- rated, but is also available in higher performance ratings, he explained. These tyres, he said, use the same internal constructions as other Continental brands sold in international markets.

Saar said that the new capacity will include light truck tyres for SUVs and pickup trucks for the first time in Alor Star. In 2006, he added, the factory will make 5 million tyres, of which 20 percent will be in the new light truck sizes. He added that the market for SUVs and pick-up trucks will continue to grow in Malaysia, Thailand and other south-east Asian nations, irrespective of increases in fuel prices.

Initially these tyres are aimed at replacement markets, said Saar, adding that experience gained will lead to improvements in quality, which he expected to lead to OE contracts in the future.

The factory in Petaling Jaya is also being modernised. In the past, said Saar, it was a true multi-purpose factory, making everything from two-wheeler tyres to OTR construction tyres. The investments will bring in radial truck tyres for the first time, and the factory will continue to make OTR tyres. These large tyres currently make up 30 percent of output. Following the modernisation and expansion, OTR tyres will continue to be important for the PJ factory, and the percentage of OTR tyres is likely to remain at the same 30 percent level, said Saar.

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Business Times story (Malaysia)