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Published on September 5, 2005

Pneustone opens mothballed Conti plant

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Date Published September 5, 2005
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A Mexican investors' group has purchased a closed Continental A.G. tire manufacturing plant and put it back in business.

Llanti Systems recently restarted the facility that had sat idle since late 2001. The firm expects to reach a daily production of 7,000 tires by year-end.

Llanti, doing business as Pneustone S.A. de C.V., acquired the factory from Conti in January. The factory has no direct employees, instead establishing a subsidiary, Corporacion de Occidente, that provides the labor for the facility. The plant has more than 500 workers.

The Guadalajara plant closed in 2001. Conti blamed the shutdown-which cost 1,164 hourly and salaried workers their jobs-on the labor union at the factory, the Confederation of Mexican Workers. The company claimed the facility had operational losses and low capacity utilization.

For its part, Llanti Systems is calling its arrangement a ``new strategy to restart (the) plant's operations.'' Executive Vice President Jose Suarez said Llanti Systems will run the entire operation of the plant, including sales and management. Only in some key decisions, such as selling a fixed asset or asking for a loan, will the company need to get the workers' approval.

``Although there is no union in this cooperative company, we do have a labor contract that considers most people's concerns, including pay raises, and which stipulates internal regulations to hire or fire employees, along with all other general issues,'' Suarez said.

Workers also share the company's profits, he said.

Suarez said the factory has capacity for more production, but declined to forecast a long-term production estimate. The plant's acquisition was completed in January, but the company didn't receive the property until March because of certain parts of the agreement.

For now, Conti has been helping with technical assistance for the plant's opening, he said. The tire maker also produces a private brand, Pneustone, for the Mexican company in the U.S. Llanti Systems makes Pneustone for the Mexican market.

``As (of) today both companies are exploring various business opportunities,'' according to the executive. He said there is a possibility that some associate brands will be produced for Continental at the plant.

The facility produces passenger and light truck radial tires as well as bias truck and light truck tires.

The company plans to manufacture various private brand tires for independent tire dealers and other tire makers. In addition to Pneustone, the firm produces the Blackstone brand for the Mexican market.

Outside of Mexico, company officials said they are ``approaching'' the European and Central American regions, but no tires will be sold in the U.S. in the short term.