HANOVER, Germany (April 3, 2009)—Continental A.G. and its largest shareholder and industrial partner Schaeffler Group have begun to cooperate on purchasing in the hope of reducing costs in this area by more than $500 million over the next three years.
Conti and Schaeffler have combined annual purchases of goods and services of nearly $27 billion, the firms said, of which about $9 billion is in areas where the firms have common needs, especially in steel and other component supplies.
Karl-Thomas Neumann, chairman of Conti's executive board, said this will enable the firm to purchase the most advanced technology with maximum quality from the best suppliers.
Schaeffler's annual purchasing volume of as much as 1 million metric tons of steel brings it direct access to steel producers, a high level of competence in this segment and good purchasing conditions, the firms said.
Continental's strength lies in the purchase of mechanical and electronic components, and the firms said joint access to the partner's purchasing expertise makes it possible for them to benefit from the improved purchasing conditions.
One goal of the pact will be to concentrate the supplier base, the firms said, perhaps halving the number of materials suppliers to 2,800. Another goal will be to achieve cost advantages by exchanging technology expertise and establishing value-added supply chains in the key vehicle manufacturing regions of Western and Eastern Europe, North and Central America, Asia and Brazil.
In addition to the purchasing volume for commodities and components, the firms said they lay out more than $5 billion annually in investments and nonmanufacturing materials, including logistics services, energy, office materials, IT hardware, telephone, travel and marketing.
Conti and Schaeffler hope to achieve savings here as well as joint purchasing that can result in higher volume and accordingly improved conditions.