(From the May 30, 2011, issue of Rubber & Plastics News)
AKRON—Unless you win the lottery or some TV game show, it usually takes time and much work to achieve success. Continental A.G.'s experience in North America is an example of that.
Way back in 1987, during the fire sale of U.S.-based tire manufacturers to foreign competitors, Germany's Continental joined the contest by acquiring one of the legendary Akron companies, General Tire. Conti had to buy something in that era just to keep up, a time when its rivals bought Firestone, the B.F. Goodrich-Uniroyal tire business, Armstrong and Mohawk.
Conti had the required gala “changing of the sign” event at General's Akron headquarters, and its management said all the typical, positive things about synergy, similar values, technology sharing, etc.
The wake-up call for Conti came quickly.
Conti got its entrance into the Detroit original equipment business, and instant access into markets throughout the U.S., Canada and, indeed, the world. It also got a stable of tire plants from a bygone era, typically old, inefficient structures, and a mostly union work force. General in those days tried to be a “mini-Goodyear,” making every kind of tire imaginable for every market.
General, needless to say, was not the low-cost producer.
Conti set out trying to turn around its new possession. Like Pirelli's early experience after it bought Armstrong, it was pretty much a disaster; years of financial losses, plant closings, layoffs, a scarred reputation.
It took decades and some brutal decisions—essentially discarding its union-organized work force and factories—but Conti is firmly back in business in the Americas.
The company has returned to profit on the continent. It has pumped money into its remaining tire factory in Mount Vernon, Ill., operates a facility in Mexico, and now is looking for a site for a brand new plant in the U.S.
Conti has gained tire market share in the country. Meanwhile, the company's non-tire business, ContiTech, has grown rapidly in North America.
It took time, fits and starts, and some tough calls, but Conti's long-ago purchase of General looks much better now than it once did.