Expansions boost ContiTech's global hose business

KARBEN, Germany—ContiTech A.G. has been building its hose operation regularly during the last three years, focusing not only on expanding globally but also extending its range of energy related technologies.

Results thus far indicate that its growth plan is working.

Sales in 2013 jumped to $1.98 billion from $1.82 billion the previous year. That trend likely will continue in 2014, according to Matthias Schoenberg, head of ContiTech's Fluid Technology business unit.

Some of that growth was accomplished by adding or expanding plants.

ContiTech is building a factory in Macae, Brazil, that is expected to be completed by the end of 2014 or early 2015. And it recently added a facility in Kaluga, Russia. In 2013, new ContiTech plants went up in Subotica, Serbia; Dubai, United Arab Emigrates; and Cerkeskoy, Turkey.

It is expanding its hose factories in Somersworth, N.H., and Vac, Hungary, and the firm completed additions at its sites in Waltershausen, Germany; Ponta Gross, Brazil; and Carei, Romania, during the last two years.

ContiTech's new facility in Macae will produce hose for use in oil production and gas extraction. Production at the factory is slated to begin at the end of 2014, Schoenberg said. The plants in Dubai and Cerkeskoy also are producing hose for the oil and marine market, he said.

Adding those investments to others made in the NAFTA region and China, he said, the Karben-headquartered hose business has accelerated its growth in the segment.

“A similar development can be seen at our Air Induction Systems Unit, which mainly produces charged air-cooling lines,” Schoenberg noted. “With big investments into blow molding technology in Somersworth and Waltershausen, we are leading the trend toward lighter solutions, especially for our North American customers.

“To increase our expertise in this area, we bought two German companies—Inotec Innovative Technologie GmbH in Kohren-Sahlis and Praezisionstechnik Geithain GmbH in Geithain—in April 2014, which specialize in tooling and equipment for the 3-D blow molding process.”

Much of the firm's air conditioning growth was gained with customers in North America as well as with Renault Nissan, he said.

That necessitated a significant investment to double production capacity at the company's Ponta Gross factory. Earlier this year, ContiTech began producing air conditioning lines at its Kaluga facility.

A significant base for the air conditioning hose business was created in late 2012 when the company acquired Parker Hannifin's air conditioning assembly business. That helped to boost the firm's business in the NAFTA region, Schoenberg said.

Capacity is being added at the company's Trumann, Ark., factory for diesel particle filter lines, and in April 2013 it added a new production hall at the firm's Vac factory to focus on extruded plastic lines.

ContiTech is well represented throughout Europe, according to Schoenberg, and because of saturation there, its biggest gains on the hose side most recently have been made in the U.S. and emerging markets, especially in China and South America.

Like most of its customers, he said, ContiTech thinks more in global contexts, and as it planned expansions it opted to increase its global presence rather than focus on one region. “This also gives us access to new customers that we previously could not attract.

“Our share of non-German OEMs has increased significantly over the last few years and will continue to do so as all OEMs appreciate our worldwide presence in over 40 locations.”

ContiTech is involved with numerous new energy related technologies, Schoenberg said, “whether we talk about tidal, wave or wind energy or liquefied natural gas and similar projects. We see some growth potential with these innovations.”

Downsizing engines continues to be a trend, and he said ContiTech is a development partner to all major OEMs of both light and heavy vehicles and is profiting from all major global trends.

“Innovations and new developments are the motor of our business,” he said, in addition to the company's comprehensive material and process expertise.

He said the advantage of ContiTech's fluid operation lies in its global presence and its knowledge of both rubber and plastic products. The company's customers are looking for lighter but robust materials, “and the solution is often found in products combining rubber and plastics,” the executive said.

In the oil and marine segment, the firm has a global presence with manufacturing facilities in the U.S., Brazil, Europe and Dubai and sales offices in China and Singapore.

That footprint, Schoenberg said, and a deep understanding of fluid solutions to problems facing its oil and gas customers, gives the firm daily opportunities for new products and projects.