ContiTech continues transition at Ohio facility

FAIRLAWN, Ohio—More than a name, logo, signs and brand names have changed at the former Veyance Technologies Inc. central complex and technical center in Fairlawn.

When ContiTech A.G. officially turned it into its central North American headquarters at a ceremony July 29, a feeling of stability hung in the air, a big change from the uncertainty that seemed to prevail at the facility during the last five years.

Gone are the any references to Veyance and Goodyear Engineered Products brands. ContiTech has replaced Veyance; ContiTech, along with parent Continental A.G., are foremost on all signs; and the products, while still the same, now sport shortened versions of their old brand names or new Continental and ContiTech names. For instance, the automotive belts brand has been renamed Continental Elite.

As Jim Hill, ContiTech's recently named CEO of its NAFTA operations, addressed a gathering of employees before unveiling a new headquarters sign and logo in front of the two-building campus, it was apparent that he and the estimated work force of 180 at the site once again were part of a firm dedicated to manufacturing.

He admitted in an interview after the address that when ContiTech purchased Veyance from private equity firm Carlyle Group in January, there was some apprehension, as there usually is with any acquisition. That quickly was replaced by the realization that this was an opportunity for the firm to grow.

“We've gone through a lot of ups and downs, good times and tough times,” according to Hill, a 27-year veteran of Veyance and Goodyear Engineered Products. Becoming part of Continental and ContiTech creates some stability for employees, he said.

“The fact that it's a large international rubber company that does a lot of other things gives people the feeling the company has a good future long term, it's going to have a good strategic direction, and they can be part of that. I think it's a positive thing, and they look very favorably upon it.”

Goodyear sold Veyance to Carlyle in 2007. During the next seven years, Veyance experienced a lot of belt tightening and some growth. But Carlyle had a short-term view. Hill noted, however, that Carlyle did help the company improve.

“The private equity model is to buy a company, then add to it as quickly as possible, which they did with us, because we had a series of acquisitions within the first couple of years,” he said. “Then they worked to turn over their portfolio. Ours took a little bit longer to find the right buyer, but I think we did.”

When ContiTech closed on its purchase of Veyance in January, it was a welcome and a positive change, Hill said. Employees “embrace it, and they want to be part of a process like that. It's great to be part of a strategic company and begin to look long term again and plan long term. In our previous life, we had gone year to year, but this is more about, "What do we want to be when we grow up tomorrow?'

“To become integrated in that process is refreshing for all of us and kind of gets our creative thought processes going again.”

One principle ContiTech brought fourth, he said, is that the acquisition was aimed at growth and not consolidation.

Every capable person at Veyance was offered a job within ContiTech—”maybe a slightly different position with slightly expanded responsibilities”—and virtually everyone has taken the firm up on the opportunities, he said.

Hill acknowledged the transition to ContiTech is not complete—but there's a lot involved, and things are coming together relatively quickly. He noted there is a lot of contact with ContiTech's headquarters in Hanover, Germany.

For ContiTech, the acquisition of Veyance should pay off in a number of different ways. The most apparent is what it will do for the firm in the NAFTA region where before the purchase, the firm did not have a high profile.

It did not have a full-blown headquarters in the region previously. It had a handful of small offices scattered around the U.S.

But with the business it acquired, Hill said, ContiTech now has a large central hub with a research and development center in Fairlawn. Many of the functions ContiTech would need in order to grow in a region are already at the Fairlawn complex, he added, so it made sense to keep it and stay in Northeast Ohio.

It also picked up numerous plants spread across the U.S., Canada and Mexico, along with several facilities overseas.

“Of all the regions in the world with the largest potential, North America was one where ContiTech was probably underrepresented from an engineered products standpoint,” Hill said. “Then, with one stroke of the pen, they became one of the leaders, if not the leader, in North America.”

For ContiTech North America, the acquisition opens the door for greater growth at its plants in North America. “ContiTech has a saying that they want to be in the market for the market,” he said. “That means, from a sales standpoint, they want to have their sales people here but they also want to manufacture and distribute the products in the market.

“They will export from one country to another when required, but if they're in the market, they want to be in the market for the market and take care of it.”

He said he already has been in on some discussions dealing with the possibility of additional capital investments at two plants in the NAFTA region, including Mexico and Canada, although he did not specify which factories were under consideration.

ContiTech North America has launched a massive “more is here” campaign over the last month, Hill said, and it's following that up with another advertising campaign to advertise the change to the Continental ContiTech brand.

Getting the word out to distributors and some larger end users has been easier because its field sales organization calls on them directly. Reaching the next level of the supply chain—its customers' customers—has been more difficult, and another ad campaign is in the works. “We'll continue to advertise the brand change on behalf of our distribution network,” he said.

Like any business, ContiTech North America has a larger share in some markets than others. Hill estimated that, generally speaking, Veyance was in one of the two top spots in virtually every segment it serves before becoming part of ContiTech. Since then, he figures, it has been strengthened further.

But there are some segments, such as hydraulics, where it doesn't have a strong presence. However, its parent company is a significant player in that market. “So there's an opportunity for us to grow in a segment like that,” he said.

In addition, there are products Conti-Tech makes but are not made by the North American branch. “Now that we're part of ContiTech, we can have access to those products.”

That makes North America a high growth region. “There certainly are opportunities for us to grow here in every segment of our business, in some more than others,” Hill said.