ContiTech hose exec happy with transition

FAIRLAWN, Ohio—From the perspective of the hose business, the transition from the former Veyance Technologies Inc. into the ContiTech A.G. business of Germany's Continental A.G. has gone seamless.

The combination of products, the integration of two staffs and the acceptance by customers of the new organization and brand name have gone smoothly since the deal was completed early this year, according to Guy Enta, director of the America's Industry hose unit for ContiTech.

“We are one company, one family, and we are combining the strengths of the two entities,” he said.

The acquisition brought together two firms that had strengths in different product lines in industry hose, which consists of industrial and hydraulic hose lines and related products. ContiTech was by far the stronger of the two in Europe, particularly Germany, while Veyance was much more dominant in North America.

“There's a lot of technology between the two companies we'll be able to share with others,” Enta said. “From the industrial hose standpoint, it really was two companies with different strong footprints. So there was not a lot we had to amalgamate. It's more expansion than rationalization.”

In addition, while both had comprehensive lines to target such market segments as petroleum dispensing, chemicals, air and multipurpose, wood products and others, ContiTech products mostly were engineered to European standards, which can be different than North American ones, he said. So ContiTech may have a higher working pressure in one line, while Veyance may have been more robust in another.

“Even though we're attacking the same markets, we're doing so with different product solutions,” said Enta, a veteran of about 30 years with Veyance and Goodyear. “It will allow us to bring the two together. We joke that with this acquisition we want one plus one to be greater than two, and I think with industry hose we're going to be able to pull that off.”

He said Veyance also filled a strategic need for hydraulic hose, where ContiTech had a limited scope. While Veyance was a relative newcomer to the hydraulic market—the vast majority of its hose revenue still came from industrial hose—it has been building its business steadily over the past several years. “We're going to expand that throughout the Conti organization globally,” Enta said.

Now that Veyance is under Continental's ownership, it no longer can use the Goodyear Engineered Products brand name. So now the products carry Continental as the main brand, with ContiTech as a sub-brand, and in many cases another product line name.

But Enta said customers thus far have been very accepting of the new names.

“It's important to have a major brand on the product,” he said. “There is no question the Goodyear brand was and is a very strong brand, in North America in particular. But the Continental brand is an extremely strong brand globally. That's what Continental has really brought to the table, that they are a truly global company. And when you add on the Veyance assets, they become even more of a global company.”

The feedback from customers has shown the change in brand names to be almost a “non-event,” according to Enta. “The major concern is they needed to make sure there was a brand that represented quality and represented long-standing service in the rubber industry, which Continental obviously has. We said it's the same product built by the same people in the same plants, using the same processes and specifications. It's identical in every way except for the brand on the product.”

Changing the name didn't require product requalifications, he said, because the firm was able to give documentation to end users that the hoses were identical in every respect.

Another big plus for the transition was that all but eight of the individual product line names were owned by Veyance, so only that handful needed new monikers.

Enta uses two words to describe how Continental officials acted in integrating the two firms: cordial and inclusive. Senior leadership went to every major facility around the world to answer questions; it located its NAFTA headquarters at the complex in Fairlawn that served as Veyance's global headquarters; and it worked to bring the Veyance team into the Continental family quickly.

He said the key points the new owner drilled into the Veyance staff were: trust each other; continue to have passion for the business; have freedom to act when an opportunity arises; and work together and support each other.

ContiTech also didn't rush like some acquiring firms do to put in its own leaders in top roles. For example, longtime Goodyear and Veyance veteran Jim Hill is CEO of the combined NAFTA business unit, and Enta and others from Veyance have key leadership roles.

“All of the Veyance people either maintained or actually got expanded roles within ContiTech,” Enta said. “So when you talk to the customer base, not only is the product made by the same people, but the same people that you're used to doing business with are still in place. That was a huge message to be able to carry forward.”

Conti also adheres to the philosophy of manufacturing products in the same market where they are being sold, so it has committed to the North American production facilities, with some expansions even in the talking stage, he said.

The German-based company as a rule invests more in capital spending and research and development than Veyance was able to under private equity firm Carlyle Group's ownership, so product development will continue to move forward. The business also is investing in virtual catalog technology that will aid its distributor partners in explaining product benefits to end users.

“We pride ourselves that in the industrial hose segment the vast majority of our product goes through distribution,” Enta said. “We live and die in this business through distribution. We feel we have the best partners throughout the Americas, so we'll continue to support that distribution network.”