ContiTech to use unit to boost presence for other hose units

ROCHESTER HILLS, Mich.—Continental A.G.'s ContiTech business is using the strength of a past acquisition to help its other fluid technology businesses grow their automotive original equipment business in the NAFTA region.

The firm in 2013 bought the automotive air conditioning business of the Mobile Climate Systems division of Parker Hannifin Corp., which had a well established organization to sell to automotive OE customers. Now the company will use that know-how to boost other hose-related products sold to the North American car market, according to Florian Fauth, head of the NAFTA region for ContiTech's Mobile Fluid Systems business unit.

Before last September, ContiTech's Fluid Technology unit covered both the automotive and industrial markets. But he said the acquisition of Veyance Technologies Inc., which closed in early 2015, gave ContiTech enough industrial sales to separate it into individual business units.

“There was always a certain dilemma between industrial and automotive business because of the different type of business,” Fauth said. “Industrial was always very project driven, while automotive is very much driven by OEMs. The leverage the OEMs had was always greater than the certain industrial customers. So a lot of the focus went to automotive when needed.”

But Continental and ContiTech are focused on growing the industrial part of its businesses, so this was seen as a good opportunity, he said, to separate the businesses.

With that, ContiTech also altered its strategy to broaden access to North American auto customers. Fauth said in the past sales were focused mainly from a product line standpoint.

The new strategy, though, will have much more of a regional focus so such areas as turbocharger hose, transmission oil and engine cooling lines, and fuel hose can benefit from what was developed in the Parker Hannifin air conditioning business.

“We want to give them a little bit of a home in terms of organization, and also use the lessons learned over the years and the know-how the Parker-Hannifin organization has with North American OEMs to help them to get better access to customers, and understand what the customers need and how they work,” he said.

For example, dealing with OEMs is different in North America than it is in Europe, where ContiTech has had much more experience, he said. The history Parker Hannifin has in NAFTA, though, will aid the other product areas in Mobile Fluid Systems, he said.

“The response we have received from the customer base is quite positive, but we still have to do our homework to be in position to be able to support further growth,” Fauth said.

That means the unit needs to have the resources in place to support the projects, both in terms of a manufacturing footprint and being able to supply the right product. ContiTech had one facility in Mexico for Mobile Fluid Systems, acquired two more there from Parker Hannifin and received another in the country from Veyance. It also got a hose plant in the U.S. from Veyance, and ContiTech's Somersworth, N.H., factory now will focus exclusively on high-volume automotive business.

“We do have a North American footprint, but we don't necessarily have the right product for the market yet,” Fauth said. “We're still in the development phase to have the right product adapted to the customer needs in North America. We still need to understand what are the demands in North America, what are the specifications of the customers, and then have the products designed to it.”

The business does have ambitious plans, he said, for 2016 in NAFTA. Volumes have developed more quickly than the firm anticipated three to four years ago, particularly in terms of turbocharger engines.

That led to a restructuring in Somersworth, where assets of the industrial silicone business will be sold, and the plant focused on blow molded parts and extruded hose that connect to those for final parts that are sold to OEMs, Fauth said.

“It's always hard to tell, but for 2016 we still anticipate a strong year,” he said. “Maybe not with growth rate in terms of cars sold, but we don't foresee any drop.”