ContiTech's Brazilian plant on selling block

HANOVER, Germany—ContiTech A.G. is planning to sell its Sao Paolo conveyor belt factory in compliance with a requirement imposed when the firm purchased Veyance Technologies Inc. last year.

It also has closed its belting plant in Volos, Greece, operated by subsidiary ContiTech Imas S.A., and it soon will shut down its Bowmanville, Ontario, heavyweight conveyor belt facility because of the continuing global slump in the commodity market, particularly the lignite and coal mining sectors.

Hanover-based Conti-Tech's sale of the Veyance do Brazil facility in Brazil was mandated by Brazilian authorities in order to finalize the purchase of Veyance in January 2015.

It was one of two requirements ContiTech agreed to in order to close the deal. The other was the divestiture of the firm's Veyance's North American air springs business.

ContiTech sold the air springs operation to EnPro Industries Inc., which has made it part of its Stemco division.

Included in the sale were a production plant in San Luis Potosi, Mexico, and a research and development center in Fairlawn, Ohio.

To help facilitate the sale of its Brazilian operation, ContiTech has brought global business adviser Ernst & Young on board.

ContiTech Imas' Sao Paolo plant produces more than 74 miles of steel cord conveyor belts annually, primarily for the mining industry in Brazil, where it claimed to be the largest belting supplier in the country.

While the company acknowledged it is selling the plant, a ContiTech spokeswoman said the process is ongoing, and the firm could not disclose further details at this time.

In terms of the company's decision to shut down the belt factory in Greece, she said cement and steel producers, along with other industrial companies, were not investing as much in their operations or projects as they did several years ago because of the global economic downturn in the commodity market.

“The mining industry has been experiencing an economic downturn for many months now, due primarily to decreasing demand for its products and depressed prices for its commodities,” said Hannes Friederichsen, head of the Conveyor Belt Group business unit.

Consequently, he said in March, ContiTech Imas was faced with excess belt capacity and, after several months of intensive but unsuccessful negotiations, the company decided to close the factory.

ContiTech is servicing customers from other plants that also had excess capacity.

The factory in Greece produced steel cord conveyor belts, fabric belts, pulley lagging and splicing material for the Greek market and for export.

Closure of the factory impacted about 138 employees, the spokeswoman said. The facility, which opened in 1972, stopped producing belts in March.

Operations not related to production, such as application engineering, sales and marketing, will continue, she said.

The company operates another plant in Greece that was not impacted by the decision to end production at the Volos facility.

ContiTech has been ramping down production at the conveyor belting facility in Bowmanville for the last several months, the spokeswoman said, and the plant was targeted to close by mid-2016, so it's expected to be shuttered soon.

Closure of the factory was prompted by the nosedive the mining and coal industry has experienced during the last two years.

About 135 employees were laid off because of the shut down.

In November 2015, when the announcement was made about the plant, the company said it was saddled with excess belt capacity throughout North America and globally.

Because recovery of the mining industry is not expected anytime soon, the firm determined the factory was expendable.

ContiTech's Bowmanville facility, which was part of the Veyance acquisition, gradually relocated production of heavyweight conveyor belts, both steel and fabric reinforced; custom mixing; and rubber-based adhesives to other under-utilized plants over the last several months, the spokeswoman said.

Some machinery has also been relocated.

In terms of closing any other belt or hose plants, the spokeswoman said, the company has made no further decisions.