The road for Germany's Continental A.G.'s tire business in North American hasn't always been smooth. In fact, there were years when the firm was in a retrenching mode rather than one of growth.
Continental made its first big splash in North America in 1987 with the purchase of General Tire. But things went anything but smoothly. The parent company shuffled CEOs in and out for several years, alternating between American and German leaders.
Conti also had to deal with a manufacturing footprint that was costly to operate and sported old technology. Over time closures and the sale of its OTR tire plant in Bryan, Ohio, left it with one tire facility in Mexico and another in the U.S., that one in Mount Vernon, Ill.
But things have clearly changed for the better in recent years. Now operating as Continental Tire the Americas, North America has been a key target for Continental's Vision 2025 plan. In 2010, the German firm saw that European revenues accounted for 75 percent of its tire business.
So it aimed for growth in places like China and its booming economy, as well as regions such as North America, where it had a market share that didn't match its significant presence. From there, it invested heavily in the U.S., boosting the Mount Vernon factory, opening a new passenger and light truck tire facility in South Carolina, and now spending more than $1.4 billion on a truck/bus tire plant in Mississippi it envisions as a future “mega-plant.”
North American tire sales reached $2.85 billion in 2015, accounting for 25-30 percent of Conti's global tire revenue. Nikolai Setzer, head of Conti's worldwide tire business, said the most important step in the evolution was a focus on customers and products, along with a renewed emphasis on marketing and distribution.
He said if Conti is doing all those things well and has a competitive manufacturing footprint, it will earn money and be able to invest. If Conti's not making a profit, it can't invest. In Setzer's view, it is as simple as that.