FAIRLAWN, Ohio—Continental A.G.'s ContiTech business is continuing a growth trend by optimizing its manufacturing footprint and building smarter products, according to Jim Hill, CEO of North American operations for ContiTech.
Specifically, Hill's word for the company's manufacturing footprint is "dynamic," as it opens a new mobile fluid solutions plant in San Luis Potosi, Mexico, to produce air induction systems for the North and South American markets. As an assembly operation producing 25,000 pieces per week, the San Luis Potosi plant will help ContiTech service automotive original equipment manufacturers. By the end of 2017, the plant employed about 160, likely growing to 220 during 2018, according to a company release.
Last year's growth has encouraged hiring throughout the North America region, Hill said.
"In 2017, there's been a pretty robust demand for our products," he said.
Though ContiTech shut down its Hannibal, Mo., plant earlier in 2017, the company simultaneously consolidated it into its Mount Pleasant, Iowa, facility with a $12 million investment, he said.
"What we did on the Mount Pleasant side was really make an investment in new equipment and headspace there, and consolidated the two facilities," Hill said. "From a market standpoint, we will have more capacity, a better quality level than before and be able to service those customers in the PVC market better. Yes, there was consolidation, but it was really in the effort to become bigger and improve our capabilities."
The investment into the Iowa facility will add 36,000 square feet, bringing it to more than 200,000 square feet, and enables it to manufacture polyvinyl chloride. Current employment at Mount Pleasant is about 200, and the first phase of the project will bring 40 new jobs, according to Andreas Gerstenberger, global head of the Industrial Fluid Solutions business unit of ContiTech. Employees at the Hannibal plant had the chance to apply for positions at the Mount Pleasant facility.
In Georgia, ContiTech invested more than $9 million to streamline its facilities there. At the end of 2018, ContiTech will relocate operations from its location in Porterdale, which produces single end yarns for technical reinforcement applications, to its Aldora Mills facility in Barnesville, Ga.
The investment will modernize equipment at the Aldora Mills location, and increase the employee total by about 106 more on top of the current 200. Porterdale employees will have the chance to transfer to the Aldora Mills facility.
"Again, it's a consolidation in footprint, but it's an expansion in capabilities that we have," Hill said. "We try to think of it as being good opportunities where we have light manufacturing facilities or processes, and look for ways to combine or enhance those capabilities and what we can do."
The company will continue to look for ways to expand and combine facilities, especially as business has grown, and with it the need for increased rubber mixing capacity, Hill said.
Part of what fuels that push for growth is Continental's goal to become a $59 billion corporation within the next five years, with ContiTech making up about $12 billion of that total, Hill said.
"That's almost doubling our business in five years, so we've got to find some new and innovative ways to do that," Hill said. "But I think (Continental) does a good job of putting your money where your mouth is, and saying, 'We want you to grow. If you bring in a good business case, you can get the dollars to do that.' "
Another part of that effort is expansion outside North America, including growing its composite hose business for the industrial side of the market and a focus on the mining industry, Hill said.
"From an overall market in the Americas, that has one of the areas that we have some of our biggest growth opportunities from a percentage growth standpoint," Hill said. "It's not near as big a market as what we have here in North America overall, but South America is a focused region for us."
Mexico continues to be both a large manufacturing base and market for ContiTech as well, he said.
"We sell product there, but we also use it a lot to source product here," he said. "But while we have a manufacturing focus and concentration of associates down there, we still produce a majority of our dollars and product here in the U.S. It's still the biggest base for our manufacturing."
But markets outside the U.S. are a particular focus for ContiTech in terms of the current political environment and developments regarding NAFTA. Though those potential changes are still up in the air, the uncertainty hasn't altered many plans for ContiTech, Hill said.
"We've continued to expand down there just as we have in the U.S., and I'd say we have probably grown equally on both sides of the border," Hill said. "As the political environment gets more clarity with what may happen with NAFTA, we may adjust our strategy. But for right now, it's going forward as planned."
Specifically in regards to Mexico, ContiTech remains mostly balanced in terms of what it exports and imports, Hill said. With that standard, though potential changes to NAFTA could be concerning, it wouldn't be one of Hill's larger concerns.
"I think we're in a fortunate, balanced position by chance," Hill said. "We're a little bit more balanced so it's not as big an issue for us as it may be for other companies."