HANOVER, Germany—Continental A.G. has confirmed plans to close a tire plant in Aachen, Germany, saying the decision is based on its need to ensure the competitiveness and long-term success of its European tire production network in the face of shrinking market demand for certain tire types.
The production cessation is expected to be finalized by year-end 2021, Conti said, eliminating the jobs of 1,800 of the 2,000 employees there.
The factory in Aachen—a city of nearly 250,000 in western Germany near the border with Belgium and the Netherlands—was opened in 1931 by then-independent Belgian tire maker Societe du Pneu Englebert, which became Uniroyal-Englebert in the late 1950s. Continental acquired that company in 1979.
Sources in the IG BCE trade union revealed Sept. 15 that Conti was planning to close the Aachen plant by year-end 2021. Conti had not commented publicly on the matter until now.
Capacity there stands at 8 million units a year, according to company data. Among products built there are Conti's "SSR" (self-supporting) run-flat tires.
"The discontinuation of tire production in Aachen is a painful step for our affected employees," said Philipp von Hirschheydt, head of passenger and truck replacement tires business in Europe, Middle East and Africa.
"This was no easy decision for us," he added. "However, we do not see a trend reversal in the capacity utilization in the next five to 10 years and anticipate unused capacity of around 15 million tires in Europe in the long term if we do not act now."
Von Hirschheydt contends that, in order for Conti to succeed in remaining competitive in the long term in the highly competitive tire market, it must consistently reduce structural overcapacities.
For several years, overcapacities have led to "enormous financial burdens" that Conti said are reducing its long-term competitiveness "substantially." The Aachen plant is Conti's smallest and most cost-intensive tire plant in Europe.
Continental said it is working with employee representatives on finding socially responsible solutions for the affected employees in Aachen. The company also commenced initial exploratory talks with the government of the state of North Rhine-Westphalia and Aachen Council to develop viable concepts for the reuse of the site.
Conti did not comment what financial measures it will have to consider to cover the closing. The company stressed that, in the last decade, it has invested well over $1 billion in it's Germany-based tire businesses to upgrade technology, expand research centers and enhance existing production sites.
Among the investments are the "Taraxagum Lab Anklam" research laboratory in Anklam, Germany; a High Performance Technology Center at the Korbach, Germany, tire plant; and the addition of a ContiLifeCycle retreading and rubber recycling unit at its Hanover-Stoecken, Germany, facility.