The Conti IFS officials made it clear the factory not only will be far larger than their current hydraulic operations, it will have the latest technology available. That includes certain elements of a smart factory and digitalization, as well as the firm's latest ideas and solutions related to sustainability.
With what is available on the technology side, Enta said it made sense to build new rather than expand at an existing factory.
"We just felt it was better to start with a blank canvas and not make the process and the equipment fit the building, but design the building around the optimal equipment and process, and that's why we decided on a greenfield," he told Rubber News.
Sustainability efforts at the San Luis Potosi site also won't be an afterthought, but built in from the get-go, according to Gerstenberger. Like digitalization, he said sustainable operations will be licenses to operate in the future.
"If you're not sustainable long term, it will be difficult for any company to stay in business," he said. "We believe sustainability needs to be part of our culture and DNA moving forward.
"... Consequently, if I build a new factory, I think we all have the duty to do it as sustainable as we can, and as we can afford. Whether it's solar panels, whether it's water management, lighting and energy, raw materials or minimizing packaging."
It also means being a good citizen in your community, Gerstenberger said, adding that it's not only a "green" headline, because sustainability is more than just "green."
"It's profit, people and planet, not in any certain order," he said. "If you're not profitable, you're also not sustainable. That's what some people forget."
This isn't an initiative, however, that the Conti IFS business is starting with this plant, said Randy Kish, manager of distributor marketing and communication at ContiTech U.S.A.
"This has been our mantra and our efforts over recent years," he said.
Dealing with 'VUCA'
Not unlike other companies in the market, Continental has had to deal with significant cost impacts in the sector. It started with the trade war between China and the U.S., which Gerstenberger said nobody talks about anymore, but the 25-percent tariffs remain in place.
That was followed by the COVID-19 pandemic, which shook up the supply chain and the availability of certain raw materials. "In the meantime, we have a shortage of people," Gerstenberger said. "It's difficult to find enough work force in manufacturing."
The business term for it is "VUCA," standing for volatility, uncertainty, complexity and ambiguity.
"It doesn't look like it will disappear tomorrow," he said. "With that uncertainty, we will continue to do things as fast as we can, but we also don't want to rush and over-promise."
Enta said that's where the Conti IFS unit will have an advantage with its solid North American manufacturing base.
"So we're not going to rely on shipping lanes and containers as much as others would be if they're importing into North America," he said "We just feel that's the best way to provide the best service and not only limit the risk of our own business, but the risk to our customers."
One of the most tangible impacts of VUCA has been the availability challenges and rising costs of certain raw materials.
That has led Continental to enact multiple price increases to the market, as have its competitors in the sector. Enta said customers have understood the situation of the rising prices, but that the raw materials costs accelerated faster than expected.
"We covered off as much as we could," he said. "We also tried to cover off from our productivity gains to bolster our customers. But the ramp-up of those raw materials happened so quickly we couldn't ramp up pricing as fast as we saw our costs ramp up."
Gerstenberger said it appears the prices in most raw materials may be plateauing, but the costs related to such things as energy, labor and transportation continue to climb.
He added that this isn't just an issue in North America, but to differing degrees in Europe and Asia as well.
Enta said the market in North America continues to grow, though the rate of growth has slowed. But the Conti IFS officials said some of the top line growth has been due to the price increases they've passed onto customers, something that is true around globe.
"But we've also seen growth in our volume too," Enta said. "It's not just price, but price has been a big part."