Travelin' man: Nelles keeps moving to drive ContiTech forward

HANOVER, Germany—From the time Philip Nelles joined Continental A.G.'s ContiTech Group sector in 2000 after finishing his education, it seems that he has been in perpetual motion.

And now that he just passed his third anniversary of joining the Continental Executive Board with responsibility as the top official of the ContiTech business, that doesn't appear to be changing.

Given the task of leading ContiTech forward with a new mission, vision and geographical restructuring, the 50-year-old Nelles spends a good bit of time on the road, away from corporate headquarters in Hanover.

Just a peek at his LinkedIn page shows quite the travel itinerary. Thus far in 2024, his stops have included:

• A trip to Mexico early in the year to visit ContiTech operations, and to oversee the groundbreaking on a planned $90 million hydraulic hose plant in Aguascalientes;
• A stop in Perth, Australia, to attend the grand opening of its new Customer Solutions Hub;
• A visit to the largest site in the firm's printing blanket business, located in Lodi Vecchio, Italy;
• A tour of several sites in the U.S., including two stops in Ohio, at the Americas headquarters in Fairlawn and a factory in Marysville, followed by a meeting with the WCCO Belting team in Wahpeton, N.D.; and
• A trip to China, where he spent time at its Changshu site, took part in a town hall, connected with two major customers and participated in the Distributor Council Meeting near Shanghai.

And all of that travel goes hand in hand toward furthering the goal of ContiTech carving out its path as the industrial sector of Continental, with one overarching theme: becoming the first choice for materials-driven solutions within its areas of business.

"Taking care of a sector of a company that has three sectors is a fascinating function," he told Rubber News in an exclusive interview. "Combining all facets of the business I've seen so far. Having the responsibility to shape and lead what it takes to develop ideas and develop vision and strategy.

"Working with a great team across the whole globe, defining what is important for our future as a sector. I simply love it and that's what I do, and therefore that's where I stand."

Nelles started with the ContiTech business right out of school in 2000. He had received a degree in industrial engineering and management from the Technical University of Berlin, along with a dual diploma in business administration from Ecole Superieure de Commerce business school in Paris.

With that background, he knew he wanted to work in industry, possibly with a company involved in automotive, but not at a vehicle manufacturer per se. And he wasn't necessarily thinking of rubber back then, but he met with representatives of Continental at a university fair, and learned they offered a training program.

"The trainee program at Conti was the perfect mix of learning about the company, the products and having different positions, even in the first year sneaking into the corporation," Nelles said. "With the different facets, it was the perfect mix to start a career, I thought, and then I always kept on moving."

His first 10 years mainly were in ContiTech's production environment, including stints as a young plant manager at a facility in Wackersdorf, Germany, and then at ContiTech Fluid Automotive in Hungary.

Nelles' second phase saw him moving into management positions, more of them on the business side of things. These included five years as head of the Power Transmission Group's Automotive OEM segment, three as head of ContiTech's overall Power Transmission Group and three more as head of the Mobile Fluid Systems business unit. This gave him experience leading in specific products and markets, where management tasks also included R&D, and his first taste of having sales and global responsibilities.

He also had some nice challenges related to the integration of Veyance Technologies, the former Goodyear Engineered Products business that greatly expanded ContiTech's presence in the Americas.

Along this path, Nelles learned a number of basic principles, none more valuable than the core values of Continental: Trust. Passion to win. For One another. And freedom to act.

These, he said, are the foundation on how they base work and collaboration,

"We continuously visualize, we continuously use the values and the expressions around it, to make visible and tangible to people that this is the base of our acting behaviors and our corporate philosophy," Nelles said. "Therefore we always refer to them in various situations, and use them actively, showing them via visuals from the shop floor to executive meetings. And we utilize them. ... They are really well established, and stable for us at Conti."

He also found that at its heart, Continental and ContiTech operate as a people business.

"We handle customer requirements, we handle lots of materials. We develop our process technologies, and it takes collaboration of the best people," Nelles said. "That's something I learned to make things happen. It's decisive to trust. It's decisive to have a good passion. A passion to win as we call it."

The lead executive of ContiTech sees himself has a pragmatic leader who puts a high value on the intelligence of the team. He looks to utilize each individual's strengths and opinions as a way to give room to create possible solutions.

"I believe in the swarm intelligence, if you want," Nelles told Rubber News. "There is really no one person or brain that can really deliver it all. It's a question of bringing the best knowledge together, and that's how I would describe a significant piece of my leadership—leaving room for discussion and exchange, making information as transparent as possible."

He said it may take some time and effort for everyone to come to a good conclusion in this manner, but it's worth it. And once the decision is made, the ContiTech official said he considers himself a strong executor, a skill that is equally essential.

"Execution and focus in a large corporation is needed to get things done," he said, "because at the end of the day this is essential. "Then our stakeholders—from customers, employees, shareholders—everybody at the end of the day benefits because leadership requires not only decision making but also execution."

Nelles said it's important to not only learn good behaviors within the company, but also keep a close eye when mistakes are made.

"That's also something I took very serious, to try to learn not only from the bright side but also to learn where things went wrong, and then to take conclusions out of that and do (things) differently," he said, noting it's not only people-related, but situation-related as well.

When looking to fill spots on his leadership team, Nelles looks for a few things in particular. First, he wants to find those who understand, respect and work according to the Continental values.

Next he looks at experience, as he believes successful teams come together with different experiences.

And finally, he wants a diverse team.

"To me diversity is all sorts and colors," Nelles said. "It's not only gender, experience, age. That is to me very important because I truly believe that discussions and exchange and different angles looking at topics create the best solutions. So that's what I look for."

When he started his tenure on the Continental Executive Board in June 2021 with responsibility for ContiTech, he and the leadership of the unit set to forge new vision and mission statements for the group.

On its own, ContiTech is a formidable company, with full-year 2023 sales of $7.3 billion, with an adjusted EBIT margin of 6.7 percent. That was enough to put the industrial goods maker in the No. 2 spot on the most recent Rubber News ranking of the Top 50 Global Non-Tire Rubber Products Makers.

ContiTech, though, may feel overshadowed within its own company, as Continental posted overall revenues of $44.8 billion, with $12.5 billion of that from tires.

So Nelles and his team looked to pinpoint the identity of the ContiTech unit.

"We worked hard, coming to the clear conclusion that the material-driven solutions that we offer and that we are ready to work on are our core," he said. "We wanted to be the first choice for materials-driven solutions."

Over the years and going into the future, Nelles said ContiTech translates customer needs and challenges in a variety of industrial fields from the perspective of how its rubber, thermoplastic and metal materials can be the problem solver for a wide range of customers' requirements.

"And that's what we do day in and day out. That is why we also came up with a clear mission statement that we connect, convey and cover with passion for our industries," he said. "That expresses that we are in many industries, and with passion we really made sure that our products are very often system critical for the applications of our customers."

"That is what I set up, giving ContiTech a very clear direction, which is ultimately becoming and being the industrial sector of Continental."

That was followed in 2023 with a restructuring that saw ContiTech's industrial offerings aligned along three global regions rather than based on product lines—such as its core offerings of industrial and hydraulic hose, conveyor belting, power transmission belts and air springs.

The setup ensures leaders focus on making the entire range of products successful in each of the regions: Industrial Solutions Americas, Industrial Solutions EMEA (Europe and the Middle East), and Industrial Solutions APAC (Asia and Pacific).

"One really strategic value to execute strategy is customer centricity," Nelles said. "I can tell you that offering product portfolio in the region, giving full power to the region to drive business and engage customers, and designing specific solutions is showing us positive feedback from customers.

"They enjoy having one contact, and the full offering of a wide and unmatched product portfolio that indeed ContiTech on technical rubber components really offers."

With the first half of 2024 showing some softness, ContiTech saw revenues for the period drop 5.2 percent with earnings down 10 percent for 2023.

Nelles said the Americas and EMEA sectors are roughly similar in size, but the Americas industrial businesses have been more robust and healthy in terms of volume and economic development than Europe.

The APAC region, meanwhile, is working from a smaller base, but is looked on as an area where ContiTech can see stronger growth.

Growing the industrial side of ContiTech and the overall Continental organization has been a major focus to lessen the dependence on automotive.

The ContiTech reorganization even included a consolidation of its automotive activities into an Original Equipment Solutions business area, which will operate globally to follow its customer structure. This occurred in conjunction with ongoing discussions of whether Conti will spin off its automotive holdings into a separate business.

Growth going forward will come both organically along with mergers and acquisitions. "We have always been looking at inorganic growth via M&A and, looking back at our track record, I think we've proven many times that we are very agile and capable of adding businesses to our defined growth and value fields.," Nelles said.

Parent company Continental also hasn't been shy about investing capital to grow operations. Besides the hose plant being constructed in Mexico, the executive said other projects also are underway, including a capacity expansion in the APAC region.

Nelles also sees future opportunities in energy markets, including hydrogen, along with its Surface Solutions business and other heavy industry, such as off-highway, ag and construction machinery.

Continental showed its faith in the ContiTech lead executive a year ago, when it extended his contract five years, until May 2029. He sees this action as a clear signal of trust from the Supervisory Board of Continental.

"Trust in the vision and strategy we have set up," Nelles said. "And it is definitely a clear signal to continue execution, and I will strive and continue to execute and deploy that vision.

"... We are in a good way. So I feel very positive on our journey in that direction and, of course, it is a proof point for us as an organization to continue that journey."