Continental redefining its place in sustainable, tech-focused auto industry

HANOVER, Germany—When Continental A.G. was born 150 years ago, phrases like "circular economy" and "environmental sustainability" were not commonplace.

Raw materials might as well have been considered limitless, and there was little thought about greenhouse gases as factories churned out products with priority given only to the bottom line.

Since its founding in October 1871, Conti has evolved along with the notion of sustainability, and recently the company entered a renaissance of sorts—consolidating and streamlining for the future with an eye toward circularity and a push toward zero-emission goals throughout its supply chain by 2050.

"Continental has already made significant progress toward its ambitious goal of becoming the most progressive tire company with regard to ecological and social responsibility by the year 2030," said Henry Schniewind, head of external communications for Conti's tire segment, one of two major business units within Conti's rubber division. "As an initial step in this direction, our company's zero-emission mobility business is on track to becoming completely carbon-neutral as of 2022.

"This is an important milestone on the road to becoming fully carbon-neutral, and will also help Continental's customers to meet their own decarbonization targets."

Throughout the 21 business units within Continental A.G., company-wide goals include becoming 100-percent carbon-neutral by 2050; 100-percent emissions-free across the industry from nitrogen oxides and carbon dioxides by 2050; achieving a 100-percent circular economy by 2050; and achieving a 100-percent responsible value chain, as far as sourcing raw materials, by 2050.

As a producer of 125 million metric tons of carbon annually throughout its supply chain, the goals are lofty, Conti officials say, and entirely possible.

Already the tire segment and the ContiTech division (Continental A.G.'s industrial business unit) have seen sustainability successes, with a focus on hydrogen fuel cells, green tire technologies, retreading advancements, climate-friendly thermal management systems and the refurbishment of air spring systems.

"Continental is committed to the Paris Agreement of 2015," the company states in its 2020 Sustainability Report, the 10th such publication for the company. "According to this, global warming is to be significantly lower than 2 degrees Celsius compared to the pre-industrial age or, ideally, be limited to 1.5 degrees. To achieve this, the global economy is to become carbon neutral.

"Planting trees and restoring ecosystems—such as reforestation—are particularly important. These and other neutralization methods are currently being investigated by Continental."
Betting on hydrogen—and other possible answers

Conti maintains broad and diverse business segments, and for 150 years the foundation of the company "has always been in and around rubber, and in chemical and material understanding," said Andreas Gerstenberger, head of the global business unit, Industrial Fluid Solutions, and executive vice president at ContiTech.

"And these materials have evolved," he said. "They have been disrupted, replaced, substituted—however you want to call it," Gerstenberger told Rubber News at the recent NAHAD Conference in Scottsdale, Ariz. "We saw this trend as a team over the last year. And I think what has been underestimated by many over the last decade, maybe longer—certainly before digitalization and sustainability came along—is material development, the potential of how good it can be.

"This is not the only trend but it is one to consider."

He offered a tactile example of material development in the fashion industry, a theme that parallels sustainability in both the Conti non-tire industrial (ContiTech) and tire spaces.

"Just touch your T-shirt," Gerstenberger said. "It is breathable and light, not like a shirt from years earlier. There is a lot going on on the materials side and it plays nicely into the discussion of sustainability.

"It is this material confidence that will help design and produce hoses of the future."

Certainly, rubber has challenges in recycling and sustainability that are inherently more difficult than those that might be found in other industries, as there are so many non-biodegradable materials in rubber compounds.

Even so, sustainability has been "one of the main thrusts" of the Conti restructuring that has occurred over the last two years—a complete company rethinking that preceded the demands brought by the COVID-19 pandemic.

"There were different movements before COVID within Conti," Gerstenberger said. "We had a CEO change. But sustainability was a discussion that was there before COVID, and COVID did not change this.

"How should we organize and focus ourselves as a corporation, then within that as a business area? Let's take change as an opportunity—in a positive way, in an American way—with our tasks as a corporation and as an industry."

One of those avenues has been a focus on hydrogen fuel cells as they relate to vehicle power plants. While much of the industry eyes lithium ion batteries as the power source for the burgeoning electric vehicle industry, Conti is making inroads with hydrogen—a limitless fuel source, but one with its own hurdles on the path to commercialization.

"There have been controversial discussions with EVs, between full EVs, hybrids, and the use of hydrogen," Gerstenberger said. "We believe it is important to be diversified toward this future energy portfolio."

Conti will look to further hydrogen fuel cell development with "partners who have similar challenges," he said.

"I wouldn't say it's a bet—but you have all types of supporting history for multiple sources of energy. In mankind's history, there have always been multiple sources of energy."

Whether with a truck or a car, there are multiple considerations—from the hydrogen system within the vehicle to the required infrastructure outside the vehicle.

And with fluid hose manufacturing, requirements will include the need to generate the hydrogen, to transport the hydrogen and to get the hydrogen into the vehicle—all of which present chemical compounding and material challenges.

"When you are concerned with thermal management, the physical requirements of transporting and processing hydrogen are very different from transporting and processing oil and water," Gerstenberger said. "The pressures are tremendously high. Here is where it will be good to work with the right partners—you will not be able to make a hose like that overnight.

"Conti is trying to position itself with different businesses for future energy. We believe hydrogen will be one of the major energy sources—likely not the only one, but one of them. Everything you have to mine has an end to it."

Conti took a step toward its responsibly-sourced supply chain goal at NAHAD in displaying its eco-hose, a sugarcane-based product that was launched a year earlier.

"We have launched our first eco-hose on the consumer hose side for GardenMaster," said Karina Robinson, market director, Industry Hose N.A., ContiTech USA Inc. "The EPDM is derived from sugarcane and is plant-based. We are trying to be sustainable across the board."

Robinson said the company will look to transition the sugarcane-based EPDM to an industrial hose line for water treatment plants and industrial vacuums in the future.

"The idea is to spread this into other product portfolios," Robinson said.

Other green initiatives within ContiTech include a climate-friendly thermal management system that increases the range of electric and hybrid vehicles; and the refurbishment of air spring systems.

Hose lines play an important role in thermal management since batteries in electric vehicles work most efficiently at temperatures between 20°C and 40°C. Outside this temperature range, the vehicle's range falls significantly.

For this reason, the batteries must be cooled or heated depending on the outside temperature.

"Sustainability also is a focus of our actions here," the company states in the 2020 report. "The use of the currently most climate-friendly refrigerant R744 is highly efficient and ensures environmentally friendly temperature regulation."

And circularity maintains a prominent role in the maintenance of air spring systems in rail vehicles, essential to ensuring compliance with demanding safety standards.

However, it does not always have to be a new system.

First, the air spring system is dismantled into its individual components, which are then checked for reusability. A new air bellows and a new metal-rubber auxiliary spring are installed onto the parts that are still intact.

The service reduces the burden on the environment, according to Conti.

"Depending on the condition of the air springs, Continental is able to reuse 110 pounds to 220 pounds of metal in each air spring system," said Jim Hill, CEO, North American Business Area, ContiTech USA. "This eliminates the disposal of the scrap metal and the manufacture of new steel and aluminum components. For each air spring system for a train or (rail vehicle), we save at least 650 pounds of CO2 with the reconditioning."

Green Chili 2.0, retreading and the tire segment

Schniewind notes that by 2050 "at the latest, Continental intends to be manufacturing its tire products using 100 percent sustainably produced materials, and thus achieving full climate neutrality throughout all of its supply chains."

One example of this is the "Conti GreenConcept," which premiered at this year's IAA motor show in Munich. The study leverages both current and emerging technologies to the engineering of sustainable tires for passenger cars, and is aimed at minimizing resource consumption through the use of sustainable materials, lightweight design and tread renewability.

"Over 50 percent of the raw materials that go into the making of Conti GreenConcept are sustainable, (being) renewable or recycled materials," Schniewind said.

Among these materials are silica from the ash of rice husks, various vegetable oils and resins, natural rubber from the regionally grown Russian dandelion and natural rubber from traceable sources.

The study also demonstrates the first-ever use of polyester yarn from recycled PET in the manufacture of tires.

"Our plans call for gradually adopting this sustainable alternative throughout our global tire manufacturing operations as of 2022," he said.

In addition, Conti is eyeing the development of rolling resistance-optimized tires through its Green Chili 2.0 rubber compound.

While tires ensure safe handling, they also play a key role in overall vehicle energy consumption. Conti posits that its Green Chili 2.0 rubber compound creates less friction when it comes into contact with the road, thereby absorbing less energy and providing a reduction in rolling resistance, improved grip in dry and wet conditions and increased mileage.

Conti also maintains a retreading service, a "perfect example of intelligent circular economy solutions," the company said in a statement. The company conducts both cold and hot retreading services.

"In addition to the significant cost savings for the end customer, retreading is good for the environment because far smaller quantities of valuable resources such as crude oil, natural rubber and water are consumed," Conti stated. "In addition, retreading helps to cut CO2 emissions because up to 70 percent less energy is required compared to the manufacture of a new tire."

People first
In any given sustainability report, it is evident that people—"the heroes on the front lines," as Gerstenberger referred to the Conti employees—are as crucial to a healthy environment as the products themselves.

And through the lens of a pandemic, they become perhaps the most important cog in the sustainability wheel.

"We put our people and our customers first," Gerstenberger said. "I think this is a major reason that we as Continental—and us as a business unit—came out relatively well from the pandemic.

"What our people did ... I really do call them heroes. Because without them we would not be sitting here."

Like many other companies, Conti had to reduce costs and instituted pay cuts.

"But our people did their job and they took care of each other," Gerstenberger said.

Having policies in place helped Conti to be prepared, said Paul Whifflin, Conti Industrial Fluid Solutions' market director for hydraulics in North America.

"I think being a part of Continental was a good place to be," he said. "It's a big corporation but we had policies in place and we were prepared. We have a great relationship with our distributors .... and that also was really important."

As both the tire and non-tire business units learn to live with COVID, the "new normal," another key is to develop products with intelligence, like the Shop-in-a-Box that ContiTech debuted at NAHAD—a full-service hose assembly system for cutting, measuring and fitting.

"The key part is to be smart, as well," Whifflin said. "It is a balance."

Whether the recovery from the pandemic is a swoosh, a U or an L, one needs only to go industry by industry to see if a recovery is occurring.

While some industries never really slowed down, others, like the hospitality realm, were crushed.

"Hotels. Entertainment. They were dead," Gerstenberger said. "In our industry, if you have built up capacity because you think this demand is the new normal, then you are challenged because your production capacity is simply too high."

Robinson noted that the garden hose market spiked to an all-time high last year, as demand was 50 percent higher than ever before.

"With everyone doing their home projects, demand was like nothing we had ever seen before for a consumer-based product in the history of the company," she said.

And high demand on the product side means increased stress on the supply chain—and from different areas, including capacity, warehousing and transport costs.

Trying to ensure raw materials are available causes problems with over-buying, as no one usually forecasts the need for those materials—"and everyone runs to the same supplier," Gerstenberger said.

And this significant effect that the pandemic has had on raw materials only serves to highlight the need for alternate, renewable sources, in an industry that is trending toward a 100-percent sustainable supply chain.