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Continental AG

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Continental AG

Type	Public (OTCBB: CTTAY)
Founded	1871
Headquarters	Hannover, Germany World HQ Auburn Hills, MI Automotive Systems NA-HQ Charlotte, North Carolina, Tire NA-HQ
Key people	Manfred Wennemer, Chairman
Industry	Manufacturing
Products	Tires, automobile parts
Revenue	$14.887 Billion EUR (2006)
Employees	85,000 (2005)
Website	www.conti-online.com

Continental AG (ISIN: DE0005439004), or Conti for short, is a German manufacturer of tires, brake systems, vehicle stability control systems, and other automobile parts based in Hannover, Germany. It is the world's 4th largest tire manufacturer. The company was founded in 1871 as a rubber manufacturer. It is the 5th largest first tier automobile supplier in the world. Continental has three divisions:

Tires
Continental Automotive Systems (CAS)
ContiTech

ContiTech has different business units and produces drive belts, air springs, conveyor belts, car interior foils, fluid hoses and vibration control modules. Continental Automotive Systems is the largest division and its products include brakes, electronic stability programs and electronic components for automobiles. Continental sells tires in North America under the 'Continental','General' 'and' 'Euzkadi' brand names. Continental's biggest customers are automakers such as Volkswagen, Daimler AG, Ford, BMW, General Motors, Toyota, Honda, Renault and Porsche. In 2001 Continental acquired a controlling interest in Temic, DaimlerChrysler's automotive-electronics business, which is now part of Continental Automotive Systems. The company also purchased German automotive rubber and plastics company Phoenix AG in 2004, and the automotive electronics unit of Motorola in 2006. Continental recently acquired Siemens VDO from Siemens AG.^[1] It Recently started the constrution of a plant in Costa Rica.

Continental Tire in North America

Continental Tire entered the North American Tire industry with its 1987 purchase of General Tire, forming Continental Tire of North America (CTNA). At the time Continental was following other tire manufacturers Bridgestone and Michelin into the American tire market. The North American headquarters of the tire divisions are located in Charlotte, North Carolina. The North American headquarters of the CAS division are located in Auburn Hills, directly North of the Great Lakes Crossing Mega Mall.

Unfortunately, over 20 years in the North American tire industry, Continental has failed to attain profitability. It has failed to turn a profit in each of the past 20 years, and between 2001 and 2005 CTNA lost almost $1.2 billion.[1] Continental representatives have pointed to high labor costs in the United States as a reason for the company's failure[2], but workers rights advocates in the United States have argued that that simply is not the case[3]. For 20 years, Continental enjoyed labor costs that were significantly lower than its much more profitable competitors Goodyear, Bridgestone, and Michelin. In reality, Continentals failures in North America have been the clear result of the company's[4]:
--Failure to Develop an Effective Tire Dealer Network
--Poor Marketing Strategy
--Failed Sourcing Strategy
--Overemphasis on the Unprofitable Original Equipment Market
In 2006, CTNA closed its tire production plant in Mayfield, Kentucky [5], and announced the cessation of tire production in Charlotte, North Carolina [6]. The same year, the Company announced that effective January 1, 2006 it would be implementing massive cuts on retiree health care for retirees across the country[7]. In response to the massive health care cuts, the United Steelworkers and several employees filed a class action lawsuit against the company.

Plant Activity Timeline [8]

• 2003- In the midst of a contract, CTNA demands $35 million in labor cost reductions at the Mayfield, KY facility.
• June 30, 2004- CTNA announces that it is indefinitely ceasing tire production in Mayfield, KY.
• September 1, 2004- Layoffs begin in Mayfield as the company stops tire production.
• March 22, 2006- CTNA disrupts negotiations in Charlotte by announcing that it may alter health care benefits for retirees.
• April 30, 2006- CTNA walks away from the bargaining table in Charlotte, implementing its “last, best and final offer.”
• May 10, 2006- After implementing its slash and burn contract, CTNA announces that it would be ceasing production in Charlotte.
• July 7, 2006- CTNA ceases tire production at Charlotte
• August 2, 2006- CTNA tells the USW that it will shut down the Mayfield, KY facility by February 1, 2007
• September 2006- CTNA announces 70 million USD expansion of its Mt. Vernon, Illinois facility.
• December 2006- USW files a class action lawsuit against CTNA demanding the restoration of retiree health care.
• March 1, 2007- Continental implements its $3,000 cap on all retiree health care liability.
• June 2007- CTNA announces and additional 70+ million USD 2nd expansion of its Mt. Vernon, Illinois facility.