SAN FRANCISCO-Continental A.G. Chairman Hubertus von Grunberg came to General Tire's recent dealer meeting in San Francisco with a special message to deliver. He told dealers to expect to see more cooperation between the two corporations with a goal of returning General to the black after several years of red ink, including an estimated loss of more than $25 million in 1993.
``The emphasis is on exchange between the two worlds of Continental and not dominance of one culture over another,'' he said. ``It's on combining strengths and becoming truly global.''
At the same time, he announced that Conti had invested $100 million in equity into General late in 1993 to strengthen the company's balance sheet and to provide capital for tire plant improvements.
``This shows you how firmly Continental stands behind General Tire,'' he said.
Speaking before 300 General-and Continental-brand dealers Jan. 13, Mr. von Grunberg said he personally will play a role in directing the passenger and light truck side of General's business, working with Bernd Frangenberg, General's newly appointed executive vice president of the passenger and light truck tire division.
The truck tire division, under the guidance of Tom Reese, executive vice president, commercial division, has done a good job, he said, and is estimated to have operated at break-even for the year. He wants the same turnaround to occur in the passenger/LT division, which lost money in 1993 and ``where there's a lot of potential for us.''
``Continental is about four times, as a group, the size of General Tire,'' the Conti chairman said. ``There should be something in it to make General Tire even better by increased cooperation and exchange.''
Mr. von Grunberg said the appointment of Mr. Frangenberg, who previously was responsible for Conti's original equipment marketing and sales worldwide, will aid in the cooperative efforts, which will involve close contact between the passenger/LT divisions in the U.S. and Europe as well as between the truck tire units.
``Bernd Frangenberg, in addition to being a top man, generally has the Continental resources at his fingertips,'' Mr. von Grunberg said. ``This will help our process of integration.''
In a separate interview, General Tire President Alan Ockene said Mr. von Grunberg felt that General Tire couldn't compete against powerful companies like Michelin, Goodyear and Bridgestone by itself, which is why he is pushing for greater cooperation between parent and subsidiary.
Continental wants to be in a position where its facilities are interchangeable, so tires made in the U.S. and Europe can be sold in both markets, Mr. Ockene added. ``It really, as far as I'm concerned, has taken too long to happen.''
In his speech, Mr. von Grunberg stressed that the exchange between the two companies would be a two-way street, and not Conti imposing its will on General.
Conti, for example, is shifting from rayon cord, used in tire building in Europe, to less expensive, but equally effective polyester, which is used by General in the U.S.
In addition, he noted that General's Mount Vernon, Ill., tire factory, under the direction of James Rippy, senior vice president of manufacturing, is Continental's most efficient worldwide. Conti will use the Mount Vernon plant as a yardstick for all of its European tire plants, he said.
Mr. Ockene said he had been recommending that Mr. Frangenberg come to the U.S. for more than a year because he is a very strong marketing person.
``I knew of Bernd when I was with Goodyear in Europe,'' he said. ``He speaks excellent English and has the type of personality to get along well with Americans.''
In coming to the U.S., Mr. Frangenberg said he would be setting up regional dealer meetings in March and April to explain the company's brand, product and marketing strategies and to hear what dealers have to say.
In its efforts to turn around the passenger/LT division, Mr. Ockene said the company will work to reduce production costs and improve product price mix.
He is looking to major cost improvements at General's Mayfield, Ky., and Charlotte, N.C., tire plants and to continuing improvement at Mount Vernon.
And, with the introduction of the new XP2000-4 high performance line, announced at the dealer meeting, he hopes to increase the precentage of the company's production devoted to more profitable high performance tires.
Another goal for 1994 is the rebuilding of the company's dealer base. While there are geographic areas where it needs distribution, General wants to do more business with its current dealer base and improve the product mix with them, Mr. Ockene said.
To encourage this to happen, General plans to step up its depth of involvement with dealers to help them sell tires, not just buy them. ``We want them to look at us as a marketing partner and develop joint marketing plans,'' he said.