HANOVER, Germany—Continental A.G. plans to close its Newbridge, Scotland, passenger tire plant by mid-November, idling 774 workers. Citing five straight years of losses amounting to about $45 million and the plant's relatively small output, Continental informed workers there Aug. 18 it would cease production in about three months.
The Newbridge plant, opened in 1967 by Uniroyal-Englebert, now a Conti subsidiary, produced about 5 million car tires a year, primarily in the smaller S- and T-rated sizes.
About three-fourths of the plant's output is shipped to Europe, a situation that made the unit's problems more acute due to the strength of the British pound vs. the euro and other European currencies.
``This situation is compounded by the strength of the pound, which makes our product more expensive to export and further investment prohibitively expensive,'' said Stewart Segrott, operations manager at Newbridge.
Mr. Segrott also noted Newbridge's size disadvantage. ``On the technology side, the trend is moving towards high-volume plants to keep unit production costs down.
``Continental's plans to close the plant were decided only after the most exhaustive analysis of the alternatives,'' Mr. Segrott said.
Continental cut 120 jobs at Newbridge in April, when capacity at the 32-year-old plant was reduced by one-third to 10,000 tires a day.
That situation led to a series of crisis meetings among Continental, labor leaders and Scottish government officials seeking solutions to the plant's problems.
Up until the closing notice was issued, Scottish officials had been working on a proposal that would have included financial incentives, as well as a possible union agreement for short-time working and redundancy measures, said Harry Donaldson, a local trade union official.
The closing contrasts with Conti's spending plans elsewhere in Europe. In January, Conti announced plans to invest $59 million in Romania to build a passenger tire plant specializing in the types of tires built in Newbridge. That plant, in Timosoara, will have a capacity of 20,000 units a day and create up to 1,000 jobs.