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Conti holds 'town hall' dealer meetings

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CHARLOTTE, N.C. (April 12, 2004) — Continental Tire North America Inc. wanted to show its commercial dealers that it values their partnership, shares their concerns and strives to correct any complaints they might have about the tire maker.

So its Commercial Group Executive Management Team took its show on the road.

Visiting seven cities in five weeks—starting with Las Vegas Jan. 21, followed by Dallas, Chicago, Cleveland, Nashville, Tenn., Atlantic City, N.J., and Atlanta—the executive management team spent time up close and personal with a total of 109 invited Conti commercial dealers.

“This is the first time we did this,” said Clif Armstrong, Conti's director of commercial marketing. “We don't get to meet and greet with our customers enough.” To ensure a comprehensive view from dealers, Conti invited a mix of wholesalers, distributors and “bolt-on” dealers to the meetings, he said.

Mr. Armstrong participated in all the meetings along with Tom Roydhouse, senior vice president of the NAFTA (North American Free Trade Agreement) Commercial Group for Conti, Jack Fenner, director of dealer sales, and Mike Barker, director of business development.

The “Town Hall” meetings were two-day affairs, according to the company. The beginning afternoon consisted of the management team giving a detailed presentation of Conti's 2003 results, its 2004 plans and programs and its market expectations. In the evening, a social function gave dealers a chance for one-on-one conversations with the executives.

On the second day came what the executives considered as the most important part of the town meetings: In the morning dealers held a brainstorming session to air what they liked and didn't like about Conti as a supplier.

To facilitate the discussion, the executives brought in a professional moderator. “We asked him to open the floor up, to get our customers to talk about things,” Mr. Armstrong said. The moderator, he added, “works for our company, but has very little to do with our operations.”

Following the brainstorming sessions, the executives came back to obtain feedback from the dealers on the topics they had discussed. “We got great feedback,” Mr. Armstrong said. And the executives were pleased that the positives the dealers discussed were exactly as they expected: the outstanding quality of Conti's commercial tires, and the close, friendly relationships the dealers have with Conti and its personnel.

The main negative, however, was equally unsurprising: supply.

“Supply is a big question to us,” said Carl Schwartz, president of OK Tire Store Inc. in Fargo, N.D., who attended the Chicago meeting. “We converted a number of customers to Conti and General tires. Will we have to convert them now to something else?

“We have been Continental General dealers for 30 to 35 years, so the brand is pretty important to us,” Mr. Schwartz added. “We said, 'Don't forget where you came from. We supported you and your radials when the quality wasn't so good, and now it's a very good product.'”

Mr. Armstrong said the company is “working hard to get more product out to our dealers. We've basically sold everything we can make, and we're low on our medium radial truck tire supply.”

He and the other Conti executives assured the dealers Conti is changing the production schedule at its Mt. Vernon, Ill., facility, so that its production “more closely reflects the product that dealers need and utilize,” he said.

Two other problems that concern Conti commercial dealers are the company's new computer and product tracking system and the influx of inexpensive new truck tires from China, according to Charles Garrett, president of White Tire Distributors in Roanoke, Va., who attended the Nashville meeting.

The change in the computer system created some problems for White Tire, Mr. Garrett said, “but we were assured by the (Conti) executives that they would look into that.”

As for Chinese imports, he said, “We have five Bandag retreading plants, and we have concerns about the retreadability of those casings, as well as to what those imports would do to our cap and casing sales.”

Conti recently disclosed it will add 700,000 units of annual truck tire capacity for the North American market by building a plant in Brazil and expanding capacity at its Conti Sime Tyres joint venture in Malaysia. The new capacity will come on stream first in Malaysia, followed by the new plant in Brazil by year-end 2006.

The company also is actively evaluating production possibilities in China, although management hasn't disclosed any potential partners or sites.

Messrs. Garrett and Schwartz found the atmosphere at the meetings “very open,” and expressed confidence that Conti officials will correct the problems the dealers identified.

Mr. Armstrong, meanwhile, is writing a report that he plans to distribute soon to the dealers. It will identify all the concerns the dealers voiced during the meetings and describe Conti's plans for addressing those concerns, he said.

“We believed going in that our relationships with our dealer customers was our most important asset, and we came out still believing that,” he said.

Mr. Armstrong said Conti is considering holding additional meetings but has no formal plans to do so at this time.

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