MAYFIELD, Ky. (June 29, 2004) –Continental Tire North America Inc. (CTNA) will cease tire production at its beleaguered Mayfield car and light truck tire plant later this year but intends to keep mixing and warehousing operational at the 44-year-old facility.
The cessation of tire production, by Dec. 31 at the latest, will affect 715 hourly and 112 salaried employees, Conti said. The firm said it will work with appropriate agencies to ease the transition for affected employees.
“This was not an easy decision, as we have been weighing our options at Mayfield for some time,” said Martien de Louw, president and CEO for CTNA, who called Mayfield the company's highest-cost plant. “We must remain cost-competitive in the market and our industry," he said.
Production and employment at Mayfield have been cut several times in the past few years. Most recently Conti reduced output at Mayfield in early May by a third and cut 200 workers. Before that, Conti trimmed production by nearly a quarter, to 10,900 units daily, and laid off 200 in December 2003.
As recently as early 2002, the plant employed 1,350 and turned out 20,000 units daily.
One reason for Mayfield's cost dilemma is its product mix, union representatives have said in the past. The plant makes a greater range of tires than the firm's other plant in Charlotte, N.C., resulting in shorter runs and more frequent ticket changes.
Conti said it would shift production to other North American plants.
At the same time, though, Conti has committed $305 million over four years to increase tire capacity at facilities in Brazil and Malaysia to make tires for North America. The plan includes a new plant in Brazil that will produce car tires by 2006 and truck tires by 2008 along with expansions of its Continental Sime Tyre operations in Malaysia.
In all, the plan calls for new capacity of 7 million passenger and 700,000 truck tires.