HANOVER, Germany (Nov. 22, 2005) — Continental A.G. will phase out production of passenger tires at its Hanover-StÃ¶cken tire plant by year-end 2006 and cut employment there by 10 percent, or 320 workers.
Conti cited “unexpectedly weak growth” in passenger tire sales for its decision to discontinue passenger tire production at the 66-year-old Stoecken plant.
“This was not an easy decision for us to take and was preceded by meticulous analysis of various courses of action,” Conti Chairman Manfred Wennemer said in a prepared statement.
Conti also will cut back the number of shifts at other plants to cut costs, Mr. Wennemer said, while also reiterating Continental's fundamental strategy—to deal with weaker markets in cost-intensive sectors by filling capacity at low-cost plants and cutting capacity at high-cost plants.
Continental produces more than 105 million passenger tires a year, mostly at factories with an annual capacity of at least 8 million units. Hanover-StÃ¶cken, with annual production of about 1.3 million passenger tires, is Continental's smallest and also its most expensive passenger tire plant overall, the company said.
The factory also makes light and medium truck, agricultural/off-road and industrial tires and is the site of some research and development activities.
This plan rescinds this year's plant agreement on longer working hours at equal pay for this sector of production. Via this agreement, “management had envisioned a much stronger market development and seen in this a possibility to give the plant a further chance,” said Karlheinz Evertz, who oversees Conti's worldwide management of passenger tire production.