AKRON (Feb. 27, 2006) — Continental Tire North America Inc. executives probably don't want to cut more jobs and capacity at the company's Charlotte, N.C., factory any more than the union members there want to see more of their brethren out of work.
Symbolically, at least, salaried employees, company executives and union workers would have to look at the hulking structure, located directly behind the headquarters building, every day when they come to work. And the plant's diminished production capacity would remind them daily of the failure to achieve a workable solution to keeping the factory running at full capacity. In a broad sense, it also would be a testament to the failure of Conti to be successful in North America for the past 19 years.
It's high time for the bleeding to stop and for the company to live up to the promise envisioned in 1987 when Hanover, Germany-based Continental A.G. bought the former General Tire Co. in Akron, establishing its first U.S. manufacturing presence.
Despite the fits and starts Conti has had with the former General Tire, there is no reason the company can't be successful. Certainly getting its fixed costs under control is one step.
Conti describes the Charlotte plant as having the highest operating cost of any company facility worldwide. To help get its house in order, it has told the union it must find a way to chop $32 million in annual manufacturing costs from the plant or face a reduction of another 510 hourly and salaried employees.
This is not unlike what's happening at many U.S. manufacturing plants today.
Predictably, the union and the company are at loggerheads over this. We certainly hope they can reach a workable solution.
Other tire makers in the U.S. have overcome such obstacles and there is no reason why this can't occur in Charlotte, as well. What must happen is all parties working together to reach that goal.
But returning the company to profitability involves more than just cutting costs. It means developing products dealers can sell and a pricing structure and programs that allow both dealers and Conti to make money.
Conti executives readily admitted in December at the launch of a new sport-utility vehicle winter tire that the company needs to make its products more friendly to North American dealers and consumers.
“We have very boring, old-fashioned designs, which doesn't convince anyone,” said Burkhard Wies, Conti's head of tire line development worldwide. He said the company plans to overhaul many products under its Continental and General brands by 2008 to improve its position in North America.
That's a good place to start. As Goodyear has demonstrated over the past two years, developing tires that excite dealers and consumers can go a long way toward helping jump-start a company's turnaround. Conti must explore all options.