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Published on April 24, 2006

Conti has a plan; now stick to it

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Opinion

AKRON (April 24, 2006) — Continental Tire North America Inc. has tried for years to come up with a business model that produces steady sales growth and consistent profits in North America, especially in the passenger and light truck tire area.


It just hasn't landed on the right formula.


But nearly two decades after Germany's Continental A.G. bought the former General Tire Co., maybe, just maybe, the Charlotte, N.C.-based unit has found a plan that will make its goals a reality.


The company's current leadership is making a strong effort to turn the business around and isn't afraid of shaking things up.


The first step in any recovery is to recognize and admit you have a problem.


Conti executives did that recently at the firm's first-ever Gold affiliated dealer program meeting in Las Vegas—verbally, by discussing areas of weakness and inconsistency, and symbolically by displaying the program's logo with a Band-Aid over it.


They also unveiled how they are attacking the issues, step-by-step, especially in the area of pricing, where the company has been inconsistent at best.


And they talked about what they are doing to improve supply, which is connected to the firm's pricing policies and to competitive issues at its U.S. tire plants.


The executives even addressed the sensitive subject of its Charlotte, N.C., tire plant, where Conti is negotiating with the United Steelworkers union over the demands that they cut $35 million in costs from the facility to make it more competitive.


Conti certainly must solve these basic structural issues to regain its financial health and give current and prospective tire dealer customers confidence that they can depend on the company as a supplier. It appears progress is being made on that front, too.


But to succeed in North America, Conti also needs to develop and launch a comprehensive marketing effort to build awareness of the Conti and General brands—something the firm has struggled with for years—and then stick with it. If dealers are to sell these products, they need that commitment.


Dealers said as much at the Las Vegas meeting. “They make a good product, they just don't tell people about it,” one said.


Understandably, Andreas Gerstenberger, Conti's vice president of sales and marketing for the passenger and light truck business unit, is reluctant to focus too much effort on building brand awareness until the firm is on sound financial footing.


But he shouldn't wait too long. One of the best ways to build sales is to get dealers excited about selling the company's products.


Having knowledgeable and enthusiastic dealers pushing Conti and General brand tires at dealerships throughout North America will go a long way toward reversing the company's fortunes.

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