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Continental eyes OTR sector for growth; renames industrial tire biz unit to reflect change

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HANNOVER, Germany—Continental A.G. intends to expand its market share in the industrial materials handling and OTR mining tire sectors as part of its corporate growth strategy through 2025.

As part of its renewed focus, Conti has renamed its industrial tires business unit to “Commercial Specialty Tires” to reflect the change.

“Moving from Industrial Tires to Commercial Specialty Tires is not only about changing our name and adding some new products to the existing tire portfolio, it (also) is a big opportunity to broaden our scope and to develop our capabilities to better serve individual needs of our customers worldwide,” said Michael Maertens, managing director of the newly renamed business unit.

The segment, which will operate under the umbrella of the Commercial Vehicle Tire division, produces pneumatic and solid industrial tires for forklifts and other materials-handling equipment, as well as tires for military vehicles, harbor and port freight haulers, surface and underground mining vehicles, agriculture and construction equipment and airplanes.

“We are covering the majority of commercial specialty tires and we are taking a deeper look into what other segments we can go and we can focus on,” Mr. Maertens told Tire Business.

Conti did not quantify the size of its specialty tire unit or provide specific growth projections, but the commercial tire division, as a whole, generated sales of $2.65 billion in 2011.

The tire maker is pursuing its Vision 2025 plan for growth that involves becoming more global, entering new product segments and expanding capacities, including the addition of seven factories.

Now in the second phase of the strategy, Conti is focusing on accelerating growth in the BRIC (Brazil, Russia, India and China) countries and building a strong technological position. The third phase, from 2016-2025, will focus on becoming the No. 3 tire maker globally.

“Commercial specialty tires is a very interesting segment that offers a lot of growth potential. It's a popular segment and is part of our Vision 2025, which was announced last year,” Mr. Maertens said.

“So our overall goal is to become No. 3 in the tire world and we are a part of the tire division, so we also work on this vision.”

The Commercial Specialty Tires unit has hired additional employees to strengthen its sales force globally as well as support its R&D efforts, he said.

The company is seeking to bolster its sales of several types of tires, including off-road mining tires—a segment it sold to Titan International Inc. six years ago—and specialty tires.

Conti makes specialty tires at plants in Korbach, Germany; Ot-rokovice, Czech Republic; and Petaling Jaya, Malaysia. It also has a joint venture in Sri Lanka with local maker Eu-Retec (Pvt.) Ltd. for production of solid tires for North America and Asia.

Mr. Maertens told Tire Business that specialty tires are a strong segment for Conti.

“We consider ourselves No. 3 in the worldwide market for industrial materials handling.... Our strategy in industrial materials handling is we have a very strong focus on the end-customer needs.

“We try to understand the end-customer needs, work together with them and find the solutions for them.”

The industrial materials-handling sector is expected to grow at a rate of about 4 percent globally. Conti is pursuing growth in particular in the ports sector, where container movement at ports worldwide is expected to double in the next few years.

“With a growth of about 6 percent each year, we want to participate in this growth for the specialty tires,” Mr. Maertens said.

In the last four years, he said, Conti has doubled its volume in industrial materials-handling tires in North America, “so we have a very good supply base for North America.” The market is supported by factories in Sri Lanka and Europe.

“We grew the market share and we want to continue growth in the Canada, U.S. and Mexico markets,” he said.

The unit also is focusing on increasing its underground mining presence, he said, especially in South Africa.

While the complete product portfolio has not been decided, the company does plan to produce up to 29.25-inch in diameter tires for underground mining.

“The mining business has strong growth because the world needs raw materials and energy (coal mining),” he said.

Conti is still analyzing its future participation in the North American mining sector.



European Rubber Journal, a United Kingdom-based sister publication of Tire Business, contributed to this report. To reach this reporter: kmccarron@crain.com; 330-865-6127.
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