Continental restructuring will affect 20,000 jobs globally

HANOVER, Germany — Continental A.G. is set to cut up to 20,000 jobs, including some tire-related positions, by 2029, as part of its newly developed Strategy 2030

The roadmap involves a so-called "transformation 2019–2029 structural program," which aims to increase efficiency and productivity through a turnaround in the organization and portfolio.

Conti said in it expects the restructuring will result in roughly $1.2 billion in costs but eventually will yield $550 million in reduced annual operating costs.

As part of this, the company will cease the production of truck tires at its plant in Petaling Jaya, Malaysia, by year-end, affecting 270 employees. Operational since 1963 and acquired by Conti in 2003, the Malaysian plant also makes agricultural, earthmover and industrial tires.

ERJ is in contact with Continental for comments on the future of the production of other tire types at the plant. It's one of two plants in Malaysia Conti acquired from Sime Darby Bhd. in 2003.

Despite the cuts at the Malaysian plant, the new strategy pledges further investments in the tire division that it expects to foster organic growth in its tire business with the goal of becoming "one of the top three suppliers worldwide."

Between 2011 and 2018, Continental invested more than $1.2 billion in expanding its tire production capacity worldwide.

Transition to future mobility

The restructuring measure aims to strengthen the company's competitiveness over the long term by focusing on electric mobility and digital solutions, Conti said.

The Hanover company said it expects most of the projected costs tied to the restructuring to be incurred between 2019 and 2022, but has not ruled out additional projects if the program fails to achieve "the desired impact."

The scheme will cover various market developments, including the increasingly digitalized working environment, the emerging crisis in the automotive industry and the rapid change in powertrain technology due to more stringent emissions legislation.

As a key growth area, Continental will aim to reduce its dependence on original equipment manufacturers in the industrial section, including conveyor belts, hoses, spare tires and auto spare parts.

The company said it expects to increase its aftermarket sales to the agriculture, railway engineering, mining and construction segments to 40% of consolidated sales from 30%.

Emerging from crisis

"Thanks to our organizational realignment, our solid balance sheet structure and our Strategy 2030, we are well prepared for the challenges ahead," Continental CEO Elmar Degenhart said.

With the program, Conti is responding to the crisis in the automotive industry, adding that "like 10 years ago, we will emerge stronger."

The strategic shift, according to the Conti boss, is to prepare the company for the mobility of the future, which requires new and sometimes disruptive technologies.

"With our strategy and our structural program, we are laying the next decisive groundwork and bringing clarity for everyone involved: employees, customers, investors, business partners and other stakeholders," he concluded