Karl-Thomas Neumann: Tough times ahead

By DavidBarkholz, Automotive News Europe

Detroit, Michigan -- Continental CEO Karl-Thomas Neumann said that supplier consolidation will accelerate in the current industry crisis.

Neumann said that this year, between 200 and 300 suppliers will be bought or disappear. A credit crisis is bound to accelerate the losses, he said.

That would continue a trend. In 1988, there were nearly 30,000 suppliers globally. Today, Neumann said, the number is about 4,500.

Size will be important in weathering the current global economic downturn, Neumann said at the Convergence 2008 conference here.

He said Continental needs resources not only to manufacture across the globe but also to put engineering teams in key markets around the world. Those teams must understand and develop parts for the different needs of customers, ranging from developed regions to emerging countries such as India.

Neumann said Continental's relationship with German supplier Schaeffler Group will make Continental stronger.

About 90 percent of Continental's publicly traded shares have been tendered for purchase by Schaeffler.

Schaeffler initially said it would buy only a minority share of Continental -- up to 49.9 percent. At the time it was made, the offer was valued at about €12 billion.

Continental makes tyres, telematics and safety systems. With its acquisition last year of Siemens VDO Automotive, the combined companies' estimated 2007 sales to automakers totaled about $25 billion, ranking it No. 4 on the Automotive New Europe list of the top 100 global suppliers. Combining with Schaeffler likely would make it No. 3.

From Automotive News Europe (A Crain publication)