Conti cites ‘overcapacity’ for German tire plant closure

Hanover, Germany – Continental AG has announced plans to discontinue tire production at its Aachen site by the end of next year, citing is overcapacity in the European market.

The move is part of Conti’s structural programme which will likely affect 30,000 jobs worldwide and aims to cut costs by over €1 billion by 2023, the German group announced 30 Sept. 

“The reason for the discontinuation of the tire production in Aachen is the declining capacity utilisation levels at all Continental’s European tire plants – in a market that will not grow in the foreseeable future,” said Philipp von Hirschheydt, head of passenger and truck replacement tires business in Europe, Middle East and Africa at Continental.

Conti, he said, does not see a trend reversal in the capacity utilisation in the next five to ten years and anticipates unused capacity of around 15 million tires in Europe in the long term “if we do not act now.” 

The decision is therefore intended to strengthen the competitiveness of the group’s European production network in the face of structural overcapacities and stagnation in a “fiercely contested” European market for passenger car tires.

According to Conti, since 2018, the number of cars produced has been consistently declining, affecting the German group’s tire business as a key supplier. 

In addition to ‘stagnating demand’, new suppliers have also increased competition and price pressure on European manufacturers. 

“The consequence is further increasing overcapacities – in a market that will not grow in the foreseeable future,” Conti said, adding that the Covid-19 pandemic is also “exacerbating the situation.”

With a production volume of eight million car tires per year, Continental said Aachen is the smallest and also the most cost-intensive site in the company's entire European production network.

The decision, which will affect around 1,800 of 2,000 jobs at the site, follows board approval of recently announced ‘expanded measures’ under Continental’s “Transformation 2019-2029” programme. 

The group is now in talks aimed at finding “socially responsible solutions” for affected employees, including with the government of the state of North Rhine-Westphalia and Aachen Council to develop viable concepts for the re-use of the site.

Continental’s tires business area has 24 production and development locations worldwide, and employs more than 56,000 employees globally. The business area posted sales of €11.7 billion in 2019.