Continental to shut tyre and electronics plants in Aachen, Karben starting next year

Closure of the tyre plant in Aachen at the end of 2021 and of the automotive electronics plant in Karben by the end of 2024, structural adjustments for future prospects in Regensburg, and termination of the JV with Osram

By:Updated: Oct 01, 2020 11:30 AM
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In its meeting, the Supervisory Board of Continental AG approved the structural measures at the German locations Aachen, Karben and Regensburg as well as the termination of the joint venture with Osram. As things stand, all of the comparable structural measures in the Transformation 2019–2029 program that require Supervisory Board approval for Continental’s locations in Germany and abroad have thus been decided. This does not include any possible disposal of specific business segments and operations included in the program that require approval. To protect company interests, Continental currently will not provide any further details.

Resolutions regarding Aachen, Karben, and Regensburg, as well as the joint venture with Osram

In its first resolution, the Supervisory Board approved the decision of the Executive Board to discontinue production in the tire plant in Aachen at the end of 2021. This affects about 1,800 of the 2,000 jobs in production, development and administration at the location. The reason for discontinuing tire production in Aachen is the capacity utilization which has been falling for several years in all of the company’s European tire plants in a market that will not grow in the short term.

For this reason, Continental is adjusting its excess capacity to market demand while at the same time lowering the cost pressure on all European plants. The aim is to sustainably ensure the competitiveness and thus the long-term success of the European tire production network. Further information can be found in a separate press release.

In its second resolution, the Supervisory Board approved the decision of the Executive Board to discontinue the production of automotive electronics in Karben by the end of 2023 and close the location by the end of 2024. About 900 jobs will be affected by the decision. The reasons behind closing the plant are the impact of digitalization of vehicle technology and the global sales crisis for passenger cars and light commercial vehicles together with the expected slow recovery of the market.

In a further resolution, the Supervisory Board approved the transformation of the Regensburg location, thus strengthening the clear commitment to its future. Development, innovation and production units are to be located in Regensburg in the future, as has been the case to date. It is also to serve as the base for the management team. For its future prospects, it is necessary to realign the location, which will affect about 2,100 jobs (total location workforce: about 7,600) in production, development and administration. These jobs are to be either modified, relocated or made redundant by 2024.

Continental is thus responding to the change in requirements with the increase in electrification and digitalization, as well as to the historic crisis in the automotive industry. At the same time, the company feels the advancing digitalization and the associated proliferation of software in the car provides the potential to assign new tasks to the site and to develop and produce competitive solutions. For that reason, a plan in particular for the future of competitive production in Regensburg is being drafted together with the employee representatives. Key elements here are the training and retraining of employees, provision of greater work flexibility and increasing digitalization of the production process.

In a fourth resolution, the Supervisory Board approved the termination of the joint venture with Osram. Continental already announced the Executive Board resolution regarding this on September 23, 2020.

Also read: Continental to produce generation-6 tyres in India: Launches new UltraContact & ComfortContact tyres

Structural program: All central functions and business units worldwide to contribute to structural program

As part of the structural program, all central functions and business units are contributing to the targeted savings and optimizations at all locations in Germany and abroad. In total, the planned changes affect more than 200 of the 595 locations worldwide.

Overall, Continental expects that the planned changes from the ongoing structural program will likely affect about 30,000 jobs directly worldwide. These will be modified, relocated, or made redundant. About 13,000 of those jobs are located in Germany.

The Transformation 2019-2029 program aims to strengthen the company’s long-term global competitiveness to ensure its viability in the future. The gross annual savings targeted with the program from 2023 onwards total more than €1 billion. Continental is thus responding to the structural transformation in the automotive industry and the sharp decrease in global vehicle production since 2018. In addition, there is an economic crisis resulting from the coronavirus pandemic. At the same time, Continental is thus aligning to a new growth model with increasing connected, safe and zero-emission mobility.

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