Continental invests in growth with new passenger tyre plant in Russia

Hanover/Kaluga, July 1^st, 2011. Continental is investing in growth by building a new tyre plant
in Kaluga, Russia. Following a phase of carefully assessing various sites in Russia, the corporation decided today in favor of the city with just over 325,000 inhabitants that lies 170 km southwest of the capital Moscow. “Our strategic goal is to achieve above-average and profitable growth in particular in the emerging markets. We shall therefore be investing
a total of more than one billion euros over the next four years in order to build up additional passenger tyre capacity. Aspects like its good infrastructure, central geographical location and the good experience Continental has already had with the existing automotive electronics plant were among the special advantages of the new site in Kaluga”, explains Nikolai Setzer, head of the Passenger and Light Truck Tires division and member of the Executive Board of Continental AG.

Some €220 million will be invested in the new plant, with production slated to start at the end of 2013. Employees at the plant which – as is usual for Continental – will have an output of about four million tyres a year in its first full-capacity phase, are expected to number about 400 by the end of 2013. The Russian government has promised to support the new site. Continental, as a major tyre producer serving the European OEMs, is thus following leading vehicle manufacturers like Volkswagen, for example, who have already had manufacturing operations in Kaluga for several years now.

“Start of construction is planned for the end of 2011, and, for us, this move represents a very important milestone for our local activities in Russia as well as for our global growth plans”, says Setzer. “Indeed, our plans for Kaluga are such that we shall be able to expand the plant’s annual capacity to eight million passenger tyres when the time comes.” According to Setzer, this new foothold in the Russian market, which has been registering significant growth again since 2010, is a ‘strategic must’ for Continental. Through its local production in Russia, the Passenger and Light Truck Tires division will benefit from the removal of import duties and from reduced transportation costs, thus making it much more competitive all round. At the new plant, Continental will primarily make summer and winter tyres under the Continental, Gislaved, Barum and Matador names which are the key corporate brands for the Russian market. The new employees will receive special instruction and training at other passenger tyre plants, a concept that proved to be highly successful for the Hefei location in China, which commenced production officially in spring 2011. “This way, we want to ensure that tyres made in Kaluga for the Russian market are built right from the start in accordance with our high production standards that apply throughout the world, and so perform just as well as those made at our established factories”, explains Setzer.

Continental has had its own sales organization in Moscow since 2005 and, today, is one of the largest foreign manufacturers of tyres in the country. About a year ago, the corporation decided to build a greenfield manufacturing facility to enable it to act faster and more directly in Russia and to improve the delivery situation in the long term. Aside from Russia, Continental is also currently expanding production capacity in Brazil, the U.S.A. and Europe in order to better serve increasing global demand on a long-term basis.