Continental plans to reduce production at Charlotte plant

Jan. 9, 2006

Citing "continued high manufacturing costs," Continental Tire North America Inc. (CTNA) announced it will implement production curtailments at its Charlotte, N.C., tire plant.

The moves will result in the layoff of 513 hourly and salaried employees.

The production curtailments will take place in two phases.

* The first phase will occur on March 15 and will affect approximately 241 salaried and hourly employees.

* The second phase will take place on June 30 and will affect approximately 272 salaried and hourly employees.

The Charlotte plant will continue to operate thereafter with a total of 573 hourly and salaried employees.

As required by law, CTNA today issued notices to the union and government officials regarding the layoffs in accordance with the Worker Adjustment and Retraining Notification (WARN).

"Manufacturing costs in our Charlotte facility are higher than any other Continental tire plant worldwide, and we have been very clear from the start that we cannot continue in our current situation," says Dr. Alan Hippe, CEO and president. "Our overall objective is to reduce significant financial losses while expanding our market position in the North American marketplace for all tire operations.

"For the last several years, we have been analyzing our North American manufacturing operations and implementing initiatives to reduce costs in all areas of our North American tire business."

According to Hippe, substantial reductions in the manufacturing costs at the Charlotte plant must be achieved in order to assure the long-term value of the Charlotte plant in CTNA's North American manufacturing operations.

CTNA is currently in negotiations with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and its Local Union No. 850L, the unions that represent hourly production and maintenance employees at the Charlotte plant. Hippe says the company's goal is to achieve significant labor cost reductions in order to alleviate the manufacturing cost disparity between the Charlotte plant and other tire plants operated by Continental AG worldwide.

"We want to continue to manufacture tires in Charlotte, but global competition is putting pressure on us as our manufacturing costs are cheaper overseas," he says. "Our future here and all over North America depends on our ability to increase efficiencies and reduce labor costs in our manufacturing operations. The production curtailments we announced today are a reflection of that reality."