CTNA may suspend production at Charlotte plant

March 10, 2006

Continental Tire North America Inc. (CTNA) will indefinitely suspend tire production at its Charlotte, N.C., plant on or near Sept. 15, 2006, unless an agreement is reached with the United Steelworkers to significantly reduce manufacturing costs at the facility.

If the suspension takes place, 478 hourly and salaried workers at the plant will be laid off.

"Today's announcement regarding the indefinite suspension of tire production in the Charlotte plant is part of our comprehensive restructuring plan to reduce manufacturing costs and improve the overall performance of CTNA's North American passenger tire business," says Alan Hippe, CTNA CEO and president.

"Due to skyrocketing costs for energy, raw materials and health care, CTNA cannot continue to operate the Charlotte plant with our current manufacturing cost structure.

"Because we have been so far unsuccessful in restructuring our labor agreement with the union to significantly reduce manufacturing costs, CTNA must take immediate steps to reduce its costs."

CTNA officials say they do not plan to close the Charlotte plant. Operations like rubber mixing, calendering, puncture sealant application and warehousing will continue at the factory, allowing 200 employees to remain working if the production suspension is implemented.

"CTNA will continue its efforts to negotiate an agreement with the (union) to reduce manufacturing costs and alleviate the need to lay off workers in Charlotte," say CTNA officials.

The company wants to slash costs by at least $32 million per year.

"I want to emphasisze that the announcement we made today is not irreversible," says Hippe. "However, we must reach an agreement with the union that reduces our manufacturing costs in the Charlotte plant and makes the plant competitive with other Continental plants worldwide."