CHARLOTTE, NC (May 8, 2006) - As part of the company’s on-going North American restructuring plan, Continental Tire North America, Inc. (CTNA) today announced that tire production at its Charlotte, North Carolina tire manufacturing facility will be further reduced on July 7, 2006. The reasons for this additional curtailment of tire production are high manufacturing costs at the Company’s Charlotte plant, escalating costs for energy and raw materials and declining business conditions in the Company’s North American passenger and light truck tire business. This production curtailment will result the layoff of approximately 481 hourly and salaried employees.
“With skyrocketing costs for energy and raw materials, our ability to manufacture tires at competitive costs continues to deteriorate. At this time, our Charlotte plant has the highest manufacturing costs of any Continental tire plant world wide,” said CTNA President and Chief Executive Officer Alan Hippe. “At this point, we must take immediate and decisive action to reduce our manufacturing costs and return CTNA to profitability. Given our inability to reduce costs at our Charlotte plant, we must implement our plan to indefinitely suspend tire production in Charlotte and relocate these products to lower cost manufacturing facilities.”
The production curtailments and resulting layoffs announced today are part of CTNA’s phased implementation plan of the previously announced indefinite suspension of tire production at the Charlotte plant. The layoff of approximately 172 hourly and salaried employees announced on March 10, 2006 will occur as scheduled on May 12. In addition, an additional 50 salaried employees will be laid off on June 30. When the production curtailment announced today is implemented on July 7, another 481 hourly and salaried employees will be laid off. CTNA plans to work with federal, state and local government officials to provide transition assistance to the laid off employees. In addition, CTNA has offered to meet with the United Steel Workers union which represents hourly employees at the Charlotte plant to negotiate layoff benefits for displaced hourly employees.
CTNA had been in negotiations with the USW since last October focused on reducing manufacturing costs by $32 million at the Charlotte plant. The union rejected all nine proposals offered by CTNA and was unwilling to offer anything near the manufacturing cost reductions sought by the Company. Following the union’s rejection of CTNA’s final proposal, on April 30, CTNA announced negotiations had reached an impasse and that the Company would move forward with its Charlotte restructuring plan, including the indefinite suspension of tire production in the Charlotte facility.
CTNA will continue to provide all of its customers with high quality passenger and light truck tires after the indefinite suspension has occurred and is implementing plans to meet commitments to customers with products produced at other CTNA plants as well as at sister plants in Europe.
About Continental Tire North America, Inc.
Continental Tire North America, Inc. (www.continentaltire.com), based in Charlotte, is a group company of Germany-based Continental AG, a leading systems supplier to the automotive industry. Continental Tire North America, Inc. has almost 6,500 employees and operates 6 plants in North America. It is a major supplier to the original equipment and replacement tire markets, selling Continental, General, Euzkadi and private brands.