10/10/2011

• From the hot-water bottle to the ContiSportContact 5 P

• Quality and ingenuity ensure continuous advancement

Hanover, October 2011. With approximately 160,000 employees in 46 countries and sales of more than 26 billion euros in 2010, Continental is among the three leading automotive suppliers worldwide. In the field of passenger tires, Continental is the market leader in Europe since 2007, and more than 30% of all new European cars leave the factory fitted with tires of the same premium brand as original equipment.  All of these are well-known facts, because they are just as ever-present in international media reports as they have been since 1994 on the striking Continental advertising hoardings in football stadia around the world. If a museum dedicated to mobility were to exhibit a reproduction of a cave painting showing us one of our ancestors named Con of Tinen-Tal shaping the first wheel from a block of granite with a hand axe while his children pass a stone ball around with their feet in the background, we would not be surprised – in fact, it would serve only to confirm what we always believed to be the case. And yet it all started completely differently, with hot-water bottles and toy dolls.

When Continental was founded as the Continental-Caoutchouc- und Gutta-Percha Compagnie on October 8, 1871, the 200 or so employees mainly produced soft rubber goods and rubberized fabrics – although solid tires for carriages were already part of the product portfolio. The company was founded by nine bankers and industrialists based in Hanover, Germany. The initial capital was around 300,000 thalers, which corresponds to a present-day purchasing power equivalent to approximately 6.3 million euros. After two years of construction and rebuilding, the main factory entered operation in the Vahrenwald area of Hanover, where the corporate headquarters is still housed today. The company had a difficult start due to established competitors and wildly fluctuating raw material prices. The first financial year ended on a loss. However, focusing on what was at the time still the new technology of soft rubber goods proved to be a judicious strategy.

From todays Perspective the first Steps look quite decent

A significant proportion of this early success was due in particular to the bicycle boom, which created a flourishing market for (solid rubber) tires during the 1880s. In the middle of the decade, Continental rose to the level of market leader – not just in Germany, but in France and the UK as well. In 1891, Continental presented the first pneumatic tire for bicycles, with the first for automobiles following just seven years later. Advanced vulcanization technology secured a pioneering role for the company. The first tire with a tread pattern was developed in 1904. Not long after that came the first tires with anti-skid protection – a precursor to later spike technology. By this time, Continental was already involved in services for the transport industry and manufactured robust wheels for trailers, among other products. In 1906, Continental initiated a cooperative agreement with the German truck and bus manufacturer Büssing in Brunswick with the aim of making pneumatic tires for trucks. However, the durability of these tires was problematic at the time.

Growth Engine Research and Development

Continental began production of pneumatic tires for commercial vehicles in 1921 and three years later introduced the “Conti-Cord”, a low-pressure tire that considerably improves driving comfort and the lifetime of the tires. With the triumph of the diesel motor in the 1930s, there was a boom in road transport. Continental offered “tires for every vehicle on wheels” tailored to their intended purpose and, right from the start, targeted a variety of customer needs and requirements with the segmentation of the market. Dynamic progress in technical developments in the vehicle industry called for higher payload capacities and speeds, while cost-effectiveness, safety and greater comfort for drivers and passengers became ever more important.

At its 50th anniversary, Continental was the first German company to introduce cord tires on the market, and it started to produce giant pneumatic tires that replaced the solid tires used on commercial vehicles until that time.

Other significant stages of development included the start of tire production based on synthetic rubber in 1936 and, in 1943, the filing of patent number 893164 for tubeless tires designated “Pneumatic vehicle tires for use without an air tube” – Continental was writing tire history. A further milestone came in the mid-1950s in the form of the introduction of M+S tires for commercial vehicles and the use of lugs and sipes. Continental continued to use its innovative strength to make advances in development and build upon its leading position in the winter tires segment. Further highlights included the introduction of the first true winter tires for buses and a winter tire for trailers.

Continental's industrial tires accompanied the development of the vehicle industry and proved their flexibility not only in use with vehicles, but also with regard to tire filling. For transporting extremely heavy loads, Conti experimented with high pressures of more than 10 bar, as well as filling tires with water, until the research department hit upon the idea of filling with the synthetic material polyurethane as the best solution for these particular requirements. The scope of the industrial tire range is also something of which the company can be proud. Today, the smallest Conti tire has a diameter of 26 centimeters, while the largest measures 2.3 meters.

Internationalization and the Way to become an Automotive System Supplier

Steady internationalization began in the early 1980s with the takeover of the tire business of Austrian manufacturer Semperit. In acquiring the European tire operations of the American company Uniroyal Inc., taking over the North American tire manufacturer General Tire and purchasing majority holdings in the Portuguese company Mabor and the Czech tiremaker Barum, Continental subsequently carried its international activities even beyond Europe's borders and laid the foundations for the success story of the multi-brand strategy. At the end of the 1990s, the corporation revamped its strategy. The first step in this direction was taken in 1998 with the purchase of the ITT Industries automotive brake & chassis operations (Teves). In 2001, Continental acquired the international electronics specialist Temic from Daimler. In doing so, Continental, as a tire and rubber specialist, gave itself a second mainstay in the automotive supplies business. This made it better able to cushion the ups and downs in business. With the acquisition of Siemens VDO – the biggest acquisition to date in the company’s history – Continental advanced to the premier league of automotive suppliers worldwide. 7,000 employees currently work at the company's central location in Hanover. In addition to corporate headquarters, the capital city of the German federal state of Lower Saxony is home to the rubber divisions Tires and ContiTech, with administration, research and development and production.

Nikolai Setzer

Preview of Opportunities for the next Decades

Given this extremely successful and continuing development over the course of almost a century and a half, it comes as no surprise that Nikolai Setzer not only looks back proudly, but also views the future with confidence. Asked whether he believes that there will still be car tires in 140 years’ time, the manager responsible for the Tires division in the corporation’s Executive Board responded in a recent interview: “The history of the wheel goes back thousands of years. I at least very much assume that new chapters are still to be written in this history and that we shall continue to require tires to make efficient use of the wheel. And automobility will also remain a topic – in whatever shape or form. Viewed historically and in comparison with other branches, the tire business itself is a stable field. It is in a continuous process of advanced development thanks to worldwide industrialization and the sale of vehicles in almost all countries of the globe. And what is good about this is that alongside passenger cars or trucks, tires are what enable efficient mobility via electric vehicles, electric bikes and many other vehicles, quite apart from enabling drivers to deal with the wintry conditions prevailing from Alaska to Eastern Russia every year. Without winter tires, this would not be possible."

The UHP summer tire ContiSportContact 5 P was launched in Spain in 2010

The opportunities for growth look good in the short and medium term as well. Rising demand is expected in Asia in particular, while the market share in the replacement business is set to grow in the USA and experts are forecasting an increase of more than 6% in the UHP segment in Europe. A constant increase in safety awareness among motorists is a source of additional market potential. For years, Continental has invested approximately 300 million euros annually in its tire plants to eliminate existing bottlenecks and to expand capacities regularly and efficiently, not to mention by far the largest tire investment program in the company’s history, amounting to more than a billion euros, which is creating additional production capacities across the world.

Further ContiTireNews can be found here.