CHARLOTTE, N.C. -- Continental Tire North America Inc.'s top executive believes the company has charted a clear course for growth in the United States.
The company plans to pour $70 million to $100 million into its Mount Vernon, Ill., factory, a significant jump from the $60 million to $70 million it said it would invest in the site last February, CEO Alan Hippe says.
That's the upside. The downside is that Hippe virtually has ruled out the prospect of tire production returning to its factory here.
The company also plans to close its Mayfield, Ky., plant and lay off 150 workers there in about six months. That will take Continental down to one U.S. tire factory. That contrasts with the four plants in the United States and one in Canada the German company obtained when it bought General Tire about 20 years ago. Continental also has majority ownership in a GTY Tire Co. plant, also in Mount Vernon.
In addition, Continental is considering moving from its Charlotte, N.C., headquarters to another site in the South. "We're just looking," Hippe said in an interview.
Continental has been building its r&d and marketing presence in the United States in the last several months, he said, and the company will focus on more tire introductions and marketing for the next few years.
Hippe said that while other U.S. manufacturers are making investments in plants overseas, Continental is spending to improve the Mount Vernon factory.
Almost every move the company is making at the production site is aimed at bringing overall manufacturing costs in line with global competition and the company's plants overseas, he said. That way, Continental can continue to produce tires in the United States and make a profit.
Hippe said that although Continental has seen improvements in manufacturing costs and its replacement tire business in the United States, it still must reduce costs further to return Continental to profitability.
He said the Kentucky site was not cost-effective.
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