Transformation is the key to success

As far back as its early days, Continental had to navigate turbulent waters. Despite generally favorable circumstances – rubber was increasingly becoming a versatile raw material – the company, founded in 1871 by nine Hanover-based industrialists and bankers, was soon faced with serious challenges. 

The coffers were soon empty and the start-up capital quickly used up. One change in management followed the other. On top of this, there was an economic crisis of considerable proportion. It dragged many sectors in Germany into recession. In the rubber industry, which was still a young one, several companies had already gone into a state of insolvency. 

Aware of these challenges, however, the founders did not allow themselves to be discouraged. They believed in the enormous market and future potential of the new rubber material, and did everything they could to guide Continental from a risky and imperfect start-up business to an established company. The market provided them with the necessary momentum: Pneumatic tires gained currency in the 1890s. 

When it also became popular with bicycles in 1892, it was the collaboration between Moritz Magnus – a defining player on the executive committee – and former cycling professional Willy Tischbein, who further boosted this trend. Science-based product development – this was already the cornerstone in this early phase of the company’s history. Even back then, Continental already had its own research laboratory. Under the leadership of Adolf Prinzhorn, this gradually contributed to Continental developing into a market-leading German company in the rubber industry. 

In the second phase of the company’s development, the upward trend, signs of which had already been present at the end of the first phase, continued. Just as in other sectors, Continental’s history was dominated by extensive innovation at the beginning of the 20th century. 

In 1904, the world’s first profile tire for automobiles was produced, followed a year later by the first riveted anti-skid tires and in 1908 by the system of a detachable rim. These inventions also ultimately helped Continental to make its breakthrough – the company became an international automotive tire manufacturer. The company had also unlocked other fields of mobility: For example, it was a supplier of rubberized materials for aircraft, zeppelins and balloons. This resulted in an even greater differentiation into technical rubber products and consumer goods. 

At the same time as its geographic and technical expansion, the number of employees grew from just 500 to around 7,000 in 1913. Continental became an important co-creator of the modern mobility society of the late 19th and early 20th century. It therefore comes as no surprise that during this time, Continental also published numerous publications on the topic of mobility, such as the “Continental Handbook for Motorists and Motorcyclists,” the “Continental Atlas,” and the “Continental Touring Office” to work out travel itineraries.

Like almost all companies in Germany, Continental was also hit by inflation after the end of World War I. During this time, international collaborations, such as those with US tire company B. F. Goodrich, were particularly valuable. 

An up and coming, wide-ranging social trend also helped Continental to gain additional business opportunities: Sport was becoming a mass phenomenon. More and more people were devoting their free time to physical activities such as cycling. Major motor sports events became crowd-pullers. This also resulted in growth in the market for Continental’s tire products. 

The era of National Socialism was undoubtedly the darkest chapter in Continental’s history. At the beginning of this phase, the company manufactured numerous products for the Nazi leisure and consumer society, but in subsequent years the product portfolio was more and more dominated by defense equipment. So for example, Continental became a supporting pillar of the Nazi military and war economy, while at the same time profiting economically from the mobilization and arms policy of the regime. 

The fifth transformation phase marks the most far-reaching process of change in the company’s history to date: Continental reinvented itself fundamentally after the end of World War II. A new corporate headquarter was built and a new logo symbolized the start of a new era. The years of the “economic miracle” followed, and with it the wave of automobilization of the 1950s and 1960s. 

Just like back then when it was founded, the company dared to branch out and use a new material: This was the birth of plastic production at Continental. But even this high phase did not last for ever. At the end of the 1960s and early 1970s, an economic slump and the technological lag on competitors at the time grew into a tangible existential crisis. The company got into difficulties. 

It was not until 1983 that this long-standing crisis came to an end – and Continental was able to “take the bull by the horns.” The economic situation within the industry had visibly worsened. Several mergers safeguarded the continued existence of the company. 

In 1979, Continental took over the Uniroyal Europe division, followed six years later by Semperit, and finally in 1987 by General Tire. However, these acquisitions brought further challenges: A large number of employees, corporate cultures and brands had to come together. They were to be combined under one roof with a uniform strategy and a common goal. 

This was the birth of Continental AG, during which we set out on our shared path into the future. But even then, the company was not at peace. An attempted takeover by Italian tire manufacturer Pirelli ultimately failed. 

But Continental would not be Continental if it had not also demonstrated its resistance to crises in this situation too. The company was facing fundamental organizational and corporate cultural changes. As a result, Continental developed into an automotive supplier and system supplier – the only tire manufacturer worldwide to do so. 

In subsequent years, the automotive sector was continuously strategically expanded. In addition to tires, the company now also produced system solutions – this change accompanied an image change from a tire manufacturer to a modern technology group. Through acquisitions and targeted entry into ever-expanding markets, Continental is becoming a company that is culturally very heterogeneous and highly differentiated in terms of its workforce structure. 

The global economic and financial crisis in 2008/2009 and an attempted takeover resulted in uncertainty within the German automotive supplier. However, Continental was able to rectify this again as a result of the economic upturn in the subsequent years. In order to be better prepared for such developments in the future, during this transformation phase, Continental once again increasingly focused on promoting its network culture and the further integration of organizational and cultural units. 

In addition, Continental was confronted with a classic problem in the history of the company and technology: The transition from an aging or old, yet sophisticated, technology to new future technologies, which in the early years were often still associated with losses. Electric mobility and automated and autonomous driving played an increasingly important role in Continental’s product range. 

The far-reaching changes that heralded Continental’s final transformation phase to date were clear right from the start. Since 2017, production and sales figures in the global automotive industry have been falling steadily and Continental’s sales have stagnated. In order to counter this development, the Executive Board brought into being the “Transformation 2019-2029” structural program. 

The core of this program is to increase efficiency and productivity by adapting the portfolio and organization. But just a year later, this industry crisis worsened dramatically as a result of the coronavirus pandemic, tearing a large hole in the company’s sales and earnings. Continental was forced to tighten its belt dramatically. Nobody yet knows how long this crisis will continue, but it could be that this transformation phase is the biggest test in Continental’s history. 

In its 150-year history, Continental has overcome many things: Various government regulatory economies, two world wars, hyperinflation, four currency reforms, various stock market crashes and at least five world economic crises. So the company “knows all the tricks of the trade” – and is ready to continue writing this success story.