Transformation 2019–2029: Continental’s Supervisory Board Supports Accelerated Technological Transition

• Continuation of global structural program “Transformation 2019–2029” aims to strengthen competitiveness in the long term
• Resolutions of the Supervisory Board approve plans already discussed at its meeting on September 25, 2019
• Accelerated transition to electric mobility necessitates adjustments and the phasing out of production at several locations worldwide
• Rapid digitalization of display and control technologies, increasing competitive and cost pressures: phasing out of production at Babenhausen location; talks to be held about future prospects in Rubí (Spain)
• Support for employees: broadened internal job market, expanded retraining measures as well as local collaborations
• Focus on profitable growth areas: autonomous and connected driving; services for mobility customers; and the tire, industrial and end-customer businesses

Hanover, November 20, 2019. The Supervisory Board of Continental AG approved the structural adjustments at the locations in Roding and Limbach-Oberfrohna (Germany), Newport News (U.S.A.) and Pisa (Italy) at its meeting on November 20, 2019. The plans had already been discussed by the Supervisory Board at its meeting on September 25, 2019. Since then, management and the works councils at the affected locations have, as announced, discussed the situation and the next steps. With its approval, the Supervisory Board supports the decision of the Executive Board to discontinue the business in hydraulic components for gasoline and diesel engines in the coming years. This is against the backdrop of the automotive industry’s disruptive transition to electric mobility, which has been accelerated by stricter emissions laws, resulting in a drastic decline in demand for hydraulic components.

In a further resolution, the Supervisory Board approved the structural adjustment at the Babenhausen location in Germany, in line with the decision to phase out production of display and control technologies there by the end of 2025. Moreover, certain research and development activities in Babenhausen are to be transferred to other locations by the end of 2021. This is necessary due to the industry’s abrupt switch from analog to digital technologies, as well as a rapidly deteriorating competitive situation and a corresponding sharp increase in cost pressure.

With these resolutions, Continental will push ahead with the announced Transformation 2019–2029 program as planned. This program aims to strengthen the company’s competitiveness in the long term and to ensure its viability in the future.

In addition, the company’s management informed the Supervisory Board that talks will be held as soon as possible with the local works council in Rubí (Spain) about the future prospects of the location. The company currently employs around 760 people in Rubí, producing mainly analog displays and controls.

Continental’s CEO Dr. Elmar Degenhart said: “We are making good progress. With its resolutions today, the Supervisory Board is supporting our urgently needed technological transition and thus the strengthening of our competitiveness and future viability. We are focusing on profitable growth areas, quickly and rigorously. These include assisted, automated and connected driving; services for mobility customers; and the tire, industrial and end-customer businesses. The jobs of the future will evolve in these growth areas.”

Referring to the next steps, Degenhart added: “We have been holding intensive, constructive talks with employee representatives for some time. The crucial question now is: how can we implement the necessary measures responsibly and with foresight so that we can emerge stronger from the current reorganization. We will be supporting those employees affected as much as possible.”

Continental, together with employee representatives, has expanded its corporate-wide internal job market considerably for employees affected by the structural program. Furthermore, the company recently founded the Continental Institute of Technology and Transformation (CITT). This offers employees tailor-made training courses, seminars and further education, which will retrain them for other tasks. The aim is to offer employees long-term career prospects and greater employment opportunities. In this way, they can retrain for jobs on the internal as well as the external employment markets.

Greater retraining opportunities and a larger internal job market will help to place employees in vacant or soon-to-be-vacant positions in the global corporate network and to retain skilled staff. Furthermore, Continental will also work locally with other companies in the affected regions to help find employees new jobs.

Information about the location measures that were discussed at the Supervisory Board’s meeting on September 25, 2019, and approved at its meeting on November 20, 2019

1. Roding (Germany): Discontinuation of production and development of hydraulic components for gasoline and diesel engines (high-pressure pumps) in 2024, resulting in the closure of the location. As things stand, around 520 jobs will be affected.

2. Newport News, Virginia (U.S.A.): Closure of the location in 2024, where around 720 people are currently employed. Hydraulic components for gasoline engines (injectors) are manufactured at the plant.

3. Limbach-Oberfrohna (Germany): Discontinuation of the hydraulic components business for diesel engines (injectors) in 2028. As things stand, around 850 jobs will be affected at this location.

4. Pisa (Italy): Discontinuation of production of hydraulic components for gasoline engines (injectors) from 2023 to 2028. As things stand, around 750 jobs will be affected at this location.

5. Babenhausen (Germany): Phasing out of production of display and control technologies of the Instrumentation & Driver HMI business unit by the end of 2025. Moreover, certain research and development activities are to be transferred to other locations by the end of 2021. As things stand, over 2,200 jobs will be affected. The business unit will continue to be managed from Babenhausen, including development and administration activities.