Conflict over Conti-Stöcken Settled

HANOVER, GERMANY - May 19, 2009: In the conflict surrounding commercial vehicle tire production at Continental’s Hanover-Stöcken plant, company management, the IG BCE trade union and employee representatives have come to terms on a solution. The compromise package makes use of all instruments the labor market provides and opens up prospects for 2010. “The package is the result of several rounds of intensive talks that came close to being broken off at a number of points. In the end, however, the two sides moved closer and, against the backdrop of a dogged and complex economic situation, faced up to their responsibility,” said Werner Bischoff of the IG BCE Executive Committee in Hanover on Tuesday.

“We have proven that we are always ready to discuss reasonable solutions. The government of Lower Saxony played a positive role in seeing the initiative for talks through to a successful conclusion. With the compromise we are taking into account the persistent situation and the ever more devastating collapse of the market, necessitating an adjustment of production output in Europe. The compromise gives us the requisite latitude to operatively optimize our production portfolio already in 2010. At the same time we have instituted a process of negotiations aimed at reconciling divergent interests and putting in place a severance plan that loses no time in establishing clarity as regards the future for the affected segment of the 780-strong workforce,” said Dr. Hans-Joachim Nikolin, member of the Continental Executive Board for the Commercial Vehicle Tires division.

The compromise worked out is essentially made up of the following components:

Due to the massive drop in demand in Europe, commercial vehicle tire production will be suspended at the Hanover-Stöcken plant as of the end of 2009. For the remaining employees, the short-time work scheme will be used 100 % for the duration allowed for by law.

The company will maintain a production cell with a capacity of 500,000 tires through to the end of 2010. 300 employees will be required for operation of this cell.

In late June 2010 a decision will be taken on the basis of foreseeable market development at that time on whether the production cell is to manufacture in 2011.

Jobs will be created for 50 employees as part of the Stöcken plant concept.

Plant management and the workers’ council will come to terms on a socially acceptable severance plan to allow around 200 employees to leave the plant in 2009.

A further group of approx. 225 employees will be phased out of the plant workforce over the first three quarters of 2010 on the basis of a reconciliation of interests and a severance package.

In the event that the market does not allow for operation of the production cell in 2011, the cell’s 300 employees will be phased out of the workforce through to the end of 2010 on the basis of the interest reconciliation/severance package negotiated.

”Integrated into the compromise are components of the position paper negotiated this year, especially as regards the use of short-time work and continuing education. What is more, a final decision on the future of production will not be taken until mid-2010. In this way we win time and are given extra options; this was very important for us,” said Michael Deister, employee representatives at the Stöcken plant.

The conflict resulted from plummeting demand for commercial vehicle tires in Europe in the wake of the economic crisis. As a consequence Continental has had to adjust production capacity downwards by more than two million tires per year at plants in Puchov, Slovakia, Otrokovice, Czech Republic; and Hanover-Stöcken, Germany.

With sales exceeding €24 billion in 2008, the Continental Corporation is one of the top automotive suppliers worldwide. As a supplier of brake systems, powertrain and chassis systems and components, instrumentation, infotainment solutions, vehicle electronics, tires, and technical elastomers, the corporation contributes to enhanced driving safety and global climate protection. Continental is also a competent partner in networked automobile communication. The corporation currently employs approximately 133,000 at nearly 190 locations in 35 countries.

As one of the largest manufacturers of premium tires for commercial vehicles, Continental carries a broad range of high-performance products finely tailored to specific application areas for heavy-duty and light trucks, buses and off-road vehicles. Continental AG produces truck and bus tires under the Continental, Uniroyal, Semperit and Barum brand names. The ContiBreakdownService, in existence since 1978, is a quick-response network of authorized dealerships providing additional security in the case of a flat tire.