Conti resumes tire production in Russia

ANAmerican companies in Russia have reacted differently in recent weeks to the aggressive war the country has launched against Ukraine. Some have left Russia or restricted their businesses. Others stay quiet. The car supplier and tire manufacturer Continental is now showing a new approach. After production was initially ended, Hannover’s Dax group is partially resuming production, according to information from FAZ.

catherine wagner

Commercial correspondent for Russia and the CIS based in Moscow.

This is the Kaluga tire plant, about 190 kilometers southwest of Moscow, where Conti suspended work in early March. Also, all import and export business with the Russian Federation had stopped for the time being, he told himself at the time. Production has been back up and running since last week, as confirmed by Conti on request. The group justifies this with “harsh criminal consequences” that threaten local employees and managers if they don’t heed local demand. “The basis of this step is the duty of care of our employees in Russia.” We are talking about temporary “in case of need” production, which is significantly below the previous capacity utilization of the plant. Conti “has no intention of making a profit.”

1,300 employees in Russia

Other tire manufacturers had recently continued their work in Russia, such as Finland’s Nokian. They want to retain control of production facilities there, but will not invest more, he said. The background of the discussion is that the Kremlin party “United Russia” presented in early March a legislative initiative that provides for the nationalization of foreign companies if they leave the Russian market or stop their operations.

The proposed law and probably also the threats of possible prison sentences for local CEOs had caused great unrest among Western companies. The Obi hardware store chain recently handed over 27 branches in Russia to a Russian investor, among other things to avoid expropriation. After initial hesitation, the Henkel consumer goods group is also leaving the country.

According to the Kremlin-loyal Izvestia newspaper, the expropriation bill has been put on hold for the time being and has not even been submitted to the government. Many of the companies do not want to leave the Russian market forever, but want to resume their activities soon, according to government circles. The government wants to accommodate these companies, so it reserves the law for “extreme cases.”

The Russian sales market is comparatively small for Conti. However, the war in Ukraine hits the group hard, mainly due to rising prices of the country’s raw materials needed for tire production. Around 1,300 employees work for Conti in Russia, most of them at the Kaluga site. These employees want to be “protected from criminal prosecution”, according to the headquarters in Hannover. The leadership strongly condemned the attack on Ukraine. “Continental supports and is complying with all applicable sanctions and legal regulations imposed as a result of the war in Ukraine.”

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