Continental and Bandvulc management comment on integration process

Continental and Bandvulc management comment on integration process

It is no secret that Continental and Bandvulc have been working together for decades. So it was also no surprise to learn that the subject of a possible takeover arose as long as 12 years ago. However, the round of talks that resulted in the sale agreement were instigated by Bandvulc managing director Patrick O’Connell during a meeting at the CV show in 2013. In the two or so years that followed the two firms say they grew together before a final deal was completed in July 2016.

However, the course of true love seldom runs smooth. And just when the “marriage” looked like was going to happen in June last year the European referendum took place on 23 June. And we all know what happened there. Understandably, this led to some additional conversations between Continental’s

UK headquarters in London and the firm’s global HQ in Hannover. No doubt these were designed to bring a greater degree of clarity to high levels of uncertainty that the Brexit vote brought with it. The end result was that, owing to the fact that Bandvulc does and will largely supply and support customers in the UK and Ireland, the acquisition still makes sense for the UK and Ireland – whether or not we are part of the European Union. This hurdle overcome, the deal was completed a couple weeks later and the  rest is history.

From the outset of our meeting it was clear that Continental executives are pleased they have been able to successfully acquire Bandvulc as well as all the strategic benefits that go with it (more on these below). Indeed, David Smith used the word “delighted” more than once when summing up his response to the acquisition. They are pleased that they have been able to partner with a company that has a compatible culture with their own – the lack of which has been the downfall of many other acquisitions. They are also pleased to add local retread manufacturing capability, which potentially has unforeseen benefits in the post-Brexit environment. And they are pleased to add something like 1 million wheels’ worth of fleet tyres to its customer base. Asked whether Conti had beaten anyone else to the punch when it came to acquiring Bandvulc, Smith declined to enter into speculation about competitors. The point is that Continental has bought Bandvulc for entirely positive and forward looking reasons, rather than any kind of defensive manoeuvre.

From Bandvulc’s point of view, it is clear that the family-owned business wasn’t entering an open sale process when the subject arose in 2013. That’s not to say that Continental were the only firm that were interested, but rather that Bandvulc’s focus remained on growing its own business, adding fleets to its burgeoning list of customers. In many ways they ran Bandvulc during this period  as if the Conti deal wasn’t going to happen – thereby maximising its continued growth potential as an investment.

What the deal means in practice

Personnel: The most immediately noticeable changes post-acquisition are the personnel movements that have taken place.

After 14 years at Continental, Arthur Gregg has joined Bandvulc as integration manager in a move that signals how seriously both companies take the cultural integration of the two businesses. Indeed, Gregg and his wife are relocating to Plymouth in order to oversee a smooth transition.

Arthur Gregg (edit)
Arthur Gregg – Integration Manager

At the same time, Matt Wilkinson has joined Continental, taking over from Arthur Gregg as commercial sales and marketing director UK and Republic of Ireland. Wilkinson joined Continental Tyre Group in December 2016 after spending the first decade of his 20-year tyre industry experience at Michelin, followed by a second decade at Bridgestone’s European headquarters in Brussels. His experience in the tyre industry spans almost twenty years, during which time he has worked predominantly with premium tyre manufacturers.

Matt Wilkinson
Matt Wilkinson – Commercial Sales & Marketing Director UK and ROI

He began his career in 1998 working for Michelin Tyre Plc as a truck sales manager. During his 11 years with Michelin, Wilkinson gained experience in a variety of customer facing roles, from traditional sales, project managing CRM systems through to Michelin Fleet Solutions. His dedication to customer satisfaction also saw him awarded Account Manager of the Year in 2004, bringing additional responsibilities including field sales training and assessments for new employees. During his final years with Michelin, Wilkinson worked predominantly in PPK and Risk management, delivering advice and support to the senior management team,  key account and sales managers. He was also instrumental in creating and developing strategic tools for the Michelin solutions offer.

Most recently Wilkinson spent eight years with Bridgestone Europe based out of their European head office in Brussels. While at Bridgestone, he was involved in the development of medium to long term strategies for the Commercial Business Unit, providing leadership to the business development, operations and system development departments as well as responsibility for European Solution Business. Previous roles within Bridgestone also gave him responsibility for PPK and mega fleet development, including negotiating multi country supply agreements with Europe’s largest fleets. He was also tasked with overseeing Bridgestone’s Independent Service Network and the European Breakdown Scheme.

In addition, both David Smith and Patrick O’Connell confirmed that there were no plans for any job losses following the acquisition. Indeed, such is the complementarity of the two firms and their ambition- the companies say – there is even the potential for growth over the long term. To give an example, 450 people worked for Bandvulc before the acquisition and roughly 460 do now as a result of the natural growth of the business. Rather than considering cuts, “our difficulty is realising opportunities in a sensible timeframe,” David Smith told Tyres & Accessories.

Product portfolio: As well as personnel changes, significant steps towards the integration of the two firms’ product portfolios have been taken. In practice this means the specific integration Continental Group products into Bandvulc’s range. According to the executives, this won’t have an enormous effect on sales of Continental’s eponymous flagship brand tyres, but will have a marked effect further down the group’s brand tree.

The clearest sign of this came in late December 2016 when Continental announced that its Uniroyal truck tyres would now be exclusively distributed by Bandvulc (previously they had been distributed by a Kings Road Tyres subsidiary).

As a result Bandvulc customers are likely to be introduced to two main new tyre/retread options: either Continental new tyres and ContiRe retreads (mostly manufactured at Bandvulc and exclusively on Conti group casings); or Uniroyal new tyres and Bandvulc retreads (based on either Conti group casings or “other compatible casings”). Clearly the company can’t force customers to take either of these two paths and the two firms’ customer centric approach will continue. But, presented in the right way, these changes are likely to result in a significant upswing in the sale of Continental Group products.

Bandvulc will now also gain access to Continental Group products in other sectors. Top of the list are Conti’s materials handling products. When you consider the fact that the fleets Bandvulc deals with are by their nature logistics operations, there are clear synergies to be had in terms of forklift tyres. Likewise in the waste and construction sectors where the relevant OTR products will be made available. The same is true of Conti’s Automotive business. The goal is to make Bandvulc a one-stop-shop for its customers and thereby increase both volume and diversity of sales overall.

Just eight months into the integration process it is too early to say how effective all of the above moves have been. However, with Continental having invested a significant but unspecified amount in Bandvulc as well as a further sum in upgrading Bandvulc’s production line with a further robot as well the capability to produce third generation Continental truck tyre retreads, this move is clearly a long-term commitment. “We bought the business for the next 30 to 40 years, not the next three or four months”, said David Smith, illustrating the long-term nature of the company’s thinking.

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