How is Continental positioned in Ecuador, both for the industrial and consumer markets?
Continental has been here for over 60 years; we are the only tire manufacturer in the country and have the largest market share. This gives us a strong footing in Ecuador, and we cover the industry end to end, from a natural rubber plantation all the way to retailing our tires. We are extremely vertically integrated, and when we throw in the entire supply chain as well, things get interesting. Value creation is one of the statements within the company's vision, so it is paramount for us to generate value in every single step of the chain. In our retail outlets, we primarily focus on tires, though that gives us an opportunity to look at the car in many other ways. We are able to do the entire maintenance needed, and we have an opportunity to expand beyond tire service.
Do you do product development locally or centrally?
We rely on a technical agreement with Continental AG, and all the basic innovation is done centrally. Our technical teams focus on customized products to accommodate for regional specifics. For the Andean markets, we consider the climate and road conditions, which are different than, for example, Germany. Many roads put stress on tires, as there are many corners and s-turns going up and down due to the specific geography of the Andes. We benefit from being in a big corporation and having all the innovations and newest technologies available in our plants. Manufacturing standards worldwide are the same. In our production facilities in Cuenca, we manufacture tires for passengers cars, trucks, and buses that are distributed across the entire Andean region, the US, Mexico, and other Latin American countries.
Ecuador has strong environmental policies in place. How do you approach the environmental aspects of your business?
At Continental, we have a concept called Continental 360° and ContiLifeCycle to re-use tires and minimize the ecological impact. We focus on originating the product from locally sourced raw materials and closing the cycle with recycling, rethreading, and other activities to ensure environment friendliness. It is possible to rethread the tires' carcass two to three times; however, some of the imports coming into the country are not feasible or as easily reused. We are working on legislation to ensure that imported tires have a minimum quality that can be recycled. Remarkably, we are able to recycle 97% of all the waste we generate. In terms of social responsibility, we have many programs. We support low-income communities in becoming entrepreneurs and learning how to make pieces of art out of recycled tires, which they subsequently sell. Similarly, another program in Cuenca provides soft floors made out of recycled tires for children's parks.
What are your ambitions for the coming years?
Aside from profitable growth, generating value, being close to our customers, and being the most reliable brand within the region, we have a great deal of room to grow outside of our boundaries. It is important to have great market presence in regions outside of Ecuador, and we have to make sure we are competitive in terms of production. This is one of our biggest challenges because Ecuador is now becoming a more open market. We strongly support this, as long as it is done in an orderly manner; only then will we be truly ready to compete. Our greatest challenge is being able to compete with any other tire producer coming into the country. In open markets, there should be strict enforcement of anti-dumping regulations, because we all need to play by the same rules. If not, unfair competition will destroy the market. Other markets, like the US or EU, have similar rules for low-quality imports from China; however, Ecuador does not. In terms of efficiency, by 2020, we will try to lower our production costs by 20% to become more efficient. In the last 10 years, Continental has invested USD60 million in production facilities in Ecuador, and we strive to create value out of that heavy investment.