Staff Report
Published July 2, 2009

Fort Mills-based Continental Tire North America today announced it has acquired the majority ownership of a leading passenger, light truck and commercial tire company in Latin America, Compania Ecuatoriana del Caucho S.A., or ERCO.

The acquisition will give Continental a significantly improved competitive position in Latin America, through ERCO’s strong distribution network in Ecuador and the Andean region, which includes the countries of Chile, Peru, Bolivia, Columbia, Venezuela and Ecuador, the company said.

The ERCO Group is an integrated tire business operated out of Ecuador and includes a tire plant in Cuenca, as well as associated operations including a rubber plantation, retreading plant, tire import businesses and various retail chains in the Andean region.

"Majority ownership of ERCO provides Continental with the ability to improve our entire value chain — from the rubber plantation to the retail stores — throughout the Americas region through ERCO's strong competence in the tire business," said Matthias Schoenberg, chief executive officer of Continental Tire The Americas. "Our plan is to have ERCO manage the six countries of the Andean region so that we can expand our business in these critical growth markets which, together, have a larger population size than that of Mexico, but with faster growth."

Currently, ERCO sells Continental, General and Barum brands. The tire plant in Cuenca produces both passenger, light truck tires as well as commercial truck tires, and is the only plant in the region capable of producing radial truck tires.

ERCO Group experienced a 15% to 20% growth rate over the last four years and expanded its associated retail chain to 120 retail stores. ERCO Group employs 1,600 people in its businesses, the company said.

Continental has held a 42% stake in ERCO since 1987, when the company purchased General Tire, which originally held the ERCO stock.