Continental and Schaeffler Group have reached a joint purchasing agreement that Schaeffler said would achieve cost benefits of up to EUR400m in three years.
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Schaeffler, which recently sought short-term finance to help dig itself out of debt incurred when it borrowed heavily to buy Continental just before the credit crisis hit, said the purchasing arrangement was the first large joint project in the history of cooperation between the two companies.
“Its goal is to optimise cost of materials and achieve an annual triple digit million benefit through access to the steel markets and component suppliers as well as investments and non-manufacturing materials,” the bearings specialist said in a statement.
The combined purchasing volume of Continental and Schaeffler was about EUR20bn in 2008. The annual purchasing volume capable of benefiting from synergies comes to about EUR6.6bn, resulting in a total savings potential of EUR350 to EUR400m for the period between 2009 and 2011.
Schaeffler has particular expertise in buying steel while Conti is skilled with electronic and mechanical parts.
Continental’s suppliers will obtain far better access to global steel markets than they presently have separately and the Schaeffler Group will benefit from Continental’s large supplier portfolio.
“The purchasing cooperation will offer everyone involved – the Schaeffler Group, Continental and our suppliers – the opportunity to benefit. The mutual build up of our purchasing activities will enable us to achieve significantly improved cost structures. This is a first important step into a successful future,” said Schaeffler Group president & CEO Jürgen Geißinger.
Continental chairman Karl-Thomas Neumann added: “Continental and the Schaeffler Group will now operate in the market with a single purchasing strategy, uniform quality standards and a common supplier base. This will enable us to purchase the most advanced technology with maximum quality from the best suppliers. This is an important element in maintaining the leading position of our companies in the market and transforming ourselves into a global champion of the automotive supplier industry.”
Future plans are to cooperate with 2,800 suppliers of production materials rather than 5,600 as in the past.
