Why Continental is now producing in Russia again

German corporations in Russia
Why Continental is now producing in Russia again

Continental has a tire factory in Russia

© Christophe Gateau / DPA

For German corporations, the Russia exit is becoming a balancing act: the auto supplier Continental is starting up its tire factory again, citing fears for its employees as the reason. Others call for an orderly retreat or simply give everything away.

It is a restart with devastating external effects: right on time for the start of the major Russian offensive in the Donbass, the German automotive supplier Continental announced that the war-related production boycott in Russia had ended. At the end of last week, production in the tire plant in Kaluga, southwest of Moscow, was restarted, the company confirmed in a report by the FAZ.

Continental initially joined the phalanx of companies that had turned their backs on Russia because of the war against Ukraine. At the beginning of March, the company from Hanover decided to “suspend production at the plant in Kaluga for the time being”, as it was called at the time. In addition, all Russian imports and exports were stopped.

“Hard penal consequences”

Continental is now justifying the about-face with its duty of care for its own employees. “The current situation is extremely complex for international companies like Continental, which operate production facilities in Russia. Our employees and managers in Russia face severe criminal penalties if we refrain from serving local demand,” the company explained to the DPA .

In total, Continental has around 1,300 employees in Russia. The company said it would only produce “if necessary” and “temporarily”. The factory should not be used to capacity. With the production in Kaluga, “no intention of making a profit” is pursued. The company also emphasizes: “Continental supports and complies with all applicable sanctions and legal regulations that have been imposed as a result of the war in Ukraine.”

The case shows how difficult it is for Western companies with Russian locations to completely end their activities in Russia. Already in the first wave of boycotts after the Russian attack on Ukraine, many companies emphasized that they still felt responsible for their employees in Russia. The Düsseldorf wholesale chain Metro, for example, is continuing its extensive business in Russia with reference to its thousands of employees, despite public criticism.

Exit strategies from Henkel, Obi, Oetker

But even those who have only temporarily put their business on hold must slowly consider whether and how it should continue permanently – and how to deal with pressure from Russian politicians. The Russian government wants everyday products in particular to continue to be produced. Otherwise there is a risk of expropriation, a corresponding draft law is currently being discussed.

The Düsseldorf-based consumer goods giant Henkel is one of the German companies that have halted investments in Russia but continue to produce locally. The producer of Persil and other well-known brands for everyday use has now decided to withdraw in an orderly fashion. On Tuesday, Henkel announced for the first time that it would be giving up its business in Russia. “The implementation process is now being prepared,” the announcement said. “Henkel will work closely with its teams in Russia on the details to ensure an orderly process.” The 2,500 employees on site would continue to be employed and paid during this time.

Other German companies have found quicker exit strategies. The Bielefeld food manufacturer Dr. Oetker has sold its Russian plant to the local management, who can now continue production on their own account. And the Obi hardware store chain has given away all 27 Russian stores, including their furnishings, to an investor. This is now allowed to continue the markets, among other things, the logo – and Obi has nothing to do with Russia anymore.

with agency material

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