Schaeffler, Continental Join Forces To Save Money

German auto parts makers will start a joint purchasing program that aims to save between $400 million and $535 million by 2011.

FRANKFURT (AP) -- German auto parts makers Schaeffler Group KG and Continental AG will start a joint purchasing program that aims to save between euro300 and euro400 million by 2011, the companies said Friday.

Privately held, Herzogenaurach-based Schaeffler said it is the first large joint project between the two companies since Schaeffler announced last year it would take over Hannover-based Continental AG in a deal worth some euro8 billion ($11 billion).

Schaeffler said Friday that the two companies will use the cooperation deal to purchase steel and other components, as well as to buy other non-manufacturing materials. The combined purchasing level of the two companies was some euro20 billion in 2008.

Schaeffler said it buys up to 1 million tons of steel each year, giving it advantages there, while Continental's strengths lie in buying mechanical and electronic components. Each company will contribute a well-established portfolio of suppliers, Shaeffler's statement said.

"The purchasing cooperation will offer everyone involved -- the Schaeffler Group, Continental and our suppliers -- the opportunity to benefit," said Juergen Geissinger, Schaeffler's chief executive.

"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," he said.

Schaeffler said the two companies purchase about euro4 billion in non-production materials and services like for energy, logistics, office supplies and travel.

"As these areas normally overlap to a high degree, cooperation can bring noticeable savings here as well. Joint negotiations can result in higher volume and accordingly improved conditions. The joint use and consequently more efficient planning of parts logistics will also result in significant cost benefits," Schaeffler said.

The news sent shares of Continental 13 percent higher to euro16.10 in Frankfurt afternoon trading.

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