Bridgestone changes aimed at boosting sales

By Roger Schreffler, Automotive News

Tokyo - Bridgestone Corp. has big plans for its global tyre business. Kiyoshi Nomura, vice president in charge of international tyre operations, is one of the top people charged with seeing that the company realises those ambitions. The Japanese manufacturer aims to reach $27 800 million in sales, up from $21 600 million in its last fiscal year, with more than 5 percent net profits by 2010.

Nomura, 54, recently discussed the company's performance and plans in an interview at corporate headquarters in Tokyo with Roger Schreffler, a European Rubber Journal correspondent.

What organisational changes are you making to plan for long-term, sustainable profits and growth?

Our new president, Shoshi Arakawa, instituted a "strategic business unit" concept, which places responsibility for product development and sales into six main regions. The regions include Japan, China, continental Asia and Oceania (Australia and surrounding islands), the Americas, Europe, and the Middle East and Africa.

We transferred the headquarters for the Asia-Pacific and Africa-Middle East regions to Singapore and Dubai. Each unit is responsible for meeting demand and making profits.

So they are independent profit centres?

Yes. Each unit structures its activities around Bridgestone's midterm plan, which is formulated in Japan. The basic structure comprises a global headquarters, based at Bridgestone's head office in Tokyo; eight strategic business units, all underneath the headquarters; and what we call a global management platform, which includes such business functions as research and development, logistics, finance and human resources. This platform supports each business unit. The midterm business plan is updated periodically.

What was the purpose for doing this - to make Bridgestone a stronger company in the future?

That's the first objective. But in addition, as you are aware, we acquired Firestone 18 years ago and overnight became a global company. Even though we made considerable investments, there were issues we couldn't resolve to our complete satisfaction.

My point isn't to criticise Firestone but to remind you that prior to the acquisition, we were a company principally involved in the production and sale of tyres in Japan and, to a lesser extent, Asia. After the acquisition, we effectively became a holding company for a large number of overseas subsidiaries, not only in Asia but also Europe, North America, South America and the Pacific Rim. We were not as successful in managing this operation as we would have liked, which doesn't mean we were dissatisfied. We've had considerable success. But hopefully, with this organisational change, we can better manage and improve the efficiency of these assets.

So basically this is the completion of the restructuring of Firestone. After 18 years, you now have that operation the way you want it?

No. It's still not complete. As I mentioned, Mr. Arakawa, in instituting this strategic business unit structure, wants to shift part of decision-making out of the head office so that we might respond more quickly to customer needs around the world. Please note this isn't an organisational change for Firestone or Bridgestone-Firestone. This is for Bridgestone Corp. in order that it might become more efficient.

When will this reorganisation be completed?

We can't say clearly. But our target for the new Asia-Pacific and Middle East-Africa units is around three years. At least we hope they'll be fully operational by then. But that depends on many factors, including changing market conditions, eventualities that we can't foresee.

Ultimately, what do you hope to gain - reduced costs?

This undertaking has nothing to do with reducing costs but with improving efficiency. The point of this effort has to do with bringing about long-term, sustainable growth, both in profits and sales.

What is Bridgestone's strength in passenger tyres?

Whether it's run-flat or ultrahigh performance, we have complete confidence in our technology. However, Bridgestone's brand image still lags in the U.S. Therefore, to a certain extent our technological strength is not reflected in our market share.

In contrast, in Europe, where we will be sole supplier of Formula One racing from 2007, our brand is highly evaluated from a technological standpoint.

And this is exhibited in our success with luxury-carmakers like Mercedes-Benz and BMW and, of course, other leading nameplates. So in Europe, we are seeing steady growth in sales of ultrahigh-performance and run-flat tyres.

What sales volumes are you achieving in the run-flat segment?

In 2002, we sold 210 000 units. In the following three years, our totals grew steadily to 1.8 million units in 2005. This year we are aiming for 2.4 million.

From Automotive News (A Crain publication)