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May 16, 2002 02:00 AM

BFS´ Lampe predicts profits in 2002

Vera Fedchenko, Tire Business staff
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    NEW ORLEANS (May 16, 2002)—Bridgestone/Firestone executives told tire dealers attending the firm's Bizcon 6 commercial meeting it is bouncing back to profitability, is stronger than ever and wants to partner with them to help fleets save on tire costs.

    Reflecting on the Firestone tire recall, a weak economy and the Sept. 11 terrorist attacks, the executives exhorted the 366 dealers in attendance to turn economic challenges into opportunities that will strengthen their businesses. They also urged dealers to take advantage of the products and services BFS offers to fleets. Bizcon 6 took place April 24-26 in New Orleans.

    Chairman and CEO John Lampe, referring to BFS' recall crisis and 9-11, said neither event has floundered the company. He said the tire maker is ahead of initial targets for profitability in 2002 and that BFS still expects its sales in the Americas to hit $7.7 billion—putting the subsidiary back in the black.

    Mr. Lampe attributed the tire maker's rebound to a December reorganization of the company that eliminated “costly functional duplications,” the “Making It Right” marketing campaign to regain consumer confidence in Firestone tires and support from others.

    “When your distribution partners, your friends, your suppliers…and millions of customers you've never met stand by your side during the toughest business environment you've ever been through and the hardest challenges you've ever faced—it changes you,” Mr. Lampe said.

    “We've drawn strength from their support, and it has filled us with that added energy to be better, to continue to make it right.”

    Hiroshi Kanai, chief financial officer for Bridgestone Corp. in Tokyo, told attendees that the parent company expects an after-tax net profit of $520 million in 2002. He said Bridgestone's stock price has surged 274 percent in the seven months since Sept. 11 to $15.56. This dramatic increase came despite a fall in stock prices immediately after the terrorist attacks in the U.S. and despite a 27-percent drop in operating profit in 2001.

    “We have reason to believe we will be the strongest tire and rubber company again,” Mr. Kanai predicted.

    Mr. Lampe also had a special message for analysts, reporters and competitors who a year ago were predicting Bridgestone/Firestone's demise: “You didn't know us. 'Making It Right' is more than a slogan. It's a mission.”

    BFS also hosted speakers from the American Trucking Associations to discuss recent trends and challenges that have hit the trucking industry. Comparing the current state of the trucking industry to the movie “Perfect Storm,” Singh Ahluwalia, vice president of commercial sales, emphasized the need for BFS, its dealers and truck stops to work together to decrease truckers' down time because profitable fleets will mean a profitable commercial business.

    Mr. Ahluwalia noted that in 2000 and 2001, the tire industry's original equipment sales of medium truck tires plummeted 40 and 14 percent, respectively. Industry re-placement medium truck tire sales fell 9 percent in 2001. The OE market appears to have bottomed out and the replacement market is forecast to grow 4 to 5 percent in 2002, he said.

    Because fewer small fleets are in the market, Rick Skinner, BFS commercial tire marketing executive director, advised dealers that they, along with BFS, must deliver total tire and service solutions to fleets, which are looking for more than just lower tire prices.

    Saying that Bridgestone/Firestone's products must provide the greatest opportunities for sales in every application and distribution channel, Mr. Skinner said the tire maker has designed a product portfolio for dealers that he promised will deliver healthy cash flow and profits.

    He reviewed BFS' multi-brand strategy of Dayton tires for small and medium fleets, Firestone for medium and some large fleets and Bridgestone for large national accounts. Mr. Skinner also warned dealers not to market their businesses based on the lowest-priced truck tire because fleets will pay for a package of services that help their trucks make just-in-time deliveries.

    He also said that selling low-cost tires will destroy brand equity.

    “If you can't be profitable, neither can we,” Mr. Skinner said.

    To reinforce its commitment to help its dealers stay profitable, BFS introduced four tires for highway and off-road use, and a program to predict sales called fleet sales potential analysis (FSPA). The new tires include:

    * Two Dayton radials for Class 6, 7 and 8 trucks—the Radial Metro All-Position for shorter haul and pickup and delivery applications, and the On/Off Highway All-Position for use in severe service, on- and off-highway use;

    * The Firestone FS560 PLUS for on-highway refuse hauling, construction and pick-up and delivery applications; and

    * The VCHS radial for port and industrial container handling equipment.

    FSPA is a computer program that displays electronic profile sheets on which dealers can figure out a fleet's needs, according to Don Streiff, BFS manager of training and development. The program displays:

    * Name and address of the key buying influences;

    * A section that graphically shows the make-up of the fleet by power unit configuration;

    * The present make-up of the fleet by trailer unit configuration and design; and

    * The present tire programs including new tires and percentage of retreads.

    FSPA also includes information on the vehicle and tire services offered to a fleet by price and frequency.

    Mr. Streiff said all these tools will show the present and future dollars spent by a fleet and will help dealers devise a present and future business plan.

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