Bridgestone Corp. has resumed production at its beleaguered Tochigi, Japan, tire plant, but said the direct and indirect costs of a Sept. 8-9 fire that destroyed the plant's rubber mixing area would be as high as $357 million.
The losses will result in a $45 million, or 3.4 percent, drop in 2003 operating income, although the weakening yen and strong exports will largely offset the costs, the company said.
Half of the $357 million will be lost sales from the plant, which makes passenger, light truck and medium truck/bus tires, Bridgestone said. The fire caused $26.8 million in direct costs, and the company said it would invest nearly $90 million to rebuild and equip the mixing department, which should be operational by September 2004.
Insurance should cover about $35.7 million of the costs, Bridgestone said.
The plant restarted production Sept. 20 at about 20 percent of capacity after the company had verified the soundness of electrical and gas lines and of all equipment and determined that conditions in the plant-excepting the damaged rubber mixing shop-warranted resuming production.
Bridgestone has not disclosed the cause of the fire, but said it is reviewing and revising fire prevention systems and procedures throughout its organization to prevent a recurrence of the Tochigi episode.
Management expects output to increase to between 60 and 70 percent of its 22,000 units-per-day capacity by year-end. Earlier this year, Bridgestone had announced investments to raise radial truck tire capacity at Tochigi.