Bridgestone Corp. will make about $5.2 billion in capital investments during the next three years to help it assert ``undisputed leadership in the global tire industry,'' Bridgestone Chairman, CEO and President Shigeo Watanabe told analysts in Tokyo recently.
Speaking at an investors conference prior to the Tokyo Motor Show, Mr. Watanabe said Bridgestone is budgeting $1.75 billion annually for fiscal years 2006-2008. The firm's strategic goals for this period call for a net income margin of 5 percent on sales of $26 billion in 2008 and $28 billion in 2010, based on the current exchange rate.
The firm's investments will support 4-percent annual growth in tire production, Mr. Watanabe said.
In North America, Bridgestone projected 10 percent sales growth in both the passenger/light truck and truck/bus tire segments. At the same time Bridgestone will improve the replacement product mix to 40 percent ultra-high-performance tires from 30 percent currently and increase shipments of tires larger than 17-inch to original equipment customers to 60 percent from 30 percent.
Part of Bridgestone's strategy for North America is to source more high-performance tires from plants in South America as well as from the new plant in Mexico that's due on stream in July 2007.
The ultimate goal is to achieve breakeven in North America and then maintain profitability, the firm said.
Mr. Watanabe's three-year forecast backs up his bullish comments in the firm's 2004 annual report, where he called the next few years a ``time of unprecedented opportunity'' and follow a period of aggressive expansion. During 2004 and 2005 Bridgestone disclosed tire-related expansion projects totaling more than $2 billion.
In that document, Mr. Watanabe outlined four capital spending priorities:
* Deploying production resources to serve the shift in demand for passenger car and light truck tires in industrialized markets toward high-performance and larger rim diameter sizes;
* Expanding capacity to serve the growth in global demand for passenger tires, especially in emerging markets;
* Expanding capacity to serve the growth in global demand for truck and bus tires and for off-the-road tires; and
* Acquiring and fostering expanded capabilities in producing raw materials for tires.
The amount of new daily capacity coming on stream in the next two to three years is roughly 45,000 units, or the equivalent of as much as $1.5 billion in new sales, depending on the mix.