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October 26, 2015 02:00 AM

Firing up Firestone

Bruce Davis
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    TOKYO—Bridgestone Corp.'s drive toward “Dan Totsu”—becoming the “undisputed world No. 1 tire and rubber company”—will involve a more streamlined corporate structure and include an expanded role for the Firestone brand globally, the company revealed recently.

    In a presentation made public Oct. 16, Bridgestone outlined its Mid-term Management Plan for 2016 to 2020, saying it intends to accelerate the pace of management reforms and increase its focus on the strategic measures outlined in the plan.

    Bridgestone said it will focus on three key issues:

    c Cultivating global corporate culture;

    c Developing human resources capable of global management; and

    c Upgrading the global management structure.

    At the same time, Bridgestone disclosed plans to invest $250 million through 2018 to strengthen its corporate research and development facilities in Japan, and $125 million through 2020 to redesign its production lines at its Hikone, Japan, passenger and light truck tire plant by taking advantage of enhanced information technology and automation.

    The R&D upgrade will involve consolidating all research offices and laboratories, including biotechnology and raw materials development, at the Kodaira City complex in Tokyo, Bridgestone said, along with relocating radial passenger and light truck tire production out of the Tokyo plant to other Japanese factories.

    Regarding the corporate structure, Bridgestone has restructured its tire sector into four strategic business units from six, combining its Middle East/Africa/Turkey business into its European unit (including Russia) and combining its Asia Pacific and China activities into one business unit.

    The other two units are Japan and the Americas.

    The company also noted it is expanding its diversified products business division, in part by incorporating more joint manufacturing ventures in specific product areas.

    Regarding the Firestone brand, Bridgestone said it is looking to grow it into a global brand from its role as a “strong regional brand.”

    To this end, the company intends to establish a global brand management/governance structure that will lead to further global business expansion. The company did not quantify its revenue or earnings expectations for this move but did note the brand is active in both tire and non-tire business areas.

    Tokyo-based Bridgestone also stressed that it intends to accelerate global acceptance and value of the Bridgestone brand through global advertising and its role as a sporting events sponsor, starting with its extended Olympics partnership and including motorsports, golf and other opportunities.

    The R&D initiative, which Bridgestone said should “create value through continuous innovations,” will encompass biotechnology and raw materials development and will include collaboration with outside entities, starting with industry-government-academia partnerships, and developing innovative technologies.

    Bridgestone did not specify which, if any, other R&D facilities in Japan will be consolidated at Kodaira or how many employees would be involved. Construction is slated to begin in 2017, with the successive opening of these facilities starting in 2018.

    Besides fundamental research, Bridgestone said this initiative will involve manufacturing, testing/evaluation and business design.

    Under manufacturing, Bridgestone said it will conduct R&D into production lines that make use of advanced information technologies and production technologies that will realize new-concept products.

    In terms of testing/evaluation, the company said its work will encompass the entire vehicle, not just individual products, in order to verify proposed new value from the perspective of the customer.

    Under business design, Bridgestone hopes to create value through integration and design of the above three areas, and propose new business models. Collaborate with universities and other outside institutions and serve as communication base for pilot experiments.

    Bridgestone said employment is 462 at the 55-year-old Tokyo facility, where it intends to keep aircraft tire production capacity. It did not comment on what impact on employment the relocation of the consumer tire production would have.

    Bridgestone also said it is establishing “solutions business” companies for the mining and agricultural equipment end markets that will encompass elements of its tire, non-tire and chemicals businesses. This restructuring is designed to “accelerate the global expansion of Bridgestone's solutions business, which collectively provides multiple product combinations and services as well as IT support.”

    The group's mining and agricultural machinery business offers product combinations that are within the group's expertise, such as off-the-road tires for construction and mining vehicles (OR tires) and conveyer belts as well as agricultural tires (AG tires) and rubber tracks.

    Establishment of these captive companies will allow Bridgestone to streamline in-house functions that oversee its businesses for mining and agricultural machinery, which were previously organized by region and product type.

    Organizing these functions from the customers' perspective will strengthen the global expansion of its solutions business, Bridgestone said.

    Bridgestone management did not disclose specific financial expectations for the coming few years, but did say the firm's “qualitative goals” include securing both growth and profitability and outlined the following goals: Return on assets of 6 percent; operating profit of 10 percent (including a minimum 10-percent target for each business unit); and a return on equity of 12 percent.

    To reach this reporter: [email protected]; 330-865-6145; Twitter: @reifenmensch

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