NASHVILLE, Tenn. — Like much of the tire industry, Bridgestone Americas Inc. has seen a "soft" market so far this year, but many challenges, like a supply chain slowdown, are improving. Bridgestone Americas expects growth throughout the rest of the year, according to Paolo Ferrari, executive chairman, Bridgestone Americas; CEO of Bridgestone West; and joint global COO of Bridgestone Corp.
How would you describe business thus far in 2024?
I've been inspired by our Bridgestone West organization. This is our new combined Americas and EMEA regions that we brought together in January to enable a stronger, more unified, empowered and accountable team. We have combined the strengths of our business units and are even closer to the markets we serve. We are also more efficiently leveraging best practices and realizing synergies across regions.
We anticipated a soft first half of the year and prepared for such, focusing on performance margins, operating expenses and profitability. Though the industry continues to weather a tough start, I remain optimistic about the rest of the year.
In consumer tire, we continue to see strong momentum with our high-rim diameter and mix strategy. As consumers and auto makers shift toward larger wheel sizes and vehicles, the demand for more premium tire products is helping to strengthen our position in these key areas.
In the last 12 months, we've also brought our Enliten technology to the replacement market. This suite of tire technologies allows us to future-proof our products, deliver on the performance qualities that our customers expect from a premium tire company, and do so in a way that is more sustainable for our world and future generations of drivers.
In our commercial business, the industry is still feeling the effects of the pandemic and fleets have evolved their business models to be more value conscious. This industry shift has led to growth in the digital solutions arm of our business, allowing fleets to maximize productivity and sustainability with the insights gathered by our tools. We anticipate this trend to continue for years to come.
How has inflation affected business?
As with any manufacturer, inflation impacts costs overall, including manufacturing, labor and transportation. Distributors and dealers are experiencing much of the same, so maintaining open communication with our partners to understand when their strategies may be evolving has been important to ensure we're meeting the needs of the market. Additionally, this type of economic environment means fleets must have a good, sound tire program that drives true value for their organizations.
What are some of the challenges of the industry going forward?
Inflation-related cost pressures have impacted all industry players including commercial fleets, OEMs, manufacturers and all suppliers. Manufacturing, labor costs, transportation, equipment and service vehicle costs have all increased. Many dealers are adjusting their stocking strategy in favor of ordering from distributors at the time of transaction.
We are well-positioned and benefit from having a broad portfolio of products and solutions to accommodate customers' needs at every price point between our Bridgestone, Firestone and Bandag brands.
Are you seeing any volatility in the supply chain?
The supply chain has largely stabilized across the business. For our consumer business, we are able to meet the needs of our end-users in nearly every instance.
In the commercial truck space, we have experienced some minor OEM volatility, related primarily to frame rail.
Has artificial intelligence (AI) begun to impact business?
Like most industries and organizations, we continue to evaluate the potential impact of AI on the tire industry. We're exploring AI's potential benefits across several parts of the business, including engineering, manufacturing capabilities, fleet solutions, marketing and more, and have several exciting pilots in progress.
Where do you see opportunities for growth the rest of the year?
For the second half of the year, we anticipate growth in all segments of the business.
We are gaining momentum with the rollout of our Enliten technology. Enliten allows us to deploy a variety of technologies to the manufacturing process, compounds, polymers and tire patterns to deliver exceptional performance, with improved sustainability and a reduced carbon footprint.
Beyond tires, our fleet customers are seeking ways to maximize productivity and become more sustainable. We are committed to expanding our market share with state-of-the-art products and solutions to address the challenging circumstances fleets encounter daily.
What additional products are you launching in 2024?
In 2024, Enliten technology will continue to be prevalent across our EV and performance tire lineup. This will allow for the ultimate customization of our products to deliver exceptional performance and improved sustainability across every segment we serve.
An all-terrain Enliten tire is coming in the next few months, as well as products for heavy-duty trucks. We will be launching Enliten technology across 90% of our lineup before the end of the decade.
Later this year, we will also be announcing new products and solutions in our mining segment, highlighting increased productivity and sustainability on job sites.
What kind of trends are you seeing in the marketplace?
The rising number of EVs each year, though with some weakening in momentum, continues to be an important trend. According to S&P Global Mobility, new electric vehicle sales are projected to be 11% of vehicles in 2024, with that figure jumping to 28% in 2027.
Our Turanza EV tire incorporates our Enliten technology with our PeakLife polymer to extend the useful life of the tire and lower rolling resistance, while delivering improved sustainability and a reduced carbon footprint. All Turanza EV fitments are made with 50% renewable and recyclable materials, one of the highest percentages among commercially available replacement tires. We will expand our Turanza EV lineup later this year to cover 69% of the U.S. electric vehicle market.
Our Bridgestone Mobility Solutions business is seeing significant growth in the last-mile delivery, mining, waste and recycling, regional and long-haul trucking, and construction segments. Fleets have a big focus on sustainability and as costs rise, fleets and dealers are looking to be more efficient. Tire and fleet-related tools and equipment continue to evolve to improve efficiency, and we are providing those tools to meet market needs. At Bridgestone, we are focused on learning from the data and insights we have acquired to better inform our customers and help them make the best decisions for their programs.
In general, we see consumers and customers being increasingly value conscious; our focus on investing in tire and digital technology to deliver value through our products and solutions in every segment and tier we compete, puts us in the ideal conditions to confirm our market leadership.
Can you provide an update on the upgrade and expansion at the truck/bus tire factory in Tennessee?
This 850,000-sq.-ft. expansion is progressing nicely and supports our company's commitment to providing safe and sustainable mobility solutions. The facility will accelerate the use of state-of-the-art technologies and achieve greater levels of sustainability in our industry. The upgrades being implemented into the plant will help us modernize how we manufacture bus and truck tires and allow our engineers the flexibility to innovate.
We have also invested in our Abilene, Texas, and Oxford, N.C., Bandag [tread rubber] plants; added new Firestone Airide distribution centers in Williamsburg, Ky., and Dyersburg, Tenn.; and added eight acres of solar panels at our Aiken County, S.C., facility.
Sustainability is important to tire manufacturers, but it seems less so to tire dealers. How do you get your customers to embrace sustainability?
Sustainability has always been deeply ingrained in Bridgestone's DNA and is reflected in our Bridgestone E8 Commitment. For Bridgestone, sustainability is about delivering value for society and our customers by improving the way people move, live, work and play today for generations to come. We've set ambitious goals for the future, including 2050 targets for carbon neutrality and delivering tires made from 100% renewable materials.
Embracing sustainability is about demonstrating shared value. Consumers, specifically millennials, are focused on protecting the environment and reducing their carbon footprint. For dealers, improving efficiency, minimizing their carbon footprint, and lowering the total cost of operation are important, and this is what our retread products offer. Whenever we can communicate how our sustainability goals align with those of our consumers or our customers, we find there is actually a great deal of shared value.
How would you describe your EV tire strategy?
We understand that EVs have unique performance characteristics. They are generally heavier with a lower center of gravity, affecting braking, handling, acceleration and wear. Our research and real-world experience have shown that EVs go through a set of tires more quickly than their ICE counterparts. All of these factors impact the way Bridgestone designs, develops and manufactures tires.
Our goal is to achieve 100% renewable and recycled materials in all our tires by 2050.
How much of a boost does the Bridgestone brand get as a result of being a worldwide Olympic partner?
We believe in the power of sport to excite, unite and inspire people across all borders and backgrounds. But we believe what really matters is making a positive impact for future generations. The values of the Olympic and Paralympic movements align with our brand purpose, provide for broad awareness and engagement and give us an opportunity to amplify these messages with a brighter spotlight on a global stage.
Do you see a spike in business around that time globally?
When we select brand platforms that align with our business values and strategy, we see increases in brand awareness and partnership development. However, it is important for us to find ways to extend these activities beyond specific moments in time to create value on an ongoing, year-round basis. For example, our work with athletes has been incredibly rewarding, especially in the Paralympic space.
We have collaborated with adaptive athletes in a number of sports to leverage our tire and rubber expertise to help improve equipment and increase access to participation. These efforts create business opportunities to showcase our innovative products and solutions in unique ways, but they also make tangible impacts in our communities. By involving our Bridgestone Americas Trust Fund and non-profit partners, we are creating new opportunities and building life skills to benefit the next generation.
What do you want tire dealers to know about the company that they may not know?
Our tire dealers remain the most fundamental connection point in our ecosystem and for end-users who trust us to help them move their families and goods safely around the world. Without our dealers, Bridgestone could not exist, nor could we bring our vision for a more sustainable mobility future to life.
Of course, Bridgestone will continue to design and manufacture the best tires in every category and channel we serve. In addition to our tire business, we also offer solutions to support our customers' businesses through sensor-based technology, digital fleet management, retread and more. Each of these innovations are designed to allow our customers to be more efficient, save on operational costs, and maintain even closer relationships with their customers.