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September 02, 2020 10:30 AM

Bridgestone CEO Paolo Ferrari navigates COVID challenges

Don Detore
[email protected]
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    Bridgestone Americas Inc. photo

    Paolo Ferrari speaks at the Consumer Electronics Show in Las Vegas in early 2020.

    NASHVILLE, Tenn. — The honeymoon period that typically serves to transition an employee to a new job has been more like a never-ending ride at an amusement park for Paolo Ferrari.

    "It's been a roller-coaster ride as you can imagine," said Mr. Ferrari, who was named president, CEO and chief operating officer for Bridgestone Americas Inc. on Jan. 15, replacing the retired Gordon Knapp.

    Just 90 or so days later, most of the U.S. was on lockdown, as the COVID-19 pandemic spread through North America. A few days later, the unthinkable happened: Bridgestone, like almost every other tire manufacturer, idled production at each of its North American plants.

    • This article appears in the Aug. 31 print edition of Tire Business.

    "It's not the beginning you would want to have," Mr. Ferrari said recently during an interview with Tire Business.

    Mr. Ferrari has spent time on three continents during his career. He joined Bridgestone in January of 2016 as CEO of Bridgestone Europe/Middle East/Africa, and was given the additional title of chairman of Bridgestone Americas in September 2017.

    Mr. Ferrari's experience in automotive, tires and mobility began in 2012, when he was hired by Pirelli & C. S.p.A. to be chairman and CEO of Pirelli North America and later CEO of Pirelli Latin America. Prior to that he worked in telecommunications and investment banking.

    His experience and background served him well as the crisis first took hold. With family in Northern Italy, where the pandemic hit hard, and friends and former co-workers in other parts of Europe sharing their experiences with him, he said he had a sense of how dangerous the crisis would be.

    "I have been ahead of the curve because of my personal experience," said Mr. Ferrari, who is fluent in English, Italian and Spanish. "That helped me in a way to steer the team, to be ahead of the curve from Day 1 as opposed to catching up."

    Even to the surprise of his new co-workers.

    "Of course initially I did sense from the team, that, hey, maybe we're overreacting," Mr. Ferrari said. "I can understand where they were coming from, but (my experience) gave me a sense of how real and how dangerous this was a little bit ahead of the time."

    That meant, he said, to bring the team together by focusing on priorities, agile decision-making, cutting costs, initiating remote working, creating a safe environment for both employees and customers: in short, managing the crisis with a clear plan.

    "It's been a little crazy, but looking at what we have done, I am quite pleased," he said. "Clearly it shows us how people were ready for change, even on remote working and on agile ways of working."

    Managing the operations of North American facilities — which closed for several weeks when demand fell steeply — kept Bridgestone ahead of the curve, according to Mr. Ferrari.

    Before the facilities reopened, Bridgestone Americas rolled out an Environmental Health Safety & Sustainability (EHSS) Playbook that outlines measures that must be taken at every location in North America, in order to promote safety. The playbook served as a blueprint for factories as they restarted operations.

    Today, Mr. Ferrari said Bridgestone has emerged from the first five months of the pandemic well positioned for continued success.

    He said Bridgestone's supply remains healthy, thanks to its supply-chain flexibility and transparency it has developed, in cooperation with its customers, including OEMs.

    "We are truly in this together," Mr. Ferrari said. "It's incredible how many of these things have happened ... the speed at which we are managing our supply chain flexibility, the cooperation with the dealers to make sure we are serving their demand swings ... the flexibility and agility and speed was enabled by the crisis."

    Demand, he said, is strong in truck/bus tires and commercial, while the replacement market remains steady.

    Mr. Ferrari described Bridgestone's growth strategy as a three-pronged approach: The core tire business; tire-centric solutions — software and solutions bundled for consumers and OEMs; and the broader mobility platforms, which includes fleet management solutions.

    The core tire business, he said, is driven by a mixed strategy, including tires with rim diameters of 18 inches and larger.

    "Certain channels are driving the mix better than others, so I think our growth is very much an opportunity," Mr. Ferrari said. "Our focus on mix is not new, but is more granular. It's one of our biggest opportunities.

    "Even within (Bridgestone Retail Operations), our retail source, we have an opportunity to upsell to a higher mix offering. Our new vision is to become a sustainable solutions company, but of course within that vision, our core business is still very important."

    The software solutions for consumers and OEMs dovetails with broader mobility solutions for fleets. Bridgestone's commitment to that, he said, is borne out by Bridgestone Corp.'s $1.03 billion acquisition of Amsterdam-based TomTom Telematics B.V. in January 2019, with Mr. Ferrari leading the European unit.

    Bridgestone has renamed the company Webfleet Solutions.

    "Fleets are a very important part of our customer base. When you talk to fleets, they want tires but they want tire solutions," Mr. Ferrari said. "They want tires that are smart and will allow them to manage better their cost base, better manage their upside, so we think the tire-centric solution is another big driver of growth for us, especially if you think about the world of fleets."

    According to Mr. Ferrari,the U.S. consumer is significantly different from those in Europe. Americans, he said, overwhelming prefer all-season tires and higher mileage, while seasonal performance and rolling resistance, promoted by vehicle makers, drive the European market.

    "Overall comfort is also important to the U.S. market," Mr. Ferrari said.

    The Bridgestone portfolio is performing well in most segments, he added, including passenger and light truck, while he sees opportunities in the ultra-high-performance segment.

    "In the (all-terrain) segment, we have upside, not necessarily through the product, which is a good product already, but through the ability to even manage better our channels," Mr. Ferrari said. "... we can do better in UHP, from a market share performance. That's part of our channel strategy."

    In its half-year financial report, Bridgestone Corp. posted a 68.3% drop in operating income and a net loss for the six months ended June 30 on 22.1% lower sales, attributing that to the pandemic. The parent company is forecasting that sales will fall about 23% shy of fiscal 2019 revenue.

    In the Americas, Bridgestone reported sales fell 22.2% to $6 billion.

    Barring future COVID-19-related headwinds, Mr. Ferrari said Bridgestone is positioned for growth.

    "I see ourselves certainly enhancing or restoring our earning power on the core business," Mr. Ferrari said. "That's very important, which is the whole mix story end to end. I think the whole industry is under a little bit of pressure from profitably point of view, same as us."

    He said Bridgestone's balance sheet was healthy entering the pandemic.

    "That balance sheet allows us to restructure what we need to restructure, to reset our core base, focus on the mix, invest in technology and invest in solutions."

    "I'm optimistic about the recovery that we are partially seeing now and will see in 2021," he said, " and we very well equipped to ride that recovery."

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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