TOKYO — Bridgestone Corp. is looking to cut fixed costs by approximately $480 million over the next two years as part of its mid-term business plan to 2023.
The company plans to reform its expense and cost structure to further efficiency and optimization in procurement and logistics across all regions, Bridgestone said in its 2020-21 Sustainability Report.
The activities, Bridgestone said, are expected to reduce fixed costs by Yen53 billion ($480 million) by 2023, compared with the 2019 baseline.
The group said its 2020 structural reforms, in response to the COVID-19 pandemic, improved fixed annual costs by $225 million.
In the coming years, Bridgestone said it will aim to maintain "this greatly improved fixed-cost structure" and continue to promote further reformation and improvements.
As part of the "drastic" structural reform, Bridgestone said it will continue to "consider and execute the restructuring of its business portfolio and manufacturing footprint over the long term."
The company said it is examining the restructuring of its 160 manufacturing sites, including diversified products and material manufacturing sites, keeping in mind the sustainable growth of each business.
In addition, Bridgestone said it will reinforce its tire plants by maximizing the use of existing production capacities through optimization of its global supply system and manufacturing improvement, while also aiming to rebuild its earning power through reinforcing sales of larger rim-diameter passenger tires.
In developed markets, especially North America and Europe, where the shift to larger rim-diameter tires is ahead, the group is reinforcing sales of 18-inch and larger tires as premium products.
In the emerging markets of Asia-Pacific and Latin America, it will be selling 17-inch and larger tires as premium products in anticipation of the trend toward the larger tires.
In China, Bridgestone said such tires already account for over 70% of total sales of original equipment tires.
In this region, the group said it will drive sales of larger-sized replacement tires to more than 70% by 2023, compared with approximately 50% in 2019.
"China is a focus area in the group's premium strategy and the group will continue to reinforce this market," it added.
Furthermore, as part of its mid-term business plan, the group will be "flexibly reallocating strategic resources" that are generated by the rebuilding of its earning power, to strategic growth investment.
These will include tire-centric solutions, the core of its solutions business area, where the group will expand and strengthen its subscription and retreading services.
Bridgestone said it planned to scale up its mobility solutions offerings through Webfleet Solutions, and through "strategic partnerships and M&A activities in North America and other regions."
In doing so, Bridgestone said it intends to triple its sales from tire-centric solutions to over $600 million by 2023. This will expand the group's solutions business area by nearly 22% to roughly $5.9 billion.