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August 13, 2020 02:09 PM

Bridgestone mulls adjusting production footprint as part of 'mid-long term' strategy

Shahrzad Pourriahi, European Rubber Journal
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    TOKYO — Bridgestone Corp. is considering plans to restructure its production footprint as part of a recently disclosed mid-long term business strategy, which aims to increase the group's profitability.

    Bridgestone will look to reorganize the business and carry out expense and cost reforms in its procurement and logistics to improve profit margins, the company noted in its mid-long term strategy update.

    "We are considering several possibilities with regards to the structure of global supply chain and competitive advantage," Bridgestone told European Rubber Journal recently.

    Further details will be disclosed in due course.

    The updated strategy also stipulates "strict selection of investments" in the coming years, to rebuild earning power.

    Here, Bridgestone said it will concentrate resources on areas that have "solid profitability" and invest "intensively" in them. These include the group's core tire and rubber businesses as well as retread and web/fleet solutions.

    The move will allow Bridgestone to "maximize return on investment and cash generation" while improving profit base, the spokesman said, adding further details would be disclosed at an appropriate time.

    In its updated version, the strategy calls for "operational excellence" in the group's core business area, through maximum use of existing equipment and improving productivity.

    In addition, Bridgestone will look to strengthen sales in its premium category through wholesale/retail price management and improving sales channels such as e-commerce.

    The Japanese group unveiled its new "mid-long term" business strategy, billed as "third foundation" or Bridgestone 3.0, earlier in July to address the "deterioration of entire tire industry profit structure."

    The vision aims to see Bridgestone strong in its core tire and rubber businesses and in parallel "fundamentally change the playing field" by developing solutions and platforms.

    To achieve this, Bridgestone said it will use its various service operations, including fleet management systems, Mobox subscription model, Toolbox tire database platform and Tirematics monitoring system.

    In its business performance review, Bridgestone noted that its share in tire industry profit declined from 18.3% in 2015 to 15.7% in 2019.

    Delivering "almost flat" sales during the four-year period, the group said its profit decreased 37% to $3.05 billion last year from $4.83 billion in 2015.

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