Q&A: Firestone recall teaches Bridgestone CEO about the legal risks of the US market

Frankfurt/Main. Shigeo Watanabe, CEO of tire manufacturer Bridgestone, tells Automobilwoche about his expansion strategy and the lessons learned from a recall crisis in the USA.

Three years ago in the USA, Ford vehicles, which were supplied with tires by US subsidiary Firestone, were involved in a series of fatal accidents involving tires. Watanabe says the world’s largest tire manufacturer has recovered and the company has learned important lessons about risk management in the US market.

Q: Recently you announced very good half-year figures and you have revised your forecast for the current business year upwards. Is Bridgestone back on track?

A: The year has so far been very successful. In the first half we had record sales – we are aiming at having similar results at the end of the year. But we will not stop there. There is still a lot of work to be done.

Q: What for example?

A: We are happy neither with our European market position nor with the image we have there. We want to take the lead there. That is why we were exhibiting at the IAA for the first time in 12 years and have increased our advertising. We also count on the positive effect of the success of Ferrari's Formula 1 cars, which use our tires. Since last December we invested 400 million euros in Bridgestone Europe. Part of the investment will go into strengthening the sales network. We believe that there is still a lot of growth potential in Europe.

Q: You have also made some acquisitions.

A: That is true. We bought 19 percent of the Finnish tire manufacturer Nokian Tyre. We are using their sales network and achieving further synergies.

Q: Could you imagine acquiring more shares in Nokian? Are there any plans of that kind?

A: No, for the time being we are not planning to increase our shareholding.

Q: Your US business suffered as a result of Firestone’s image loss following the recalls related to the Ford Explorer accidents. Has your position on the American market recovered?

A: Last year we made a profit again on the American market. We are making good progress despite higher costs for raw materials. We managed to compensate for that by increasing our prices in January. Prices will rise again in October. By the way, we successfully used the same strategy in Asia, the Middle East, Australia and Africa.

Q: After the Explorer accidents your more than 100-year-old business connection with the US corporation was finished. Is there any hope of cooperating again with this important manufacturer?

A: We still insist that Firestone did not make any mistake, but that the combination of tires and car was not right. Ford, on the other hand, believes that we are to blame. That is why we still don't cooperate with Ford USA. However, recently we had first talks in that direction.

Q: What have you learned from this experience?

A: That due to the enormous risks regarding legal proceedings and compensations in the USA we need a different approach to risk management than the one we have in Europe or Japan. We now have better risk management, more intensive lobbying, we are holding talks with the media and the US Congress. That is why we opened an office in Washington, D.C.

Q: You mentioned your potential for growth in Europe. Which regions have similar or more potential in your opinion?

A: Primarily in China the demand has increased substantially. We are expanding our sales network there by building a store chain called Che-zhi-yi. The first branch opened in August, within the next three years we will have 200 locations. On top of that we will increase the capacity at our Japanese plants and will build a new plant in the growing market Thailand.

Q: Bridgestone likes calling itself a market leader in innovations. What are the new developments?

A: There are a few! We presented a shock absorber system for tire-integrated engines. It increases performance, comfort and safety of electric vehicles with tire-integrated engines. Another example is our all-automatic production system "BIRD". It will be the first system where the whole of the production is totally automatic, from the raw materials to the inspection of the finished tires. Series production is supposed to start next year.

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