History of Bridgestone Tire 'Bridgestone Corporation'

Company Perspectives:

Selling the best tires in the world means being ready with the best tire for each customer and following up with prompt, reliable service. Our multibrand strategy offers customers the tire industry's broadest range of choice among quality tires for every need and budget. Bridgestone is becoming a byword for premium quality in car and truck tires around the world. Likewise, we have restored the Firestone brand to a pre-eminent position in mainstream tires. And we supplement those brands with a full spectrum of regional and private brands. Extensive dealer networks provide conscientious support for customers and for fleet users.

History of Bridgestone Corporation

The leading Japanese manufacturer of tires and related products, Bridgestone Corporation is one of the world's "Big Three" tire makers, along with Michelin (the leader in Europe, with Bridgestone number two) and The Goodyear Tire & Rubber Company (the leader in North America, again with Bridgestone number two). In addition to its flagship tires sold under such brands as Bridgestone and Firestone, the company's range of products includes industrial materials, marine products, chemical products, building materials, vibration and noise isolating materials, sporting goods, and bicycles. Products are manufactured within 39 tire plants and 46 nontire plants on six continents and marketed and sold in almost every country in the world.

Beginnings in Rubber-Soled Footwear

Bridgestone was founded by Shojiro Ishibashi, whose name means "stone bridge." The company originally made tabi--Japanese workers' footwear--and Shojiro Ishibashi made a fortune by adding rubber soles. Deciding that his future lay in the rubber business, he began intensive research and development in 1929, founding the company, Bridgestone Ltd., two years later in Kurume, Japan. In 1942 the company changed its name to the Nippon Tire Co., Ltd., but was renamed Bridgestone Tire Co., Ltd. in 1951 and became Bridgestone Corporation (Bridgestone) in 1984. Ishibashi was an aggressive businessman with strong marketing skills whose main business principle was to expand during recessionary periods. He also thrived on business connections made through his children's marriages. It was said in Japan that his relationship by marriage to government officials allowed Bridgestone to secure orders during the Korean War of the 1950s, helping the company to gain its strong position in the domestic market.

Before World War II, Bridgestone's business--like that of other major Japanese industrial concerns--was focused on supplying military requirements; at the same time, Bridgestone tires also supplied the growing Japanese automobile industry. Production was based at two plants, one in Kurume, the other in Yokohama. Growth after the war was rapid, with the establishment of four new production facilities in the 1960s and six during the 1970s. Bridgestone's first overseas factory was established in Singapore in 1963, with further factories built in Thailand in 1967 and Indonesia in 1973. Bridgestone Singapore ceased operations in 1980 following the Singapore government's lifting of tariff protection for locally made tires. In 1976 Bridgestone set up a sales company in Hamburg, Germany, in partnership with Mitsui. This new company, named Bridgestone Reifen G.m.b.H., was intended to increase tire sales in the important West German market. In 1990 Bridgestone set up a new subsidiary in London, Bridgestone Industrial, to handle industrial rubber products throughout Europe.

Expanded through 1980s Acquisitions

Since the 1980s Bridgestone's most significant expansion has been by acquisition, acquiring majority interests in Uniroyal Holdings Ltd. (UHL), the South Australian tire manufacturer, in 1980 and a Taiwanese company in 1986. In 1982 the purchase of a plant in Nashville, Tennessee belonging to The Firestone Tire & Rubber Company (Firestone) was the first step toward Bridgestone's acquisition of that U.S. Company in 1988, for a total of US $2.65 billion.

Before acquiring Firestone, Bridgestone had first approached Goodyear in 1987, with proposals for a merger that would have created the world's largest tire manufacturer. Talks in Hawaii, however, failed to reach agreement as Bridgestone would not accept the high value that Goodyear had placed on its loss-making Trans-American oil pipeline. Bridgestone then turned to Firestone as a United States production base for the manufacture of heavy-duty radial truck tires. They were encouraged in this by the acquisition of an ailing Firestone plant in Tennessee in 1982, which Bridgestone had turned into a success. Bridgestone originally agreed to buy Firestone's tire operations for US $1.25 billion, but Pirelli, the Italian manufacturer, intervened with a rival bid, forcing the Japanese company to increase the offer. Bridgestone finally paid US $2.65 billion for the whole company, with 54,000 employees and two headquarters, in 1988. The following year Bridgestone's North American operations were integrated with those of Firestone under the Bridgestone/Firestone, Inc. subsidiary. One year later, Bridgestone/Firestone Europe S.A. was created to manage European operations.

The Firestone deal gave Bridgestone its sought-after foothold in the United States and strengthened its position in Europe, as Firestone also owned plants in Portugal, Spain, France, and Italy. In addition, it gave Bridgestone instant access to high-quality manufacturing facilities, with an extensive national marketing system for replacement tires, as well as large research and development laboratories. The Firestone name and sales network gave the Japanese company access to Detroit car makers for original equipment sales and for the sale of Firestone brand tires for the two million cars a year produced by Japanese automobile firms. In North America, Bridgestone's sales in the replacement market were through independent dealers and through their Master Care network of more than 1,500 tire and service centers. These independent dealers also strengthened sales in the United States and Canada, and the company's marketing strategy widened further in the early 1990s through mass merchandisers such as Sears and Kmart. Another highlight of its international sales network was the chain of Cockpit retail outlets, which offer car audio equipment and accessories such as wheels, as well as tires. The 200th Cockpit shop opened in the spring of 1990.

Within six months of the Firestone purchase, Bridgestone announced a US $1.5 billion modernization program. Firestone's auxiliary head office in Chicago and Bridgestone's own United States base in Nashville were closed to concentrate operations in Akron, and Firestone's management was reduced through a voluntary early retirement scheme. The investment in Firestone coincided with a slowdown in North American and European car production, however, heralding a period of much tougher competition in tire markets. The renovation of Firestone turned out to be more expensive and time-consuming than expected. Other problems included weak markets in Latin America and the Middle East and intense competition in European markets. Fortunately for Bridgestone, not all of the massive investment came from borrowings but in part from Bridgestone's hidden assets, including land, buildings, and securities, purchases made decades ago. The company founder Shojiro Ishibashi had also invested heavily in art, mostly western, opening the Bridgestone Museum of Art in 1952.

Bridgestone continued to retain its position in Asia, where Bridgestone and Firestone brands maintained the largest share of the market. This region promised to display rapid growth in the world's tire markets over the next decade, and Bridgestone was positioned to remain in a strong position to capitalize on this with local production operations and large market shares, particularly in Thailand, Indonesia, and Taiwan.

Difficulties with U.S. Operations Dominated 1990s

By 1991, Bridgestone's acquisition of Firestone generally was being called a huge blunder. Bridgestone, not wishing to step on American toes, was slow to push for changes that were needed at a Firestone bloated with bureaucracy. Bridgestone even waited until late 1991 to integrate the U.S. headquarters of Bridgestone and Firestone into one location (which turned out to be Nashville, not Akron, where Firestone had resided). Bridgestone also had difficulty with the size of its new foreign subsidiary, finding it hard to manage from Japan. Finally, in March 1991 Yoichiro Kaizaki, who spoke little English and had a background in the company's nontire operations, was sent to the United States to head up Bridgestone/Firestone, the first Japanese person to do so. Meanwhile, Bridgestone/Firestone had lost US $1 billion in the United States from 1990 to 1992. Bridgestone's profits consequently suffered, totalling only ¥4.5 billion in 1990 and ¥7.47 billion in 1991 before rebounding slightly to ¥28.4 billion in 1992.

Kaizaki immediately began to turn around the company's U.S. operations. In addition to consolidating headquarters in Nashville, he also tightened the management structure by setting up 21 operating divisions at Bridgestone/Firestone, each with its own president whose pay was tied to his or her division's performance. Money was pumped in from Japan to raise productivity at the plants and to improve the quality of the tires produced there. After two years of improving the American operation, Kaizaki returned to Japan as president of Bridgestone Corporation. Kaizaki appointed Masatoshi Ono, a trusted lieutenant, to head up Bridgestone/Firestone.

Bridgestone executives believed that its U.S. plants would not be profitable until the wages of its workers were cut and the workers agreed to operate the plants 24 hours a day. With labor and management on a collision course, United Rubber Workers (URW) contracts with major tiremakers expired in April 1994. Goodyear was chosen that year as the target company, and it reached an agreement in June with the URW. Bridgestone, however, refused to accept the "pattern" agreement, the union rejected the company's contract proposal, and on July 12, more than 4,000 URW workers at five Bridgestone/Firestone plants went out on strike. In January 1995 Bridgestone hired more than 2,000 permanent "replacement workers" (scabs), bringing criticism from both Labor Secretary Robert Reich and President Bill Clinton and much negative publicity for Bridgestone/Firestone. In May the URW called off the ten-month-old strike, with the workers agreeing to return to work without a contract. Nevertheless, not all of the workers were immediately rehired. In July 1995 the URW was absorbed into the United Steelworkers of America.

In September 1996 Bridgestone/Firestone recalled almost all of the workers it had replaced, and a little more than a month later, in early November, a three-year agreement was reached, which both the Steelworkers and Bridgestone claimed as victory. Among the provisions favoring the workers were the 4.4 percent wage hike and the rehiring of all workers dismissed during the long conflict. Bridgestone won the key concession on operating the factories around the clock.

In the midst of this labor strife, Bridgestone/Firestone managed to turn a 1996 profit of US $180 million in part because it had unilaterally imposed an around-the-clock schedule. Back in Japan, meanwhile, Kaizaki was trimming domestic operations to contain costs, cutting the work force 14 percent from 1993 to 1996. The company was also in the midst of building new tire plants in central Europe and China and a plant in India scheduled to open in 1998 through a joint venture with Tata Industries. And despite its difficulties in the United States, Bridgestone spent US $430 million in 1997 and 1998 to upgrade existing American plants and announced in mid-1997 that it would build its eighth U.S. tire factory, a US $435 million plant scheduled to open in early 1999, manufacture about 25,000 car and light-truck tires at its peak, and reach full employment of 800 workers by 2000. The company needed the new plants to satisfy the increasing demand for its tires; the U.S. plant was also specifically designed to reduce the need to import tires from Japan.

Indeed, tire sales had increased nearly 19 percent in 1996, a year in which Bridgestone earned a record ¥70.34 billion (US $645.28 million) on a record ¥1.96 trillion (US $17.96 billion). With its long, bitter fight with its American workers behind it, Bridgestone once again set its sights on becoming the undisputed number-one tiremaker worldwide. Kaizaki set goals to solidify Bridgestone's number-two positions in Europe and North America and to capture 20 percent of the overall world market by 2000, all of which appeared to be within reach.