Bridgestone History

Key Dates:
1931: Shojiro Ishibashi founds Bridgestone Ltd. in Kurume, Japan, as the first local tire supplier for the nascent Japanese automotive industry.
1937: Headquarters are relocated to Tokyo.
1942: The company's name is changed to Nippon Tire Co., Ltd.
1951: The company is renamed Bridgestone Tire Co., Ltd.
1983: Bridgestone gains a U.S. production base through the purchase of a plant in LaVergne, Tennessee, belonging to the Firestone Tire & Rubber Company.
1984: Bridgestone Corporation is adopted as the new company name.
1988: Bridgestone acquires Firestone for $2.65 billion.
1989: Bridgestone's U.S. operations are integrated with those of Firestone, forming the Bridgestone/Firestone, Inc. subsidiary.
1994: A long and bitter strike begins at five Bridgestone/Firestone plants in the United States.
2000: A spate of rollover accidents--some fatal--involving Firestone tires and Ford Explorer vehicles leads to the recall of 6.5 million Firestone tires.
2001: Recall-related tensions lead Bridgestone to sever relations with Ford Motor Company in North and South America; the company's U.S. unit loses $1.7 billion because of costs associated with the recall, restructuring efforts, and lawsuit settlements.


Company History:
Bridgestone Corporation is the world's leading manufacturer of tires, and the company is number three in the North American tire market, trailing the other two of the world's "Big Three" tiremakers, Michelin and The Goodyear Tire & Rubber Company. In addition to its flagship Bridgestone and Firestone brands, the company makes and markets tires under the names Dayton, Seiberling, Road King, Gillette, and Peerless, as well as private and house brand tires. Bridgestone also makes the raw materials that go into tires and maintains an extensive network of company-owned tire retail outlets, including nearly 2,300 in North America and about 700 in Japan. The company's tires also are sold through tens of thousands of independent retailers operating in more than 150 countries around the world. Nontire products, which account for about 20 percent of sales, include automotive components, particularly vibration- and noise-isolating parts, such as engine mounts and air springs; industrial products, such as polyurethane foam, conveyor belts, and rubber tracks for crawler tractors; construction and civil engineering materials; and sporting goods--golf balls and clubs, tennis balls and rackets, and bicycles. Products are manufactured within more than 40 tire plants and more than 60 nontire plants on six continents. Geographically, sales break down as follows: 44 percent from North and South America, 37 percent from Japan, 11 percent from Europe, and the remaining 8 percent from elsewhere (Africa and the Asia-Pacific region outside of Japan).

Origins of Pioneering Japanese Tiremaker
Bridgestone was founded by Shojiro Ishibashi, whose name means "stone bridge." Prior to founding the company, Ishibashi, along with his brother, had led the family clothing business, which produced tabi--Japanese workers' footwear; 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 Bridgestone Ltd. two years later in Kurume, Japan, as the first local tire supplier for the nascent Japanese automotive industry. Headquarters were moved to Tokyo in 1937. 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 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 family connections 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. Meantime, production of nontire products began early on, with golf balls added to the portfolio in the 1930s and bicycles in 1946.

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.

Expansion 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 1983 Bridgestone gained its first U.S. production base by purchasing a plant in LaVergne, Tennessee, belonging to the Firestone Tire & Rubber Company. This proved to be the first step toward Bridgestone's acquisition of that U.S. company in 1988, for a total of $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 U.S. 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 LaVergne, Tennessee, in 1983, which Bridgestone had turned into a success. Bridgestone originally agreed to buy Firestone's tire operations for $1.25 billion, but Pirelli, the Italian manufacturer, intervened with a rival bid, forcing the Japanese company to increase the offer. Bridgestone finally paid $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 carmakers 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 MasterCare 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 offered 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 $1.5 billion modernization program. Firestone's auxiliary head office in Chicago and Bridgestone's own U.S. 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. Company founder Shojiro Ishibashi also had 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.

Bridgestone's production, however, was not limited to tires. Its technical research and development laboratories worked on the development of rubber and nonrubber items. Rubber technology featured prominently with such items as conveyor belts, inflatable rubber dams, and marine fenders. Multi-rubber bearings were produced for use in the construction of buildings in areas prone to earthquakes as the rubber element in the construction enabled the buildings to vibrate with the earth's movement. Bridgestone's other innovative ideas included rubber "muscles" for robots and grease-free conveyor belts. Bridgestone became a Japanese leader in vibration-isolating components for automobiles and through Bridgestone/Firestone gained a large share of the North American market for rubberized roofing materials. It was also a major supplier in the United States of air springs for trucks, automobiles, trailers, and other vehicles.

In 1988 Bridgestone Cycle Co., Ltd. gave cyclists the first opportunity to design their own machines. Cyclists were able to choose, from a list of standard parts, the shape, color, and materials for the frame, brakes, handlebars, and seat, to make their own unique "mix and match" bicycle. Bridgestone's advance in metallurgy made it possible to produce bicycles that were lighter than ever in weight. The Radac line of racing, touring, and recreational bicycles was introduced in 1990, with a model that featured the world's lightest frame, thanks to an aluminum-ceramic composite, the first ceramic material ever to be used on a bicycle. Nonrubber products included items from special batteries for electronic equipment to weighing systems for aircraft.

Bridgestone was also a leading supplier of golf balls and clubs, tennis rackets, and other sporting goods. The Bridgestone Sports Co., Ltd. was established in 1972 and subsequently won many awards, including one from the Japanese Ministry for International Trade and Industry for a line of windsurfing boards. In 1987 the company introduced the Science Eye system, which gave a high-speed photographic analysis of a golfer's swing, for use in department stores and professional shops. Bridgestone also operated swimming schools and health clubs.

Although Bridgestone Corporation entered the 1990s with the ability to compete on equal terms with the industry's two other giants, Goodyear of the United States and Michelin of France, its international expansion came late. Bridgestone had concentrated on the domestic market while other Japanese companies were developing production plants and overseas markets. Japanese customers bought whatever Bridgestone sold, which did little to encourage Bridgestone to develop new products; in addition, Bridgestone's production of radial tires came late by Western standards. Japanese manufacturers were reluctant to import European or American tires in the 1960s and 1970s, even though foreign tires were considered superior to Bridgestone's. These factors conspired to give the company a commanding share of the Japanese market, 46 percent in 1990, while exports were 50 percent.

Difficulties with U.S. Operations in the Forefront in the 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 $1 billion in the United States from 1990 to 1992. Bridgestone's profits consequently suffered, totaling 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 rehired immediately. 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 $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 workforce 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. In addition, despite its difficulties in the United States, Bridgestone spent $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 $435 million plant scheduled to open in Aiken, South Carolina, in early 1999. The new factory would 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 also was designed specifically 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 ($645.28 million) on a record ¥1.96 trillion ($17.96 billion) in sales.

Despite slumping sales of automobiles in Japan and other Asian nations because of the Asian economic crisis of 1997-98, Bridgestone closed out the decade strongly. In fact, the results for 1998 set new records: ¥104.63 billion ($921 million) in profits on ¥2.24 trillion ($19.69 billion) in revenues. The company was aided by its more efficient and productive U.S. operations, which showed steadily increasing profits in the late 1990s, reaching $300 million by 1999. The balance sheet of the U.S. subsidiary also was bolstered through a 1999 infusion of cash from the parent company aimed at reining in Bridgestone/Firestone, Inc.'s $3 billion debt.

On the negative side, Kaizaki had received much criticism in Japan for his aggressive, U.S.-style restructuring initiatives, including the launch of an early retirement program in the early 1990s; such moves were, in large part, still considered anathema in Japan. The criticism of Kaizaki came to a head in March 1999. That month a Bridgestone manager who had agreed to take early retirement went into Kaizaki's office to demand that the company's personnel policies be changed. When Kaizaki refused to change course, the manager took out a knife and committed hara-kiri. The resulting firestorm of negative publicity was only heightened by Kaizaki's failure to speak publicly about the incident for four months; when he did break his silence during a meeting with reporters, the company president came off as defiant and unfeeling.

Surviving a Potentially Devastating Tire Recall in the Early 2000s
In mid-2000 Kaizaki found himself embroiled in another crisis when reports began surfacing of possible defects in several Firestone tire models. Some of the tires, many of which had been used as the original tires on Ford Explorer sport utility vehicles, were shredding on the highway, leading to rollover accidents and more than 200 deaths and some 800 injuries, according to investigators with the U.S. National Highway Traffic Safety Administration. In August 2000 Bridgestone announced that its U.S. subsidiary would recall 6.5 million Firestone-brand ATX, ATX II, and Wilderness AT tires and replace them at the cost of hundreds of millions of dollars. Bridgestone's stock nosedived, and the company was once again hurt by missteps on the public relations front: Kaizaki, as he had in the prior crisis, maintained a long public silence over the issue, and Ono, the head of the U.S. subsidiary, made a belated public apology that was further marred by the suggestion that the drivers were to blame for the accidents because they had failed to keep their tires properly inflated.

Bridgestone gained control over the crisis soon after new executives were installed. In October 2000 Ono was replaced by John Lampe, who had been marketing chief for Bridgestone/Firestone. In early 2001, Shigeo Watanabe, a senior vice-president, took over the helm at Bridgestone, replacing Kaizaki. One of Watanabe's key early moves was to give Lampe more authority to make autonomous decisions concerning the crisis without constantly needing to gain approval from the Tokyo headquarters. As an American, Lampe was better able to communicate the Bridgestone/Firestone line: While acknowledging that the company had made some bad tires, and after expressing regret for the tragic accidents, Lampe was aggressive in contending that the design of the Ford Explorer had played a key role in the rollover accidents. When Ford Motor Company announced in May 2001 that it would spend $3 billion to replace an additional 13 million Firestone tires on Ford vehicles, Lampe made the stunning announcement that the Bridgestone/Firestone unit would end its 95-year relationship with Ford--at least in North and South America. (The two companies had more than just a business relationship: William Clay Ford, Jr., chairman of Ford, was the great-grandson of the founder of Firestone, Harvey Firestone.) While dramatic, cutting ties with Ford represented the loss of only 4 percent of Bridgestone's total revenues.

To escape the bankruptcy of the U.S. unit that many observers were predicting at the height of the crisis, Lampe engineered other moves. He took to the airwaves, starring in television commercials that had the theme "Making It Right" to begin repairing the damaged Firestone image. To the surprise of a number of analysts, the Firestone brand was not jettisoned but was instead retained as a mass market brand in the United States--though repositioned slightly downmarket--while the Bridgestone brand received greater emphasis as a premium brand. Lampe worked hard to keep Bridgestone/Firestone dealers onboard in particular by picking up the costs of the recall. He also launched a cost-cutting initiative to stem the unit's sea of red ink. Most notably, the company's plant in Decatur, Illinois, where many of the recalled tires had been made, was shut down at the end of 2001, costing about 1,500 workers their jobs.

Recall-related costs led to a $511 million loss at Bridgestone/Firestone in 2000, and the following year the unit lost a whopping $1.7 billion thanks not only to recall and restructuring costs but also to $285 million paid out to settle lawsuits filed in connection with the rollover accidents. The crisis meantime had a major impact on the company's U.S. market share, cutting its portion of the replacement tire market from 10.5 percent in 1999 to 7.5 percent in 2001, while its share of the new car market fell in the same period from 25 percent to 22 percent. To shore up the finances at Bridgestone/Firestone, the parent company injected it with $1.3 billion in January 2002. Despite the retention of the Firestone brand, Bridgestone began dropping that moniker from the names of its subsidiaries, with the U.S. unit renamed Bridgestone Americas Holding, Inc. at the beginning of 2003 and the company's European holding company renamed Bridgestone Europe N.V./S.A. This rebranding was part of an effort to build a global corporate identity under the Bridgestone name.

The remarkable turnaround at Bridgestone was evident in its results for 2002, which included a 5 percent increase in revenues, a 161 percent jump in profits, and the return of the U.S.-based subsidiary to profitability. Growing ever more confident that the crisis was over, Bridgestone announced late in 2002 that it was earmarking ¥56 billion ($467 million) for an expansion of its global passenger tire production capacity at plants in Japan, Poland, Thailand, Indonesia, China, Costa Rica, and Mexico. An additional ¥27 billion ($225 million) was set aside to increase production capacity at plants in Thailand, China, and Spain, where truck and bus tires were made. In March 2003 Bridgestone bolstered its European operations by purchasing an 18.9 percent interest in Finnish tire manufacturer Nokian Tyres PLC for ¥78.3 million. Nokian was the largest tire producer in the Nordic region with sales of ¥479 million in 2002. Still the world's leading tire maker, Bridgestone had managed not only to survive the potentially crippling tire recall but also to return quickly to a policy of aggressive growth.

Source: International Directory of Company Histories, Vol.59. St. James Press, 2004.