Bridgestone Announces Enormous Expansion Plans

Bridgestone Corp has announced huge expansion plans, which could see the manufacturer spend as much as 200 billion yen (£990 million) every year between now and 2008.

Bloomberg has reported that Bridgestone is pre-empting a stagnation in the domestic Japanese market by increasing investment in new factories and upgrading equipment. The company is aiming for sales of 3 trillion yen (approximately £15 billion) by 2008, with a profit margin of 5 per cent, company president Shigeo Watanabe told a Tokyo press conference. “We are aiming to capture about 20 per cent of the global market share for tyres” by 2008, from the current share of “between 18 per cent and 19 per cent,” he said.

The move follows Bridgestone projections that the global tyre market will expand between three and five per cent every year until 2008. The Tokyo-based company is also in the process of building factories to supply Toyota Motor Corp and other automakers amid increasing vehicle demand globally. Bridgestone captured 18.2 per cent share of the global tyre market in 2004 while Michelin holds 19.4 per cent, Bloomberg reported.

On 12 October Bridgestone agreed to pay Ford Motor Co $240 million in order to settle the 2000/2001 Firestone recall. “The settlement with Ford has resolved our concern and will allow us to focus on our tyre business,” Watanabe told journalists.

Bridgestone is currently building four new plants, bringing its total to 51 factories in 24 countries. The Japanese manufacturer is spending $300 million to open its fourth plant in China in January 2007. In Mexico, Bridgestone is spending $220 million on a third plant, which will start operations in July 2007. While in Japan, the company is spending about 17 billion yen on expanding the capacity of three plants.

But Bridgestone’s plans were wider ranging than just increasing production. The company also said it will expand its overseas sales network. In Central and South America, the company plans to open 150 outlets every year by 2008. The manufacturer said it will also open 1,410 shops in China in three years, tripling its current total of 420 stores.

In addition to its plans for the emerging markets, Bridgestone said it will also increase the number of outlets it runs in Europe from 1,500 at the moment to 2,100 in 2008. This is said to be part of the company plan to reverse its current Bridgestone/Firestone product mix ratio. The manufacturer said it is aiming for 60 per cent of its sales to be generated from Bridgestone products, as opposed to its current level of 40 per cent.