Details of Bridgestone – Toyo Business Alliance Released

Following the May 16, 2008 conclusion of a basic agreement over a business and capital alliance, Bridgestone Corporation and Toyo Tire & Rubber have engaged in discussions in order to, as reports Bridgestone, “create increased efficiencies and generate synergistic efforts” in a number of areas. The two companies have agreed upon a number of initiatives, which have now been made public. The planned joint undertakings cover a number of business areas – tyre production technology development, the procurement of materials and equipment, cross production, logistics and the entry into businesses other than tyres.

These initiatives come in response to, in Bridgestone’s words, “unprecedented changes” in the tyre and rubber industry’s business environment. These include structural changes in demand due to market segmentation into high performance products and general-purpose products, the impact of low-priced products from low-cost manufacturers, and rising global raw material costs. Bridgestone hopes that, through the effective use of both company’s strengths and business resources, a synergy can be created through this alliance that will bring both companies additional corporate value.

The two companies intend to mutually licence technology for production systems, such as Bridgestone’s BIRD (Bridgestone Innovative & Rational Development) and Toyo’s A.T.O.M. (Advanced Tire Operation Module) systems. Joint development programmes will be conducted in order to overcome common challenges, such as those encountered in equipment development, and to increase design efficiency and optimise other aspects of production.

When procuring raw materials, other materials and equipment, the two companies will mutually supply materials produced in-house and equipment for general use, along with maximising the utilisation of both companies’ engineering subsidiaries. Bridgestone and Toyo will also investigate the possibility of the joint procurement of equipment components and, in the medium to long-term, jointly procure raw materials and integrate raw material specifications to the greatest extent possible.

The two companies will utilise production capabilities through the cross production of passenger car radials at Bridgestone’s facilities in Latin America and Toyo’s in the US. In the medium to long-term the companies will also implement the cross-production of TBR tyres, integrate the manufacture of other products, including bias tyres, and aim to use cross-production techniques at factories built in the future. By introducing cross-production at plants closer to relevant markets around the world, adds Bridgestone, distribution costs will be improved. Complementary production systems will also be implemented to increase flexibility.

In terms of logistics, Bridgestone and Toyo plan to mutually utilise warehouses and make maximum use of logistics subsidiaries and resources, including round-trip transportation wherever possible. Through this, says Bridgestone, the efficiency of domestic distribution will be increased and carbon dioxide emissions reduced.

Furthermore, the possibility of collaboration in the development and production of products other than tyres will be investigated. Two such products named by Bridgestone are urethanes and antivibration rubber. Joint research will be conducted into eco-friendly technology and production technology, and the two companies will investigate the possibility of the joint procurement of necessary components.

The establishment of a capital alliance between Toyo and Bridgestone has already been agreed upon, and payments between the companies were completed on October 16. For the capital alliance, Toyo issued a new ordinary share of 20 million stocks (8.72 per cent of the issued stocks including this issue) and allocated the shares to Bridgestone Corporation. Bridgestone allocated 3.9 million of its treasury stock (0.48 per cent of all issued stocks) to Toyo.