Turnover rose by 3.7 per cent, but the group announced a loss for the first half year of 280 million Euro. This is the result of the fatal recall and all the other costs from Bridgestone Firestone in the USA. Despite all the bad news, the management was confident that it would show a profit at the end of this year of around 80 million Euro. In the US, the group is not expecting to show a profit before the second half next year.
An Arizona-based panel of experts assembled by an attorney acting against Firestone has stated that Firestone tyres made in Japan are more durable than those made in America. The ATX tyres manufactured in Japan are claimed to carry thicker layers of key rubber materials, which prevents damaging cracks from appearing. Firestone denied the claim, admitting differences in production but not in durability, the company added that the findings ” are not based on scientific analysis but on anecdotes and unsupported theories.
Ford chief Jacques Nasser faced some tough questioning at yesterday’s Congressional hearing into the Firestone tyre/Ford Explorer situation. ‘Billy’ Tauzin, from Louisiana, revealed that one of the brands of tyre being used to replace the Firestones had a failure record nearly 25 times worse than the Wilderness. Nasser said that, if this was correct “then we’ll act on it”. Tauzin also criticised BF Inc’s John Lampe of attempting to shift the blame on to Ford.
Mr Shoshi Arakawa has been appointed chairman and chief executive officer (CEO) of Bridgestone/Firestone Europe (BFE). He succeeds Mr Takeshi Uchiyama, who retires and returns to Japan after leading BFE for the last three years.
The 13 million recalled Firestone tyres in the USA may be about to create another set of problems.Ford has contracted Recovery Technologies Group (RTG) to collect and recycle 6 million of the tyres. The company is having to use sub-contractors to collect, so may not be fully in control of the collection and it is feared that many tyres may be returned to the road. Additionally, RTG, can currently only shred 500 tyres per day, which equates to 32 years of non-stop shredding. Even if the firm does shred and crumb every tyre, there are serious doubts about the available market for the end product.
The German cooperation organisation Point-S and Bridgestone-Firestone are working more, and closer, together than in the past. Point-S is evidently reducing volumes with Pirelli and Michelin, which are the biggest suppliers to the fast-growing Viborg group.
The UK newspaper Financial Times has published its annual list of the world’s 500 largest companies, ranked by market capitalisation. The only tyre company to appear last year was Bridgestone, at number 300. The company does not make this year’s global top 500. Among Europe’s top 500 are the following tyre companies, with their positions. Michelin (301) Pirelli (242) and Continental (479). Mention should be made too of Sabanci Holdings, the ultimate parent of Lassa/Brisa, which appears at number 331 in Europe.
Bridgestone/Firestone Inc. has acquired a majority shareholding in Morgan Tire & Auto. This equity has, after it purchased rival Tire Plus Limited in the summer of last year, more than 550 depots in 24 states of the USA and was second biggest independent equity in the USA, referred to as a “retail-powerhouse”. Turnover of Morgan Tire & Auto exceeds 800 million Euro. Larry Morgan, who began his career as an employee of Firestone, remains CEO. The acquisition is a clear sign that, despite the Firestone recall disaster in the USA, the tyre manufacturer intends to stay in the market with the Firestone brand.
Bridgestone Firestone Inc. has launched a web-site dedicated to tire safety offering consumers the opportunity to sign up to an e-mail notification service to remind them to check their tyre pressures. According to Michael Fluck, e-business and Internet manager for Bridgestone Firestone, “Many cars have longer service intervals than their predecessors. consequentially, tyre inflation levels may not be checked often enough. an e-mail reminder that it’s time to do so may reinforce the importance of doing this check”.
Ford’s Jacques Nasser and BF Inc’s CEO John Lampe are due to face questions from a Congressional committee regarding the spate of rollover accidents involving Ford Explorers fitted with Firestone tyres. This comes as the death toll in such accidents rises to 203 and lawyers in Florida, representing a family who had two members killed and three others injured in an accident, are seeking $1 billion damages from Bridgestone/Firestone Inc.
As US automotive sales figures revealed that the US domestic product was facing a massive slump in sales compared to almost universal increases by imported marques, sales of the Ford explorer held up against the national trend with sales rising 3.8% on the 1999 figure, despite the bad publicity onslaught from the Firestone recall.
At its so-called annual strategy day, Michelin had only partly good news to tell. Following the disastrous Firestone tyre recall, the price increases in the US-replacement market appear to have stuck. However, recent price increases in the US truck tyre replacement market have not held and this is squeezing the EBIT margins. For the first time ever, analysts were allowed to see a tyre made by the C3M process. Michelin is convinced that it can increase market share significantly in the UHP market with the help of C3M, while analysts from Deutsche Bank see C3M as a key driver to achieve an EBIT margin of 10 per cent in 2005, compared to 7.6 per cent in 2000.
In a management reshuffle at Ford in the USA, Henry Wallace, Chief Financial Officer and Wayne Booker, Vice Chairman, are to retire. There is speculation that Martin Inglis, Head of Operations for Ford North America, is to succeed Wallace and that Nick Scheele, Chairman of Ford Europe, is to return to the States as a replacement for Inglis. Ford stressed that these latest moves have no connection with the current Firestone recall situation.
Bridgestone Firestone lawyers have made attempts in a pre-trial hearing in Indianapolis, to limit the number of legal suits being filed against the company. Whilst the consumers’ attorneys sought to expand the recall, Firestone lawyers asked for the dismissal of some 80 claims where the claimant had suffered no fiscal or physical harm, therefore leaving nothing to be remedied at law. If successful in having these claims dismissed, this would reduce the cases against the firm by 40%. The hearing continues in March.
John Lampe has spent all his working life with Firestone and then Bridgestone/Firestone. He has recently been put in charge of the Bridgestone group’s largest subsidiary, Bridgestone/Firestone Inc. in the USA. In addition – and this is a first for Bridgestone and very rare for large Japanese businesses – Lampe sits on the board. This illustrates how highly he is thought of in what are difficult times for the company. In our exclusive interview, he talks of the relationship between Bridgestone/Firestone Inc. and Ford. However, since the interview, this attitude changed dramatically, with Bridgestone/Firestone Inc. ending its business relationship with Ford. Our follow-up article after the Lampe interview traces this change in attitude and the increasingly-bitter war of words as the companies try to pin the blame on each other.
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