What’s next for Bridgestone Americas Inc.? Scott Damon, CEO, Bridgestone West; group president, Bridgestone Americas Inc.; and Bridgestone's global chief digital transformation officer, provides a preview in this MTD exclusive.
MTD: Can you bring us up to speed on Bridgestone Americas’ performance during the first half of the year? What have some of the company’s achievements and challenges been?
Damon: Our North American business is doing pretty well from a quarter-over-quarter basis. Certainly, our profit is up slightly. Our revenue is comparable to what you saw in a lot of the first quarter earnings. It's down a little bit. Our consumer and retail businesses are flattish.
I think (we’re seeing) a lot of the challenges that replacement consumer (tire) dealers have probably talked to you about, where you see them trading down just because their available access to goods and services is somewhat challenging in a credit-constrained market, especially for lower- to medium-income people. But our retail business and our consumer business are weathering that and they're flat.
Our commercial truck business and retreading business are strong - stronger on the dealer side than even the fleet side, but both are up year-over-year and it's certainly helping our performance. Our off-road business is also quite good in North America. And our ag replacement business is good year-over-year. That business has been quite challenging and the original equipment business on that side is down almost 30%. So the ag business is definitely a headwind for us.
The OE businesses themselves, year-over-year, in both truck and consumer also are a little bit down, but we've forecasted them to be soft, in general. Overall for our business, I'd say we're doing better than we were last year from a profit perspective, but certainly revenue is down slightly, as you saw from other manufacturers.
MTD: What’s your take on demand right now? What are you hearing from your distributors and your independent dealers?
Damon: I'd say on the consumer side, sellout is getting better. It's been getting better each month and from a manufacturer's sell-in side, it's also getting a little bit better. I think with the tariff volatility, what you saw was an influx of lower-tier products in the first quarter and so that affected a little bit of the sell-in, but sellout has been better. I think the jury's still out (as to if) it can sustain itself and what will happen as costs may be passed along, relative to where that is in terms of structural impacts on manufacturers’ costs and what that means to consumers. But dealers, for the most part, are seeing a little bit of good news.
On the commercial side, like I said, it's been quite strong. We are in a freight recession, but I would say we’ve seen pretty good demand, which is somewhat counterintuitive to maybe what you hear on the macro-economic side. But it's been OK.
MTD: The company recently decided to end TBR tire production at its LaVergne, Tenn., plant, which is scheduled to shut down next month. Can we expect to see more production or plant rationalization across your manufacturing footprint? Are you looking at some other rationalization opportunities?
Damon: I think, in general, that's a broader process that you look at, based on where you see future opportunities. I wouldn't say there's an immediate signal there. We have announced several actions globally that certainly touch the world that I'm responsible for. We recently announced a reduction in our Spain agricultural/truck (tire) plant. We had an announcement earlier in the year in Argentina. And so I think LaVergne is just one example of many, where we're a global company using a global supply chain. (Our) Warren County, Tenn., TBR facility is one that we do expect to invest back in.
The U.S. is still a major growth engine for Bridgestone and we will invest accordingly, where it makes sense. But we also have to understand that our cost base has to be competitive and it's what our customers expect. And so we'll (pull) all the levers that drive that. I would also comment that with the way the tariff landscape has pushed things, we do have machine capacity availability in our Wilson, N.C., and our Aiken, S.C., consumer plants. We expect them to get full machine capacity over the next 18 months or so. We will be diverting supply back into the U.S, where we have availability to do that.
MTD: I wanted to touch upon the Warren County plant a little bit. How's the investment coming along there? (Editor’s note: In August 2022, Bridgestone announced it would invest $550 million in its TBR tire factory in Warren County, Tenn.)
Damon: It's coming along as planned. Part of our challenge there has been the softness in OE (demand), but we're methodically working through how that will play out. We’re working great with the state of Tennessee, with the USW (United Steelworkers) and with the plant to make sure that it fulfills our needs, long-term, in the supply chain.
MTD: It sounds like the investment will enable you to do some pretty remarkable things at that plant, like putting RFID into the TBR tires made there...
Damon: We're actually capable of doing RFID in all of our TBR plants. We haven't implemented it across everything because we're still looking at all the use cases of where it makes sense, but we're ready to do that in our Brazil facility and Warren facility and even our Asia facilities.
One of our big product strategies in both consumer and commercial centers around our ENLITEN technology. That's really where we can bring best-in-class performance that complements ... our sustainability goals and bringing both in concert together to bring a premium product to market. And so a lot of what we're investing in Warren is not only the technology in all aspects of tire manufacturing, but also the capacity expansion that's coupled with that. So that's really what Warren was targeted to achieve.
MTD: Will you continue to roll out new products, both consumer and commercial, that contain ENLITEN?
Damon: Yes and you're seeing that happen in real-time. We're launching a steer tire in Bridgestone that's an ENLITEN technology (product) in the R273. We have several Bridgestone touring products. One just came out called the Turanza EverDrive. We've also launched the Turanza Prestige, so they're basically targeted towards touring applications and fulfilling everything from passenger sedan through CUV, SUV and our broadline touring (lines) of Bridgestone. They're all going to be ENLITEN technology. So it's really that synergistic effect of bringing to light premium performance, but also coupling that with what we expect to drive in terms of sustainability. Where we can complement both of those together? That's what we're trying to achieve.
MTD: Are there any plans to realign or reshuffle your brand offerings in North America, on both the PLT and TBR side?
Damon: Obviously, Bridgestone and Firestone are flagship in both. We also offer the Fuzion brand in consumer as kind of what I would call a tier-three offering. Right now, I would say we're sticking with that complement in consumer. We really expect Firestone to play a broad approach (in) the upper end of tier two and sometimes even into tier three. On the commercial side or TBR side, we do the same with Firestone, where we stretch it up to the top of tier two and then down into tier three with Firestone Classics, which are older patterns, but well-liked by our customer base. And of course, Bandag fits across all tiers because we love to retread premium Bridgestone products with Bandag at our fleet level. And then Bandag is a great complement as an entry-level price point for commercial dealers in that tier-three/tier-four space.
MTD: You’ve mentioned that the Bandag business has been very robust. What do you credit that to?
Damon: I would say as our fleet business continues to grow, most of our fleets retread. They retread almost twice as much as they buy a new tire, so (the Bandag business is) almost weatherproof in terms of it's always a good value proposition for a fleet customer. You could take that value proposition and it carries forward in any kind of macro-economic condition. As you've seen an elevation of pricing, it allows retreading to certainly fit the right space, where you've seen tier-four growth, and it can play in there nicely. Overall, retreading still is at the heart of our commercial strategy and it's the heart of our reliance on our dealer base. And so it will always be foundation. We want to make sure that it grows and stays on pace with the market.
MTD: Shifting over to retail, what role will your network of 2,200- plus company-owned retail stores continue to play in Bridgestone's North American strategy? Is there a possibility that you could add more stores through greenfield or acquisition? What investments are planned for your company-owned network?
Damon: We've been adding stores. It probably doesn't feel like we're growing because we closed underperforming (locations) at the pace we've been adding, so it's stayed relatively constant at that 2,200 number. But I would say one big push from our global CEO this year in the North America market is what we call ‘consumer rebuilding’ and it's really been built around Firestone and Firestone Complete Auto Care. We do see it as a strategic advantage and we think it coexists well with our Firestone family channel dealers. It’s an area that we would like to grow.
Your (other) question was, ‘Would you consider acquisitions of other dealers versus greenfield?’ Of course, that's always in consideration. But we want to make sure that our locations are in the markets that can drive the right complement of our brand growth and certainly service areas that are highly advantageous for Firestone Complete Autocare and the customers they serve.
MTD: How does Bridgestone Americas fit into parent company Bridgestone Corp.’s Mid Term business plan and how does that impact what you're doing in the North American market?
Damon: Bridgestone Americas is a huge part of (Bridgestone Corp.’s) overall business. We're almost 50% of revenue. And so it is a major focal point of the company's growth and they see the U.S. market as a big driver of that, in consumer and commercial. When they think of Bridgestone, they think of the U.S market as a very high priority and so it will continue to be that ... through the products we sell and certainly the distribution strength that we have, both with our independent dealer network and with our retail network.
MTD: Do you have any specific messages for your network of independent tire dealers across the U.S. and Canada?
Damon: The dealer (network) is at the heart of what we do as a company and it's certainly been the reason that we've been successful. We don't take dealer success lightly. In this market, you see the consolidation that's happening and certainly that's something we want to manage collectively with our independent dealers. Top of mind with us is their ability to grow, so we can grow. And we want to make sure that our offering is right for them to be able to be profitable (and) to be sustainable with their customer base. Certainly, we value what they do for us specifically and that's not lost on Bridgestone. And so the loyalty that's been built with them, with us, the trust they have in us as a partner and then the way we approach them with a mutual goal of success are key to us.
MTD: What can we expect to see from Bridgestone Americas during the rest of the year and even into early next year?
Damon: I think you're going to see a renewed focus on consumer rebuilding. Our Bridgestone product line has been completely revamped. A lot of that was (driven by) customer feedback. Next year - at least the middle of next year - you're going to start seeing the Firestone product line revamped. On the commercial side, I think we're going to continue to work on growing our fleet business with our distribution network and bringing what I would call a total offering - including dealer service (and) dealer solutions that come through technology, as well as great products - to them.
I think, lastly, one of the big strategies that we're trying to build upon with our customers and our independent dealers, specifically, is making sure that it's just easier to do business with Bridgestone. It’s not lost on us that sometimes we're complicated in that arena. Piece by piece, we're really trying to work on solving those problems to make it easier for those customers to interact with us, so it's a big part of our strategy.
This is a big year for the Firestone brand because it's (the brand’s) 125th anniversary. We want to build on the roots of a strong brand - a strong reputation - and that really comes from what Harvey Firestone built. When he built (Firestone Tire & Rubber Co.), it was in essence based on customer trust through quality and service and so I think you're going to see a lot from us as we exit this year and enter the next year on rebuilding Firestone (and) the heritage that comes from the brand.
