Enter Emkes: Bridgestone Americas prepares for the future with a new captain at the helm. First up: profitability in North America
Mark Emkes, chairman, CEO and president of Bridgestone/Firestone North American Tire LLC, will take over as head of Bridgestone Americas Holding Inc. April 1. He will replace John Lampe, who recently announced his impending retirement.
No stranger to the company, Emkes, 51, has been president of Bridgestone/Firestone divisions in both North and South America, including Bridgestone/Firestone de Mexico and Bridgestone/Firestone Latin America. He was named to his current position in September 2002.
The Lampe era as head of Bridgestone Americas Holding (BSAH) was short but memorable. Since his appointment in October 2000, he has helped steer the company through three potentially devastating recalls -- one contrived by Ford Motor Co., the other two voluntary. More than three years later, BSAH is in the black, and its two main brands, Bridgestone and Firestone, are gaining market share.
Modern Tire Dealer spoke with both of them to find out where Bridgestone Americas, particularly its North American tire operation, is headed. Between them they have spent more than 57 years with the various incarnations of Firestone Tire & Rubber Co.
Emkes was the focus of the interview because he will have to address issues such as union negotiations, profitability in North America, even the Tire Industry Association's proposed checkoff program.
Lampe, 56, is not gone yet, however. He will continue to have a day-to-day impact on the company until April 1; after that, he will remain on the Bridgestone Americas board of directors. And he still has a lot to say about the future of the company he has called home for more than 30 years.
MTD: Mark, you recently were quoted as saying you want the company "to evolve into a premier business enterprise," not just a top tire manufacturer. What does that mean?
Emkes: We have four LLCs in the Americas: Bridgestone/Firestone Latin America and Bridgestone/Firestone North American Tire (BFNT) are focused on tire sales. But the retail company, BFS Retail & Commercial Operations LLC, is more than a tire-related company, and they do a very good job. (The retail and commercial operation is responsible for a "substantial" automotive service business, plus the company's credit card business. Bridgestone Americas also runs a road service business through its GCR stores.)
There's also BFS Diversified Products, which sells air springs, roofing products, synthetic polymers, textiles and other non-tire products, including natural rubber. One of its divisions, BFS Vehicle Systems, offers our Praxis suspension system, which debuted on the 2003 Subaru WRX. Other OE manufacturers have expressed interest as well.
Of our four LLCs, three are making money. Only North American Tire is not, but we're getting close.
MTD: You say your immediate priority is to turn a profit in North America. What are you doing to make this so?
Emkes: One of the drains on our North American business is our OE division. One of the ways we are "decreasing our numbers in the red" is improving the tire mix -- providing higher rim sizes like performance tires and SUV tires. Our goal is "bigger tires, better fitments."
We improved on this in 2003, will continue to improve on that in 2004, and have 2005 fitments where that is going well. We used to be totally focused on sales and market share at OE. Now we are focusing on the right mix and turning a profit.
MTD: How are negotiations with the United Steelworkers of America going on a new union contract? The last one expired last April.
Emkes: We're in the middle of negotiations, although we haven't met since late October. We're ready, willing and able to get back to the table. We're one family, and all families have differences of opinion. But if we can sit down together, we can find solutions. We need a competitive agreement that allows us to make tires, sell tires and make a profit in the U.S. The average wage and benefit package in our tire producing plants is well over $30 an hour. We are looking at ways to be competitive, and the point is to keep those good paying jobs here.
MTD: How important are government relations to a domestic company? When you were first named chairman, CEO and president of Bridgestone Americas, John, you quickly opened up communications on Capitol Hill.
Lampe: That was one of my biggest challenges. We just didn't have any friends. We didn't even have any acquaintances.
We put Steve Akey in our D.C. office as the full-time Washington affairs guy. I think we've made a lot of progress.
Emkes: One of my very high priorities is to continue to improve government and community relations.
MTD: Mark, what is your opinion on the Tire Industry Association's proposed checkoff program?
Emkes: I really don't know enough about that yet. I'm still evaluating it.
Lampe: I think the concept is good so long as we can iron out the legal issues. (The money collected from it) could be utilized well, and would allow the industry to do good things. But before I'm behind it 100%, I need to know it will be accepted by the industry -- Sears, Wal-Mart, independent tire dealers, the Texas Tire Dealers Association, everyone.
MTD: Is run-flat technology close to widespread acceptance in the aftermarket?
Emkes: Run-flat technology will be very much OE-driven. BMW is being very aggressive with equipping its vehicles with run-flats. (Bridgestone Corp. supplies 60% of BMW's run-flat tires globally, according to the company). That's a market that is going to evolve -- it won't change overnight. With our technology, run-flats can be used on a standard rim.
Lampe: Our run-flat (which is designated RFT) is an option on the new Toyota Sienna. It's on the BMW Z-series, the Z4 and Z8, the new 5 series and also the 7 series. We had a run-flat display at the Chicago Auto Show in February.
MTD: One tire distribution channel that has shown growth the last few years is automobile dealerships. Some 85% of your business is through your "family channel" of independent dealers and company-owned stores. What do you think of the auto dealer channel?
Emkes: I think the car dealerships are going to become more active in the selling of tires. We supply tires to car dealers through our existing dealer organization with just-in-time deliveries.
Lampe: And I think that's one of our strengths. Last October, we announced that Midas shops were switching their tire business to us, and that Bridgestone and Firestone tires would be supplied to them only through our dealer network.
MTD: Bridgestone Americas posted a profit of $83 million last year, but the North American Tire operation lost money. Goodyear Tire & Rubber Co. lost money as well. Why does it appear to be so hard to make money in the U.S.?
Emkes: It's a very competitive market to begin with, and we also need to seriously address manufacturing costs in this country. We need to look at production and what we can do to be more competitive.
Lampe: Where else in the world does a producing tire company have to absorb costs from legal, health care and workers' comp standpoints of the magnitude we see here in the U.S.? Unfortunately, the current status of the way our legal system works results in our products being less competitive.
MTD: Are the class action tire recall suits over with, or will they linger on for a few more years?
Lampe: We have just completed a "fairness hearing" where a judge will decide if the proposed settlement of all our state class actions is appropriate. If the proposed settlement is approved -- and we understand that many of the plaintiffs' attorneys support it - that will put those class action cases behind us. But lawsuits are now a way of life in the U.S., and it's that way for all tire companies.
MTD: Mark, what do you plan to do in your first 100 days as chairman, CEO and president of Bridgestone Americas?
Emkes: I'm just going to build on the foundation John has established, and continue to improve customer relations, teammate relations, government and community relations. I want to continue to improve processes, systems and quality, not just in manufacturing. The way to do that is very simple: Respect your people, treat customers as partners, visualize success, plan well and implement. These simple philosophies and guidelines have worked well for me over the years.
I want to add that John has a pension, and I have a job, because our dealers buy tires. We need to make sure our dealers have products and programs in place to help them make money and succeed.MTD: Thanks, gentlemen.