'Our revenues are exceeding budget:' Strengthening relationships is the way to go, says Bridgestone/Firestone's Lampe
Bridgestone/Firestone's recent history is divided into two parts: BR (before recall) and AR (after recall). The effects of the recall have been significant, if not devastating: five years of building Firestone brand market share BR went down the drain in two years AR. A sweeping reorganization of Bridgestone/Firestone's operations in the Americas followed.
But the bleeding has stopped, partly because Chairman, CEO and President John Lampe hasn't. When he's not making nice on Capitol Hill or preaching the importance of independence to members of the North Carolina Tire Dealers and Retreaders Association, he's rallying the troops outlet by outlet.
MTD: Are there any outstanding lawsuits involving your voluntarily recalled tires? If so, are they affecting your bottom line either directly or indirectly?
Lampe: Yes, we still have lawsuits pending, but based on our current information and the advice we have received from our attorneys and accountants, the reserves we have previously established are appropriate and consistent with generally accepted accounting principles.
MTD: In general, do you expect more lawsuits against tire manufacturers in the future than there were pre-recall?
Lampe: Unfortunately, yes, but I don't think we can say that the recall is entirely to blame for this phenomenon. We live in a highly litigious society and all manufacturers, whether they make tires or other products, are facing increasing activity in this area. I fully support the court system as a way for people to have "wrongs righted" and to receive just compensation for injuries that are caused by others.
However, the judicial system is being abused in many cases and some trial lawyers see it as a way to generate instant wealth, regardless of whether or not there is anyone at fault. We believe that well-reasoned tort reform is mandatory. Otherwise, manufacturers of every kind will be driven out of the U.S. market.
MTD: How has your relationship with the government changed since the recall?
Lampe: As you know, I've said that one of my key objectives has been to strengthen Bridgestone/Firestone's relationship with the agencies that regulate it and the legislators, both state and federal, that can affect it. In support of that goal, we've opened a Washington, D.C., office and established a PAC in order to allow both the company and its associates to become more engaged in the political process.
I've made many trips to Washington to visit with NHTSA (National Highway Traffic Safety Administration) and Department of Transportation officials, as well as members of Congress. We've worked hard to improve, and in some cases develop, relationships, and I believe we've made quite a bit of progress.
MTD: After a $1.7 billion loss in 2001, how soon will you return to profitability? How do you plan to achieve that?
Lampe: This year. Our business so far in 2002 has been better than we had expected. Our revenues are exceeding budget and we are doing a very good job of controlling expenses.
The Bridgestone brand continues to grow and the Firestone brand is strengthening, both of which are contributing to our recovery. Our dealers and our company-owned stores have also contributed significantly to this progress, and we are extremely grateful for their loyalty and support. Overall, I'd say we are very encouraged by our level of consumer tire sales.
MTD: Are you finding it easy to hold to your price increases of 2/1/02? In general, are all the price increases sticking in the marketplace?
Lampe: In general, yes. On the consumer tire side, our prices have held firm. We have had a bit more difficulty on the commercial truck side, but for the most part those prices have held as well.
MTD: How important are OE fitments to your brand strategy?
Lampe: OE fitments are important. That's why back in 1999 we began promoting the Bridgestone brand to our OE customers.
The visibility and consumer acceptance that can be achieved through OE fitments on premium and luxury vehicles can be valuable. However, our OE strategy focuses on selective growth in that segment, and we are not looking to rebuild our OE share to 1999 levels.
MTD: Have you completely made up for the loss of the Ford business with other domestic vehicle manufacturers?
Lampe: No, but as I mentioned earlier, that is not our goal. Instead of looking for quantity growth, we are selectively looking for quality growth.
We have continued excellent relationships with our OEM customers and have been awarded new fitments with existing and new OEMs. In fact, last month we celebrated our seventh consecutive GM Supplier of the Year Award with a presentation at the Firestone Indy 200, here in Nashville.
Overall, we've received that award nine out of the 10 years it has been given. I believe we are on the right track.
MTD: How close are you to striking up another OE supply contract with Ford in the U.S.?
Lampe: We continue to discuss mutually beneficial opportunities with Ford at many levels. Overall, I'm pleased with the talks; they've been productive. I hope that some day in the future we can say that we are prepared to do business with them again.
MTD: What are you doing to help independent tire dealers?
Lampe: We are doing many things to help our dealers. First, we are providing them with a variety of new and exciting products. Just this year, we've launched the new Bridgestone Turanza LS and the Firestone Affinity LH. Reports from the field tell us that we've provided our dealers with real winners in these products.
We've also launched the first tire to proudly wear the logo of the Indianapolis Motor Speedway, the Firestone Firehawk Indy 500 tire. Our dealers have long supported Firestone's return to open wheel racing, and this tire is positive evidence that listening to your dealers makes good sense.
And at the end of July, we launched our latest Dueler tire, the Dueler A/T Revo, which sports an aggressive and dynamic appearance coupled with excellent wet handling and braking and improved dry handling.
In addition to a strong lineup of new products year after year, we also offer our dealers a wide array of support services. From educational programs like our Pro Certification to marketing and promotional support such as our recent Canon camera promotion, our package is unequaled in the tire industry.
We have long believed that our success in the tire business is dependent on our dealers' success. Anything and everything we do should drive increased profitability of our business partners. As a result, we are always identifying new and better ways to support our distribution partners.
MTD: Thank you, John.