Bridgestone Chile prepares to broad-line tire plant

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Bridgestone Firestone Chile S.A. (BFCH) will close its Coquimbo, Chile, plant at year's end. The plant is not globally competitive because of "intense" competition from low-cost producers; the company a future of significant losses, "with no viable strategy to reverse the losses."

The plant has not generated a reasonable return on assets for several years. It is equipped to make smaller or "mass-market" tires and bias tires, a segment of the market which is shrinking globally.

The company says it has weighed all of the alternatives and even with new capital investment, under current market conditions, it would be difficult, if not impossible, to restore the plant to a competitive position.

"We have a difficult challenge in Coquimbo," says John Jenkins, president of BFCH, a subsidiary of Bridgestone Americas Holding Inc. (BSAH). "The reality is that as market conditions erode for low-end or mass-market tires, the plant, which for several years hasn't generated a reasonable return on assets, is now projected to begin losing a significant amount of money. New capital investment will not reverse the market forces that have created the competitive obstacles we are facing."

The Coquimbo plant, which began operations in 1975, was purchased by BFCH in 1999 and produces radial and bias-ply passenger and light truck tires, truck and bus, and off-the-road tires. More than 70% percent of the tires made at the plant are in the low-end mass market segment and include bias-ply tires that are unique to this market.

BFCH will continue to maintain a sales office in Santiago. The company adds it plans to grow its "Family Channel" dealer base in Chile as well as in Bolivia and Peru, markets that have been supported by Chilean products. BFCH will supply tires to these markets from manufacturing facilities operated by its sister companies in Latin America.

The facility employs more than 470 active employees.

"The closing will be done in full accordance with Chilean labor law," says Jenkins. "We have contacted local government leadership, the union and the community to explain our decision as well."

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