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Critical Mass: Under Cost and Capacity Pressures, BFNAT Outlines Its Plan

Under Cost and Capacity Pressures, BFNAT Outlines Its Plan

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There were no new products to introduce, but Bridgestone/Firestone North American Tire’s (BFNAT) commercial division still had a lot to say to dealers and fleet managers at its ninth Bizcon conference. Most of the talk focused on fast-rising raw material and burgeoning health care, legacy and operating costs that have hammered North American tire companies.

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Held in New Orleans in late April, BFNAT also used Bizcon 9 to outline actions it has taken to help customers weather the industry-wide shortage of medium truck tires. Some 550 dealers, truckstop managers and fleet managers from the U.S. and Canada attended.

Art Campagnoni, BFNAT’s director of truck tire sales, summed up the focus of the two-day meeting with his opening remarks: Tiremakers are all in the same boat, facing high raw material and operating costs, he said, “and no one has tires.”

BFNAT will differentiate itself by “creating and demonstrating the highest value for end users,” at the same time, “lowering fleet operating costs must be a collaborative effort between the tire company, the dealer and the fleet,” he said.

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Mark Emkes, chairman and CEO of BFNAT and its parent, Bridgestone Americas Holding (BAH), reviewed 2004 financial results for Bridgestone Corp. and BFNAT. On a global basis, Bridgestone anticipates 2005 sales and profits to increase marginally from 2004 results, driven down primarily because of raw material costs, Emkes said. The 2005 goal for BFNAT, which has lost money in each of the last two years, is to reach breakeven this year, a task Emkes admitted would be difficult.

Asahiko “Duke” Nishiyama, recently installed vice chairman and president of BAH and BFNAT, echoed Emkes’ statement. “Our 2005 objective is to break even,” he said. “In the face of rising costs, it will be difficult.”

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Singh Ahluwalia, president of BFNAT’s commercial tire group, reviewed his division’s 2004 performance and outlined hopes for 2005. The group’s replacement medium truck tire unit sales last year hit 108% of its goal, he said, while OE unit sales hit 132%.

Thus far, 2005 sales are “off to a great start,” he said, with replacement unit sales at 110% of budget, and OE unit sales at 98%. Ahluwalia outlined the group’s 2005 strategies:

• Increase internal training.

• Achieve budget goals and BFNAT’s breakeven goal through balanced transition to new products and disciplined pricing, distribution strategies and marketing programs.

• Meet unit sales volume goals by better managing OE and replacement sales and protect commitments to “key fleet customers.”

• Manage inventory better. “Capacity is maxed out for every major tiremaker, and global capacity is strained,” he said. BFNAT is “importing more tires than ever before from Japan, South America and Thailand.”

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• Review key contracts with truckstops and dealers and fleets.

• Improve processes using Six Sigma and IT enhancements.

One other key division goal, addressed by Campagnoni, concerned BFNAT efforts to curb rampant gray marketing, mostly cross border between the U.S. and Canada. In its gray market battle, Campagnoni said, BFNAT cancelled some large dealers and fleets, terminated employees and disciplined some GCR stores.

Kurt Danielson, the division’s director of truck and bus tire marketing, sees no end to the current medium truck tire shortages, which, he said, were caused by “a perfect storm of rising OE and heavy replacement demand at the same time.” To address the issue, BFNAT is no longer taking OE orders and has restructured its field sales force to balance OE and replacement needs.

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Bizcon also featured a mini trade show displaying some of BFNAT’s current Bridgestone- and Firestone-branded products, including the Bridgestone Greatec super wide and some future tire technology projects currently underway. And, a number of business seminars were held, covering topics such as selling services, compensation strategies, building image and reputation, negotiating for higher profit, building loyalty within an organization and selling skills.

Bizcon 10, according to BFNAT, will be held in Washington next spring.

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