Bridgestone / Firestone, Inc. Essay, Research Paper

Company Overview

Bridgestone/Firestone, Inc., a subsidiary of Bridgestone Corporation, was formed in 1990 when Bridgestone U.S.A. merged with The Firestone Tire & Rubber Company. In addition to manufacturing tires, Bridgestone/Firestone produces a variety of products including air springs, building materials, synthetic and natural rubber, and industrial fibers and textiles. The Nashville, Tennessee-based company has over 38 QS9000/ISO9000 Certified production facilities throughout the Americas, along with numerous international facilities throughout the world.

Firestone’s company philosophy is derived from a blend of Japanese and Americans methods, with a focus on providing quality products. In the words of the former leaders of Bridgestone and Firestone, Bridgestone/Firestone strives to “Serve Society with Products of Superior Quality” and to be the “Best Today ? Still Better Tomorrow.”

Bridgestone/Firestone is best known for it’s production of tires (more than 8,000 different types and sizes), which account for more than 75 percent of its annual revenues. As a leader in world tire technology, Firestone utilizes research and development centers in three countries and testing centers around the world to help develop, manufacture and market tires for almost every kind of vehicle. (Bridgestone/Firestone Profile)

Strengths

Bridgestone/Firestone finds much of its strength in having “one of the richest tire makers in the world as its parent” (Chappell, 09/11/00). Bridgestone Corporation has been around since 1931 and has established itself as a well-known international manufacturer of tires, rubber products, automotive products, chemical products, sporting goods, and other products (Bridgestone Annual Report, 1999). The resources and prestige of having Bridgestone as a parent gives Firestone an extra edge in the market.

One of Firestone’s biggest strengths is the fact that Firestone’s passenger vehicle trade is not the critical part of Bridgestone Corp’s world profit picture. Roughly 60% of Bridgestone’s North American profits came from the sale of heavy-duty truck tires. Firestone has a 16% share of that market, and the Bridgestone brand holds another 6.5 percent share.

Another strength for Firestone is its well-established brand name. According to an Automotive News reporter, the Firestone brand is “positioned in such a way that even a major decline in its original-equipment automotive business would not necessarily sink it” (Chappell, 09/11/00). This fact is essential to the survival of the company should the Firestone tire business disappear as a result of the current recall fiasco.

Bridgestone/Firestone has also signed a new deal with Honda of America Manufacturing Inc. Firestone has previously supplied approximately 75 percent of the tires to be put on the Honda Civics manufactured in Ohio and Alliston, Ontario. Dunlop Tire Corporation supplied the other 25 percent. The new deal will equip all new Civics from those plants with Firestone tires. Not only does this add to Bridgestone/Firestone’s revenues, but it also shows that Honda has confidence in Firestone’s ability to produce quality tires (Chappell, 09/15/00).

Bridgestone/Firestone also has a deal with Saturn Corporation to equip every Saturn with Firestone tires. Some Saturn dealers say that customers have asked about the recall but that customers have not stopped buying them because of the recall. A spokeswoman for Saturn says that they are not even considering choosing a different supplier. This, along with the Honda deal and a strong commitment to Toyota helps Bridgestone/Firestone’s image in that it shows that Firestone’s non-Ford customers have faith in the Firestone brand (Chappell, 09/11/00).

Another important strength for Bridgestone/Firestone is the fact that they have survived another big recall in the past. In 1978, the National Highway Traffic Safety Admininstration forced the company, then know as Firestone Tire and Rubber Co., to recall nearly 13 million tires. That recall involved the Firestone 500-series radial passenger car tires. The 1978 recall “remains the single largest product-safety action in automotive history” (Hess, 09/16/00). There are many similarities between the current recall and the 1978 recall. Both involved long strips of tread separating from the tires, apparently a result of a breakdown of the adhesion among the layers of the tires. Until the recent problems began at Bridgestone/Firestone, Firestone tires were among the top selling tires.

Problems/Weaknesses

Problems at Bridgestone/Firestone have recently become some of the top news headlines. The three most pertinent areas of controversy include labor relations and plant safety, production problems, and the current tire recall.

Threats of a union strike back in September brought to light issues involving poor labor relations at Bridgestone/Firestone. According to observers, there has been a “long history of labor trouble at the company – and in the tire industry in general” (Wilson, 09/04/00). The United Steelworkers of America had threatened to strike at nine of the Bridgestone/Firestone plants if an agreement could not be reach by September 1, 2000. Allegations have been made that faulty tires were made at a plant that was using replacement workers. On September 21, however, Bridgestone/Firestone announced that three contracts covering those nine plants had been ratified by the union (Bridgestone/Firestone Corporate News). Despite the contract resolution, Firestone is still in need of improving relations with its workers.

Working conditions and plant safety is another area that needs improvement. A series of tragic accidents at Firestone plants has also caused problems for Bridgestone/Firestone. One worker in an Oklahoma City plant died when the tire-assembly machine he was working on suddenly turned on and crushed his head. Two welders also died in oil tank explosions at a factory in North Carolina in 1994. Two plants in Tennessee were given citations by state OSHA officials that same year for “failing to ensure that machinery was disconnected from its energy source before repairs” (Newsweek, 09/18/00).

The recent recall of certain Firestone tires is definitely the company’s biggest problem. The recall began on August 9, 2000, and applies to the Radial 9235/75R15 ATX, ATXII, and Wilderness tires. The ATX and ATXII tires were produced at plants in the U.S., Canada, and Mexico; the Wilderness tires come from the Decatur, Illinois plant. As of October 16, 2000, 119 deaths in the U.S. have resulted from problems with these Firestone tires. Experts say there may be as many as 250 deaths and over 3,000 injuries related to the recall.

Accidents occur when layers of tread peel off from the tires, often causing the vehicle to roll over. These accidents have occurred most often with Ford Explorers equipped with Firestone tires. “Ford officials estimate the defect rate is 241 tires per million for 15-inch ATX and ATXII tires” (Firestone Tire Recall Legal Information Center).

The cause of the tread separation is still a source of controversy for Bridgestone/Firestone. Bridgestone/Firestone denies that the tires are defective. Firestone also claims that high temperatures and high speeds encourage the tread separation, speculating that consumers may be at fault. High heat and humidity in some of the plants may also have caused the breakdown of the adhesiveness. The lack of air conditioning in some areas has been linked to the corrosion of the brass-coated steel in the steel-belted radials.

Prior to the official recall of the Firestone tires, four former employees at the Decatur plant gave depositions regarding the allegations against Bridgestone/Firestone. Each of the employees had worked at the plant for over 30 years and had retired after a bitter strike in the mid-1990’s. The employees claim that outdated materials were used to make tires, that supervisors often encouraged shoddy practices such as bursting bubbles in the tires to cover up the flaws, and that emphasis was placed on production rather than quality. One of the employees had been an inspector at the plant and claims that high production quotas made it difficult to sufficiently inspect the tires before they left the plant. He also claims that the “green tire,” the carcass of the tire on which the steel belts and treads were applied, were often set on the ground, causing debris to stick to the green tire and wind up in the final product. Claims were also made that the chemical used refresh the adhesiveness may actually have directly caused damage to the rubber (United Press International, 08/14/00).

Opportunities

Because Bridgestone/Firestone is not dependent on its original-equipment business for its survival, Firestone’s future is not as dismal as some may think. Sales of heavy-duty truck tires account for more profits than the passenger car tire sales. Also, if Firestone’s North American business suddenly plummeted, the excess capacity could be aimed toward Europe, where Bridgestone has been increasingly picking up market share.

Threats

As a result of the many problems that Firestone has experienced a number of threats have surfaced. Firestone’s competitors are rapidly increasing production to grab replacement business. On September 29, 2000, Ford decided to equip the 2002 Explorer with Michelin tires rather than Firestone tires. Ford eventually plans on letting dealers and customers choose the brand of tires they want on their vehicles.

The public is becoming increasingly skittish about any of Firestone’s tires although the vast majority of them are safe. The public only sees this as a Firestone problem and not as an isolated incident of production. These threats are imperatively damaging to Firestone’s reputation and future business transactions.

Recommendations

We recommend that Firestone take specific steps to accomplish good faith and quality back to their consumers. Firestone will need to focus on the European market as a major buyer of their products and emphasize the passenger car market. Working to build better OEM relations and upgrading plants will not only push them to better technology but will create a “checks and balances” type environment. They will need to rewrite procedures from the bottom up, creating new policies to coexist with the upgrade of the plant. We recommend for their relations with consumers to concentrate on rebuilding market share in the U.S. by initiating a PR campaign that brings to light Firestone’s ISO 9000 certification and focus on product quality and safety.

Implementation

Years 1-5

Car manufacturers account for a large portion of the tire market. For this reason we feel that Firestone should work to build better OEM relations. This will help Firestone to maintain its profits and market share while going through this turbulent stage. This should be pursued throughout the implementation process and may become a permanent part of Firestone’s marketing program.

Years 1-4

We feel that Firestone should implement these changes over a five-year term. The first step in implementing these changes will be to focus on the European market where Firestone has seen an increase in market .Firestone’s problems have received much less publicity in the European market and the potential for increasing market share is much better than in the US market.

While focusing on the European market, emphasis should be moved from the light truck market to the passenger car market. Firestone’s recent problems have been confined to their light truck tires with no real damage being done to their reputation as a quality passenger car tire manufacturer. Firestone’s greatest growth potential lies in the passenger car section of the European market.

Years 2-4

These changes should be implemented in years 2 through 4. This should allow Firestone enough time to secure the capital required for this phase of the implementation process.

The next step in the implementation process is to upgrade outdated machinery in existing plants. This will help to insure that problems with product quality do not arise in the future. This may also lead to a reduction in manufacturing costs and increased profitability.

As plants are upgraded, an effort should be made to rewrite plant procedures from the bottom up. Using a “bottom up” process should help to increase employee morale and result in a higher quality finished product. This may also help Firestone avoid future labor relation problems.

Year 5

We feel that over the next five years the recall be forgotten by most US consumers and Firestone can begin to rebuild market share in the US. This will be done through a massive PR campaign. The campaign should focus on Firestone’s ISO 9000 certification, product quality and safety. Educating consumers on the level of quality needed to attain an ISO 9000 certification should help to alleviate consumer doubts on Firestone’s product quality. Other measures taken to increase product quality, such as plant remodeling, should also be focused on.

Through out this “rebuilding” process a panel of executives from Firestone’s financial, manufacturing, marketing, and engineering departments will be appointed to oversee and evaluate each stage. This team will make quarterly assessments of the plan’s progress and results, which will be reported to the company’s senior executives. They should also make recommendations as to any modifications that should be made to the plan.

Bibliography

Sources:

Chappell, Lindsay. Automotive News, September 11, 2000 v75 i5893 p46. “Analysts: Future OK for Firestone.”

Chappell, Lindsay. Automotive News, September 11, 2000 v75 i5893 p47. “Firestone’s Non-Ford Customers Show Little Concern Over Recall.”

Chappell, Lindsay. Automotive News, September 25, 2000 v75 i5895 p8. “More Firestones for Honda Civic”

“3 suppliers may sell tires for next Explorer.” Automotive News, Sept 4, 2000 v75 i5892 p8.

“The tire flap: behind the feeding frenzy.” Business Week, October 16, 2000 i3703 p126.

Firestone Tire Recall Legal Information Center, http://www.firestone-tire-recall.com

Grimaldi, James V. and Caroline Mayer, Washington Post, “4 Former Firestone Workers Deposed,” August 24, 2000, pE01.

Hess, David. National Journal, September 16, 2000 v32 i38 p2896. “Firestone’s Other Tire Debacle.”

“A Company Under Fire: Did Firestone do Enough to Protect Its Own Workers?,” Newsweek, September 18, 2000 p30.

“Ford, Fireston knew of tire problems for years.” United Press International, September 29, 2000 p1008271u8435.

“Testimony Indicates Abuse at Firestone,” United Press International, August 14, 2000 p1008226u6557.

Wilson, Amy. Automotive News, September 4, 2000 v75 i5892 p8. “Labor Unions Unrest Adds to Bridgestone/Firestone’s Problems”