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Bridgestone closed the Firestone deal in March 1998, beating out its European rivals. The makeup of the global tire industry would never be the same, as one by one competitors followed with their own acquisitions and mergers.
’13 Cadillac ATS fitted with Bridgestone Potenza runflat tires.
On the Global Map
In 1989, Michelin bought Uniroyal-Goodrich Tire, and Yokohama Rubber acquired Mohawk Rubber. Nearly a decade later in 1997, Goodyear Tire & Rubber and Sumitomo Rubber Industries completed the industry restructuring by joining forces in North America, Europe and Asia.
Bridgestone all together picked up 27 plants including eight non-tire units and a tire technical center in Europe, raising its global total to 60 facilities, of which 36 were dedicated to tires. Overnight, the company’s market share jumped to 17% from 10% before the acquisition, moving past Goodyear to become the world’s second-largest tire maker behind Michelin.
Bridgestone, whose name is a transliteration and inversion of the surname of its founder, Shojiro Ishibashi, or “stone bridge,” was on the global map.
“It would have taken decades if we had attempted to establish our own plants in all of these markets – in Europe, North America and Latin America,” Bridgestone CEO Akira Yeiri said in a 1990 interview.
True enough. But along with market share and an overseas presence, Bridgestone also acquired management headaches the likes of which it had never seen. In Yeiri’s words: Bridgestone “swallowed a whale.”
Although Firestone had fewer manufacturing facilities, its labor force was nearly double that of Bridgestone’s, and far less compliant. Added to this, Firestone plants were far less productive, estimated at 50%-60% of Bridgestone’s Japanese plant levels.
Problems arose almost immediately.
Just days before the U.S. Securities & Exchange Commission approved the purchase in early May of 1988,dropped Firestone as a supplier. GM accounted for a reported 20% of Firestone’s OE business in North America.
Before the year ended, Bridgestone had to put together another mega-financing package, this one for $1.5 billion, to upgrade Firestone plants in North America and Europe. John Nevin, Firestone’s savvy CEO, had refused to let prospective buyers into the plants for a look, thus Bridgestone bought the operation sight unseen.
While all of this was taking place, the U.S. economy went into a deep recession and Firestone’s North American operation began to hemorrhage money.
Over a four-and-a-half-year period through fiscal 1992, losses, mostly in North America, exceeded $1.2 billion, dragging down Bridgestone’s consolidated net earnings to their lowest levels since its 1961 listing on the Tokyo Stock Exchange.
At the low point in fiscal 1989, net earnings fell to ¥4.5 billion ($50 million). Management saved itself the embarrassment of its first deficit by selling off a ¥30 billion ($330 million) tract of land west of Tokyo.
Masatoshi Ono, the former Bridgestone/Firestone chief, reported that losses in its North American operations exceeded $1 million a day in fiscal 1989 and fiscal 1990.