A HEALTHY REORGANIZATION
Commercial and product reorganization, technologies and the development of new business models have changed the face of the Japanese company’s European division. At its head since 1 January 2012, Franco Annunziato, who talks about the crisis and the recipe for getting through it.
Mino De Rigo
KEEPING European business in the black by leading the subsidiary out of the shallow waters of the crisis. With the continuing negative economic situation, it is a task that makes veins throb and pulses race, but at the beginning of the year it was given to Franco Annunziato, the first non-Japanese to hold the position of CEO and chairman of Bridgestone Europe. Reorganization created six regional entities and assigned to Italy the job of coordinating the South Region, which was prompted by the need to rationalize the entire structure and be closer to the market, in addition to new models that would differentiate the Group’s actions from those of its competitors.
The situation” – Annunziato said – “is very complex, mainly because the crisis seems to be structural. But it is true that it does not bite in the same way everywhere: whereas in east Europe, in the Czech Republic, Hungary and, especially, in Poland and Russia, the market continues to grow despite the problems, but in the west, saturation is evident. However, here, too, a distinction must be made”. Starting with the dynamics of individual markets, which show that demand in Italy, Spain and Portugal that was traditionally oriented towards primary brands, is now moving towards standard and budget segments, a sign of gradual impoverishment and a trend in specific product segments.
Approaches created by area and segment
A highly distressed car industry has an effect on the supply of original equipment, but there are significant differences between mass produced brands and automotive brands in the premium segment; moreover, the changeover market is holding on and road safety regulations contribute to the demand for winter tyres”. Moving from cars to heavy vehicles, the situation is even more difficult, but the factors change: “The downturn in demand is sharp, although original equipment seems to be holding on (thanks to exports) and there is growth particularly in retreads. As to the shift in the logics of choice that make price the main variable, it should be noted that premium products still have a considerable share and once the critical phase has passed if nothing else the phenomenon should diminish from current proportions”. In the meantime, there is a need to review the approach and specialize by area and segment by taking advantage of new paradigms. Even where Bridgestone continues to be highly competitive: UHP, run flat, winter and 4x4 tyres, motorbike tyres, agricultural tyres and retreads. “This is why we are applying more sophisticated intelligence than ever to the market” – Annunziato stated – “and developing proposals that will meet and anticipate market demands. For fleets of heavy vehicles, models that will simplify operations by optimizing costs and, for the car segment, products whose added value will be better quality of life onboard”.
The healthy effects of the reorganization
What counts more than quantity and volumes is the value and quality of the products and service”. The contribution made by new technologies is obvious if you consider that the new generation of tyres is eco-compatible, durable, safe and frugal consumption-wise. Then there are the systems for maintaining tyre pressures at nominal values (what’s more, in November TPMS were made compulsory for all new vehicle models). Bridgestone aims at higher levels of service and is betting on new business models but also on an increase in competitiveness, starting from inside the company.
The reorganization that began last year” – Annunziato confirmed – “has allowed us to attack operating costs and optimize structure effectiveness and efficiency, not only for production but also in the commercial area by merging the sales organizations, and we are beginning to see the results already. Now we are at stage two and the completion of the strategic revision. Regionalization has increased operating flexibility in step with the optimization of the production structure”. Nine factories in east (Poland and Hungary) and west (France, Italy, Belgium and Spain) Europe are now operating in synergy for a group division that is totally self-sufficient (only motorbike and earthmoving tyres come from Japan) thanks to the research, development and testing centre in Rome.
European business maintains its positions
The figures seem to prove that management is right, if it is true that despite a downturn in sales in the first six months from the 206.7 billion yen of the same period in 2011 to 175.2 billion, and a reduction in turnover of around 12% forecast for the entire year, Bridgestone Europe’s business should still show an operating profit in spite of the falloff in demand. The group’s results are expected to grow in 2012, which will confirm the trend of the first six months; but it will be 5.7% lower than last year, when the Japanese group’s revenues stood at 3,024 billion yen.
Europe represents about 14% of global sales, America 42% and the remaining 44% comes from the other world markets. “There can be no doubt that Europe” – Annunziato emphasized – “is the most sophisticated and competitive market, but even though we are maintaining our positions now, we are still engaged in re-launches to enlarge the share. Thanks primarily to technology, the ability to maintain brand image on a level with product quality and even a multi-brand approach with Bridgestone, Firestone and Dayton products”. A range that is undoubtedly necessary for attacking developing markets like those in the east, where budget and standard products are still the most widespread.
Innovation and hi-tech are the primary driving forces
On the technology front, the commitment is total: “From the fourth generation of run flats” – Bridgestone Europe CEO pointed out – “to airless tyres, from intelligent systems (CAIS for providing real-time road surface condition information) to renewable and eco-compatible materials”. They range from synthetic rubber obtained biochemically from guayule, a desert plant as an alternative to rubber trees. “And then, ‘green’ products like the Ecopia line with the EP001S in the AA class, personalized coloured tyres and the ever-increasing lightness and performance of the new UHP tyres that express the best of our sporty DNA”.
The other strategic front that owes a lot to technology is the heavy duty linked to the binomial Bridgestone Bandag: “At IAA” – Annunziato said – “we launched Trisaver, a radical innovation in manufacturing tyres for trucks and buses that increases efficiency and savings. Since the acquisition of Bandag in 2007 we have worked on developing retread technology and the advantages of manufacturing the casing and tread separately with a process that is optimal for each component”. Trisaver takes advantage of this production method and new compounds for the casing and the tread that will reduce rolling resistance compared to traditional tyres, increase durability and the number of potential retreads. “As to prospects” – the manager concluded – “the first six months of 2013 will not bring anything new, but we hope that by the second half of next year things will change and vitality will be restored also to the Italian market which for us is, and will continue to be, strategic.”
• Gala in Palazzo Lombardia for winter tyres
Putting across a product well stimulates the market and contributes to brand image. It also widens the audience to include those outside the sector. So, what could be better than a glamorous evening with a view of Milan by night: the super-attic in the new Lombardy region building was the location for meeting the European management of Bridgestone and a brief full immersion in a strictly topical subject - winter tyres. Logic and substantial qualities were explained in a series of installations that conveyed a message that was as simple as it was direct: diving into water when you can’t swim is very dangerous without a lifebelt and it isn’t healthy to wear flip-flops in the snow. These were the parallels drawn with winter tyres that are necessary when the weather is inclement, especially because they are dedicated to personal safety and that of others. More technical and less immediate, but equally convincing, was the adrenaline-generating film shown in a kind of black cube that catapulted the audience into a tyre’s journey across different terrain in widely different weather conditions, with dynamic properties and performance stresses emphasized by a frenzy of figures. Also persuasive was the result achieved by Stefano Modena, former F1 driver and first class test driver. DJ Linus was also there; he had been enlisted by Bridgestone to be the connecting link between winter tyres as a factor of road safety and the world of young people who are still fairly uninformed.