AKRON—Gary Garfield knows that for his vision for Bridgestone Americas Inc. to come true, the tire and rubber company has to focus on several fronts. Being financially successful tops the list.
“My vision is this: To be the clear leader in our industries,” the company's CEO and president said while attending the recent Bridgestone Invitational World Golf Championships in Akron. “We have an incredible heritage. Firestone and Bridgestone are great brands. What we are about is being the best, so that's what we're working toward.”
Garfield joined Bridgestone/Firestone Inc. in 1991 and was elevated to his current position in March 2010, after serving as vice president and general counsel, when Mark Emkes retired as Bridgestone Americas chairman, president and CEO.
Concurrent with Garfield's promotion, Asahiko “Duke” Nishiyama was named chairman and Eduardo Minardi chief operating officer for Bridgestone Americas.
Garfield said that while wanting to lead its field is a common goal for corporations, he knows that won't happen for Bridgestone Americas unless the firm's bottom line is sterling. “Every great company is financially successful,” he said. “In order to be sustainable, you have to be financially successful.”
Toward that goal, Bridgestone Americas has put integration programs in place for both its consumer and commercial tire groups, to streamline the units and ensure coherent strategies for the marketplace, Garfield said.
The firm also has created various “centers of excellence” to eliminate redundancies in delivering such internal services as human resources, public relations and manufacturing support.
“We've also looked intently at our administrative areas and how can those be streamlined, both to be faster and more efficient,” he said.
To date, these efforts have yielded $50 million in annual savings, the executive said.
For the first half of 2011, it seems that its financial position was strengthening.
Bridgestone Americas' sales for the six-month period rose 4.1 percent to $7.81 billion, with operating profit up 50 percent to about $483.8 million. Its operating margin was 5.9 percent this year, compared with 4.1 percent in 2010's first half.
Three other areas also are prime focuses as Bridgestone Americas strives to meet its CEO's goals: providing the best products and service; developing its employee base; and being an outstanding corporate citizen.
Having topflight products and services in whatever market the company is participating in is called “fulfilling the brand promise,” Garfield said.
“Our brands represent something great and we … expect whoever is buying our brand to have very high expectations. And we expect to meet or surpass those.”
The Nashville, Tenn.-based subsidiary of Bridgestone Corp. also has devoted part of its human resources staff toward making sure the firm has a top-notch work force.
“Every tire company has tire building machines,” he said. “We have to have the right people in the right spots. We have to be as good at managing and developing and growing and attracting our people as we are at making tires.”
He said it is equally important that Bridgestone Americas operates in an ethical and upstanding manner.
To him, that means, respecting and helping preserve the environment, making sure its operations are safe, and “helping the communities in which we work be better places to live.”
Garfield said he didn't have a difficult transition from being the firm's top legal executive to having to view Bridgestone Americas from the broader perspective of CEO.
“There absolutely is a learning curve for any new CEO,” he said. “I don't care what your background is, the first time you are a CEO, it is a different perspective, and there is a learning curve. I'll honestly be surprised if in five years I'm still not learning. Anyone who gets to the mode where in five years they're not still learning, they probably need to move on, no matter what job they're at.”
Tire market split
Looking at the North American tire business, Garfield said it's a different situation depending on which end market is being discussed.
The consumer market for passenger and light truck tires has been sluggish and probably will rise roughly 1-2 percent for the year.
“We've been pretty good on the passenger side,” Garfield said. “Our replacement sales of major brands are up in terms of market share. We're very pleased with the type of tires we're selling—high-margin tires.”
On the other hand, the truck and bus tire sector, along with agriculture tires and some off-the-road segments, are showing much stronger growth.
Truck/bus tire sales, for example, are up about 55-60 percent from 2010, with the majority of that coming from original equipment sales. “Part of that is pent-up demand for trucks,” he said. “No one was buying trucks during the recession.”
Climbing demand in developing countries is driving the growth for ag tires, he said, and the mining tire market also is increasing.
The Bridgestone CEO said the firm is less optimistic now than it was several months ago that the U.S. economy is coming back strong.
“I'm a little more concerned that the economy will stay sluggish longer than any of us would like,” he said, which would impact both passenger and truck tire business.
What worries Garfield the most about the domestic economy is the housing and construction market, because the industry employs so many people, both directly and through the ripple effect.
“It's hard for me to imagine that we can make a significant dent in unemployment without housing picking up,” he said. “Conversely, it's hard for me to imagine that we can make a significant improvement in housing picking up with unemployment being so high. So we're in a little bit of a Catch-22 situation, so something has to be done to address it.”
Despite the current uncertainty in the economy, Bridgestone Americas' tire facilities are running at about full capacity, Garfield said.
The LaVergne, Tenn., truck and bus tire factory had ramped down considerably during the recession, but he said the firm is bringing production back as quickly as possible at the facility.
It also announced in July a $135 million expansion at its Graniteville, S.C., tire plant.
That project will help the firm shift some production of high-margin tires from outside the U.S. to this country, as some of these tires currently are being imported from Japan, according to the executive.
Increasing production in the U.S. helps with both exchange rate issues as well as transportation costs.
“We are concentrated on producing here in the U.S. the branded tires and strategic tires for this market,” Garfield said.
Bridgestone Americas also must remain flexible with its production capabilities and keep a close eye on market conditions.
“If we need to have slowdowns, then that's what we'll do,” the official said. “I hope that's not the case. We aren't planning any at this time, but some of the economists are saying we're heading back into a recession, so we'll just have to wait and see.”
He does project that as the tariffs enacted two years ago on Chinese-made consumer tires decrease to 5 percent this month and are eliminated in September 2012, the quantity of those tires being imported from China will grow.
He said that the firm does outsource non-Bridgestone and non-Firestone brand tires for these lines from a third party in China.
Garfield said raw material prices may not rise as much as many have expected if the economy slows in the U.S. and Europe.
Having its own backward integration of synthetic and natural rubber supply doesn't give the firm much of an advantage on price, he said, but it does help ensure supply.
In addition, it allows Bridgestone to help drive innovation in materials because it can determine how much research and development spending is focused on polymers.
The firm's new Akron Technical Center will be completed and staffed by mid-January, Garfield said, with a grand opening to follow in April when the weather should be warmer.
“This is tremendously exciting for us,” he said. “One of the things we are trying to do is really create an air and culture of innovation—much more so than we ever have. One of the keys to our success will be unleashing the power of our people. This will be symbolic of that.”
Garfield said all of the firm's non-tire businesses are performing well.
The Building Products Group, which makes rubber roofing and other construction products, was hurt by the recession but is bouncing back nicely this year.
The air springs business is ahead of budget, in part because the OE truck business has picked up so much.
And the NR plantation in Liberia is doing well with rubber prices being high, and the fibers and textile business—which mainly supplies the firm's tire plants—is strong as well.
“Right now, there are no weak spots,” he said.