TOKYO (Oct. 18, 2012)—Bridgestone Corp is planning to increase its annual capital investments by 25 percent or more the next five years, to more than $3 billion, to support its goal of becoming the “absolute and clear leader”—“Dan-Totsu” in Japanese—globally in its respective tire and non-tire business segments.
Half of the annual spending will go toward “tire strategic projects,” Bridgestone said in its 2012 mid-term management plan, without specifying what those projects are.
Bridgestone said its ultimate goal is to become the “undisputed world No. 1 tire and rubber company in both name and reality.” Bridgestone already ranks as the No. 1 tire maker globally and is among the five largest non-tire rubber product makers, according to figures compiled by Tire Business and Rubber & Plastics News.
The new plan covers the period from 2013-17. Capital spending at $3 billion or more per year would represent nearly 8 percent of the firm's sales, or a full percentage point or more higher than the tire industry's average the past few years.
Calling the current global operating environment “increasingly unstable,” Bridgestone is in the process of restructuring its management to respond to the increasing need for globalization and the increasing uncertainty in the world.
Elements in the plan are to diversify away from natural rubber technologies and to move to renewable resources from fossil-based resources. Part of this is to create tires using 100-percent renewable raw materials.
Bridgestone aims for a 6-percent return on capital invested and to achieve an operating income ratio of 10 percent while increasing sales 5 percent yearly. By comparison the firm's operating ratio last year was 6 percent.
In general, Bridgestone said it intends to implement reforms “centered on the principles of flexibly responding to economic fluctuations and creating new value for customers.” One particular area of focus, the firm said, will be “leveraging the benefits to be realized through vertical and horizontal expansion.”