By TIMOTHY AEPPEL, NORIHIKO SHIROUZU and MICHAEL WILLIAMS
Staff Reporters of THE WALL STREET JOURNAL
First came the recall. Now, the attempted revival. The recipe?
Replacement tires and racing.
With Tuesday's appointment of John Lampe as
Bridgestone/Firestone Inc.'s chairman, chief
executive and president, the company is seeking
to shake off the paralysis that has gripped it
since its Aug. 9 recall of 6.5 million tires. The
recalled tires have been linked to 101 deaths in the U.S. and more than
50 overseas, mostly involving Ford Motor Co.'s popular Explorer
sport-utility vehicles. Mr. Lampe succeeds the embattled Masatoshi Ono,
who is returning to Bridgestone Corp. after nearly 10 years at its U.S.
subsidiary.
The 53-year-old Mr. Lampe, previously executive vice president, is the
first American to head Bridgestone Corp.'s U.S. tire-making unit. The
company's Tokyo headquarters also picked a well-regarded senior vice
president and board member, Isao Togashi, to serve as the unit's No. 2
executive. In his new role as chief overseer of manufacturing and quality
control, Mr. Togashi, 58, has a mandate from Bridgestone's
tough-talking chief executive, Yoichiro Kaizaki, to fix operating problems
at the company's U.S. unit and impose strict production standards.
It isn't clear how much autonomy Mr. Kaizaki will
give his new American CEO, who isn't a Bridgestone
Corp. board member. But if the recent past is any
indicator, he will allow Messrs. Lampe and Togashi
considerable latitude in running
Bridgestone/Firestone, though probably not as
much as he gave Mr. Ono in recent years.
Americans who worked for Mr. Kaizaki during his
own days at Bridgestone/Firestone say he put a lot
of trust in his subordinates.
"Mr. Kaizaki and I have an understanding that I am
going to be running this company as CEO," Mr.
Lampe said Tuesday. "I told Mr. Kaizaki the only
way I can successfully run this company is that if I have that total
responsibility and am empowered to make decisions."
Mr. Lampe's strategy is expected to borrow a page
from Mr. Kaizaki's playbook. After arriving in the
U.S. in the 1990s to rehabilitate a Firestone brand
that had languished since a big 1978 recall, Mr.
Kaizaki's solution was to boost sales through
dealerships and use auto racing to spruce up the
brand's image. For Mr. Lampe, another major
priority will be to minimize the loss of Firestone's
original-equipment business with car makers.
Firestone, which is bracing to lose all of its business
with Ford, is expected to use its strong retail
presence to start rebuilding the market share it has
lost amid the recall. In addition to operating the
nation's biggest network of company-owned tire stores -- at more than
1,500 locations -- Firestone also sells tires through affiliated dealers
that carry a variety of brands and big retail chains, such as Sears,
Roebuck & Co. In all, Firestone estimates that about 13,000 retail
outlets carry its replacement tires.
That market will be crucial for the tire maker now that its prospects of
making big sales to auto makers have dimmed. Ford has already lined
up rival suppliers, France's Groupe Michelin and Goodyear Tire & Rubber
Co., to provide tires for its Explorers and other vehicles. In a recent
interview with a Japanese business magazine, Bridgestone's Mr. Kaizaki
conceded that "we might lose" the Ford business, which represents
about $350 million in annual sales for the company's U.S. unit.
Firestone's total sales in 1999 were $7.5 billion.
But Ford is only part of Firestone's problem. Other car makers are
likewise approaching its competitors to supply their new vehicles, fearing
that consumers will be turned off by the name Firestone on the sidewall.
At least one Japanese maker, Toyota Motor Corp., has been in touch
with Firestone competitors.
A Toyota spokesman in New York says there is a possibility that "our
procurement people on the ground might have contacted Goodyear and
others to check them with their supply abilities," but that he couldn't
confirm whether Toyota had actually done that or not. Toshiaki "Tag"
Taguchi, the highest-ranking Toyota executive in North America, says
Toyota will continue to buy tires from Firestone as long as the tire
maker can meet Toyota's standards for quality, cost and delivery. "We
don't believe it's necessary at least at this point to phase out Firestone
as a supplier," he says.
Mr. Taguchi says the most pressing issue Firestone has to resolve is to
win back the trust of consumers the tire maker has lost recently.
Firestone's recall, he says, is not only a problem affecting Firestone
and
Ford alone but an issue affecting the entire auto industry. "We want
Firestone to quickly settle the tire problems and regain the consumer's
trust for automobiles as a whole," he says.
One way to do that is to leverage an asset not directly tarnished by the
recall: Firestone's auto-racing program, which also happens to be the
pet project of Mr. Kaizaki.
Al Speyer, Firestone's motor-sports director, says the company is
"brainstorming" about ways it will use motor sport to rebuild its image.
He says many drivers and team owners have come to Firestone,
volunteering to help them by giving testimonials. Once the recall is
complete, possibly by the end of November, Mr. Speyer says he expects
to see Firestone launch an advertising campaign centered on auto
racing.
The company is even considering seeking out one or more drivers to
serve as spokesmen. One idea is to integrate the company's message
into "The Road to Indy," a weekly TV program that runs during the
months leading up to the Indianapolis 500 in late May. Firestone is also
considering linking such promotions with its local tire stores. For
example, drivers might be brought to specific retail stores to talk about
the tires they use on their racing vehicles, as well as their personal
vehicles.
While some racing-team owners and drivers wonder whether Firestone
will cut back on its participation as a result of the recall or whether
Firestone can afford the huge costs, Mr. Kaizaki said last week that
Bridgestone will continue to sponsor auto racing. "Bridgestone
absolutely will rebuild Firestone, and we want to regain the trust of our
customers as quickly as possible. To that end, we will continue to fully
participate in Formula 1 and CART-series motor sports," Mr. Kaizaki said
at a news conference before the Japanese Grand Prix Formula One race.
Mr. Lampe's first act as Firestone CEO Tuesday was to express regret
about the incidents that led to the company's recall. "We can debate
over cause and responsibility for there is much that is not known. But
that does not change the fact that there have been tragic accidents,
and for this I am deeply sorry," he said.
But "to say our tires are the only reasons for a Ford Explorer accident
and rollover is very unfair," Mr. Lampe added later, taking a direct jab
at
the auto maker. He said that tire manufacturers and vehicle makers
must work together to gain a better understanding of how their
products interact, in order to make those products safer and more
reliable.
The new CEO and his lieutenant, Mr. Togashi, are likely to operate as a
team. Look for Mr. Lampe to play point man in trying to resuscitate the
company's marketing operation, dealing with the U.S. government's
investigation of the tire crisis and working to win back public confidence.
That would free Mr. Togashi to bring Firestone's factories and
technology up to parent-company standards, and close down any
troubled operations.
Mr. Lampe says his top priority is accelerating the recall effort by
increasing the company's production of replacement tires, and he
disclosed Tuesday that Firestone's decision to speed up the recall would
require it to take an additional $100 million charge on top of the $350
million charge it had previously announced. He also intends to establish
a new method for examining product-performance data, addressing
criticism that the company seemed unaware of quality problems with its
tires despite mounting numbers of complaints over the past several
years.
Mr. Lampe's fortunes at Firestone have risen in direct proportion to the
fall of his predecessor Mr. Ono, under whose tenure Firestone fumbled
its initial handling of the tire recall. At first the company said it would
recall the tires in stages, meaning some consumers would have to wait
almost a year for replacements. It also repeatedly blamed drivers and
external factors for its tires' failures and denied that it had been aware
of any problems with the tires.
The one experience that more than any other turned Bridgestone Japan
against the Ono team came on a night last month when top
Bridgestone executives huddled in a war room at their Tokyo
headquarters. They watched on TV through the wee hours and into the
next day as Mr. Ono struggled through testimony before the U.S.
Congress, following the back and forth through a Japanese-language
interpreter. Mr. Lampe, by contrast, stood up to questions and
managed to deflect some of the pressure onto Ford for the first time
since the crisis began.
Even before this latest crisis, Mr. Lampe had demonstrated his ability
to
handle pressure. In 1994, after the gruesome death of a worker in an
industrial accident at the Oklahoma City plant of Firestone's Dayton
unit, which Mr. Lampe oversaw, the Clinton administration sought to
make an example of the operation. Then-Labor Secretary Robert Reich
descended personally on the Oklahoma City plant, among other things
hand-delivering a stack of papers alleging 107 safety violations at the
plant. Mr. Lampe rushed back from a trade show in Minneapolis to deal
with the crisis. The crackdown eventually fizzled, partly as a result of
a
backlash among the unit's officials and workers against the
government's heavy-handed tactics.
Those who know Mr. Lampe say his tough manner helped deflect the
heat. "He's the kind of person who stands up to such storms; he's not
intimidated or scared," says Sunil Kumar, a former Firestone executive
who now works in the chemicals industry. "He's sufficiently assertive,
which is what you need to be effective as an American manager in a
Japanese company."
Mr. Lampe built his career in sales, joining the company in 1974 as an
international trainee. Along the way, he developed a strong global
background, putting in stints for the tire maker in Singapore, Denmark,
Costa Rica and Brazil. He is credited with rebuilding Firestone's Dayton
tire brand, which he managed as president from 1991 to 1995. In this
role, he helped implement a key aspect of Bridgestone's U.S. strategy.
Part of Bridgestone's plan after it bought Firestone in 1988 was to
develop a multilevel approach to the tire market. Bridgestone is the
premium brand, while Firestone is the middle-tier name and Dayton
serves as the value brand.
During Mr. Lampe's tenure at Dayton, the brand's market share grew
steadily, and Mr. Kaizaki put him in charge of the replacement market
for Firestone-brand tires as a promotion. "He's got the trust of
independent Firestone retailers, and that's irreplaceable," says the
former colleague.
While Mr. Lampe will handle the front end of business, Mr. Togashi will
have a greater hand in running Firestone's technology, particularly in
bringing Firestone's U.S. factories more into line with the higher
standards of Bridgestone's Japanese operation. In an interview with The
Wall Street Journal last month, Mr. Kaizaki suggested he regretted not
having modernized the equipment Bridgestone inherited at Firestone
plants when Bridgestone purchased the U.S. company, though he was
careful to note that the tire recall "wasn't at all a result of economizing"
on investment.
Mr. Togashi has been Bridgestone's key man for opening shop overseas
as the head of an International Technical Headquarters division at
Bridgestone in Tokyo. One project he oversaw is a $435 million plant
Firestone opened in South Carolina in the mid-1990s.
Some operations, such as Firestone's Decatur, Ill., plant are likely to
be
closed or severely downsized. Not only is the Decatur plant one of
Firestone's oldest -- it is also the one cited as a source of many of the
tires subject to the current recall. "They have other plants that are
more efficient," says Trevor Hoskins, a former public-relations chief for
Bridgestone/Firestone.
As head of quality assurance, Mr. Togashi will be pushing for controls
that make it easier for information about tire-failure claims to be shared
within the corporation and conveyed back to Japan quickly.
It was Mr. Kaizaki who set up Firestone's current highly decentralized
structure. In the early 1990s, he established the 21 operating
companies that spread operational decision-making power among a
large group of executives. One former executive said that while there
was coordination between U.S. and Japanese manufacturing and
technology departments, there was less so elsewhere. "Other areas,
such as public relations,. legal, technical service, were the weakest sides
of the interaction."
Mr. Lampe said Tuesday that the 21-company concept was wonderful in
the 1990s. "But it's difficult to have leadership and direction when you
have 21 people reporting to you," he said.
Write to Timothy Aeppel at timothy.aeppel@wsj.com, Norihiko Shirouzu
at norihiko.shirouzu@wsj.com and Michael Williams at
michael.williams@wsj.com