Bridgestone 2004 Annual Report Download - page 16

14
Bridgestone Annual Report 2004
Operating income in our operations in the Americas increased 37%, to ¥26.7 billion
($256 million). A 4% rise in sales, to ¥1,018.9 billion ($9.8 billion), helped offset the adverse earn-
ings effect of rising raw material costs. That rise reflected a series of price increases for tires, as well
as unit sales gains. Our operations in the Americas posted unit sales gains in passenger car and light
truck tires and in truck and bus tires. Sales grew in both of those categories in the replacement mar-
ket and in the original equipment market.
Restoring our tire manufacturing and wholesale business in North America to profitability
remains our top priority in the Americas. The operating deficit in that business shrank further
in 2004, and we are tentatively confident of eliminating the pretax deficit completely in 2005.
Profitability in our North American tire operations has improved as management has concentrated
rigorously on upgrading their sales portfolio. That strategy has included a reduced emphasis on
market share and a sharpened focus on high-value-added products.
Our projections call for further sales growth in 2005 at our principal subsidiary in the Americas,
Bridgestone Americas Holding, Inc. We expect operating income there to remain about the same as
in 2004 because of the rising raw material prices.
Tire demand was strong across the board in the Americas in 2004. That reflected a generally strong
economic performance in the United States, where capital spending increased and the employment
picture brightened. Economic conditions were also generally favorable in Canada and in Latin
America.
Our operations in the Americas, like their Bridgestone Group counterparts elsewhere, struggled
with supply constraints throughout the year. They coped with those restraints by raising plant pro-
ductivity and by allocating production capacity to high-value products.
The plant under construction in Monterrey, Mexico, will help alleviate the now-chronic shortage
of supply capacity in North America. That plant will produce passenger car and light truck tires,
mainly in the high-performance and large rim size categories. It will feature the first installation
outside Japan of our highly automated BIRD production system. The plant will also benefit from
the impressive work ethic of the highly motivated Mexican workforce. Labor productivity at the
Our Fuzion line of tires debuted in North America in 2003. Fuzion is an affordable brand of high-
performance tires aimed at the emerging “tuner” market. That market consists largely of young
car enthusiasts and customizers. Supporting the Fuzion brand has been an innovative marketing
effort to reach out to young consumers at regional auto shows and tuner events. Fuzion sales have
exceeded our highest expectations. In 2004, we added an even more affordable Fuzion tire line,
which helped fuel further sales growth.
Bridgestone Group tire manufacturing and marketing operations in Latin America contributed
greatly to the group’s operating income in the Americas in 2004. Shown here are a tire plant in
Cuernavaca, Mexico, and a retail outlet for tires in São Paulo, Brazil.
Regional Review: The Americas
Broad-based growth