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By Eric Mayne / The Detroit News

CHICAGO — Bridgestone/ Firestone Inc. is no closer to resuming business ties with Ford Motor Co.’s North American operations, following a tumultuous breakup over recalls and rollovers.

John Lampe — chairman, CEO and president of Bridgestone Americas Holding Inc., the tiremaker’s parent company — said Ford remains a solid customer in other markets. But there is still friction after Bridgestone/Firestone pulled the plug on its Ford business in May 2001, a move triggered by the automaker’s determination to recall millions of Firestone-brand SUV tires a second time in 2000 and 2001.

“We still have that desire,” Lampe said of his company’s wish to normalize business relations with the No. 3 automaker. “I believe they have that desire as well.”

Lampe made his remarks as he joined his successor, Mark Emkes, at the Chicago Auto Show last week.

It was the first time Emkes has greeted the media since Lampe’s plan to retire — effective March 31 — was announced Jan. 7.

In addition to swinging from a $1.7 billion loss in 2001 to an $83 million profit one year later, Lampe will be remembered for his impassioned defense of the tiremaker during hearings held to investigate connections between Firestone-equipped Ford Explorers and nearly 300 rollover deaths.

The National Highway Traffic Safety Administration ruled some Firestone tires were defective, but found insufficient evidence that alleged design flaws in the Explorer played a role.

Emkes said Bridgestone/Firestone’s struggling North American tire operations will be his top priority.

“In the Americas, we have four operating units,” Emkes said. “One of those four units is not profitable, and that’s our North American tire business. Even though we’ve made progress, and we’re getting close, we need to focus on getting our North American tire business profitable.”

The U.S. tire market has been battered by increased competition, soaring material costs and 2003 demand from automakers that analysts labeled “lackluster.” Major tiremakers such as Goodyear Tire and Rubber Co. have been forced to close plants, slash dividends and layoff workers to cut costs.

Among the biggest challenges for Bridgestone/Firestone is component costs. Oil prices are rising steadily while the cost of natural rubber is approaching 60 cents per pound, Emkes said, nearly double what it was two years ago.

To compensate, Bridgestone/Firestone raised tire prices by up to 5 percent on some models. In addition, the company has sought other means of reducing operating and manufacturing costs.

“What we’ve done to counteract part of that is driving efficiencies, cutting costs,” said Emkes, who will retain his position as chairman, CEO and president of Bridgestone/Firestone North American Tire LLC.

“But that hasn’t compensated for the entire cost increase,” said Emkes. “We’re going to have to go through the year and reevaluate when we get into May and June.”

And if the price of raw materials don’t decline by then, “we’ll have to look at prices once again.”

One cost-cutting measure that doesn’t appear likely is labor.

Bridgestone/Firestone’s North American tire operations employ about 14,000 people. “We don’t expect any fluctuations in those numbers,” Emkes said.

Bridgestone/Firestone will report 2003 earnings on Feb. 22. In August, it forecast a $60 million profit — down from last year because of rising costs for raw materials and employee health care outlays.

The company expects to meet or slightly exceed its profit forecast.

Emkes and Lampe are banking on major product improvements, such as more advances in run-flat tire technology, to drive the tiremaker’s performance. Bridgestone/Firestone offers two run flat tire systems and has deals to supply brands such as BMW AG and Toyota Motor Co.p.

The proliferation of tire-pressure monitors, required by Congress after the Firestone tire recall, will provide an opportunity to enhance revenues and profits, Lampe said.

Bridgestone/Firestone, like other tiremakers, is researching the prospect of embedding tires with a special computer chips that will sense when air pressure decreases and poses a hazard.
 
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