OCTOBER 1, 2000

Can Bridgestone survive in Formula 1?

One question which is being asked in Formula 1 circles is whether or not Bridgestone will be able to survive the public relations disaster currently going on in the United States of America without having to economize.

One question which is being asked in Formula 1 circles is whether or not Bridgestone will be able to survive the public relations disaster currently going on in the United States of America without having to economize. It is hard to imagine that such a thing will be possible as the Bridgestone-Firestone empire stands to lose millions, perhaps even billions, of dollars as a result of the recall of 6.5m 15-inch tires as a result of a series of tire failures when the tires are being used on Ford Explorer Sports Utility Vehicles. These have resulted in at least 101 deaths in the United States in recent years. Replacing the current tires will cost around $250m and this figures does not take into account the loss of confidence in Firestone products and any legal actions resulting from the accidents. Several laws suits have already been filed against the company and many more are expected to follow. The value of the company has almost halved since the crisis began.

Firestone has already gone investigations by the US National Highway Traffic Safety Administration and has had to endure a Congressional Hearing but there remains the possibility of criminal charges in the case as it is alleged that the tires were being sold despite the fact that Firestone personnel knew that a vital layer of the tire was missing.

The problem is not restricted to the United States of America. There have been reports of similar accidents in Europe and the government of Saudi Arabia has recently banned the sale of Firestone tires.

The cost of the crisis and the loss of revenue as a result of the image-damage could weaken the company to such an extent that it becomes a target for takeover by one of its rivals.

Despite all of this the Bridgestone management in Japan says that the intention is to revive the Firestone brand rather than replacing it with the Bridgestone brand. The Japanese, it seems, are worried that Americans will not buy a Japanese brand but will still purchase tires from Firestone which is a well-established US name. Most people in the US do not know that Firestone is owned by Bridgestone.

Motor racing is a double-edged sword for the company because while success on the track may help to revive the Firestone brand, any failures would simply add to the problems and so it is probably better for the company not to take the risk and to try to rebuild public confidence by another route.

While there will be no direct effect from all this on Bridgestone's F1 programme, the company is going to have to pay for problems. This will not be easy because the tire business is at best sluggish. There are only three major players left: Goodyear, Michelin and Bridgestone. Other firms such as Pirelli and Continental are diversifying into other related industries such as cabling and car componentry.

In the circumstances, justifying an expensive F1 programme is not going to be easy for the Bridgestone management, particularly as costs are going to rise dramatically because of the arrival of Michelin in F1. Motor racing is a luxury and there is a great deal of logic in the idea that it is better for Bridgestone to withdraw from F1 to save money as this will have the side-effect of depriving Michelin of publicity as tires are rarely mentioned unless there is a tire war going on. If Bridgestone withdraws from F1, there is no company to challenge Michelin.

This, in itself, is a big worry for Formula 1 bosses as there is no reason for Michelin to be involved in F1 unless there is opposition and publicity and if the French company were to withdraw from F1 the sport would be left without a tire supplier.

Perhaps this is why Bernie Ecclestone had a meeting with Goodyear boss Sam Gibara, during his recent visit to the United States of America...