Japanese tire maker Bridgestone Corp said today its president and chief executive officer, Yoichiro Kaizaki, would resign, in an effort to salvage the company's image after a costly and controversial tire recall.
Kaizaki will be replaced by senior managing director and engineering veteran Shigeo Watanabe, but he will remain as a full-time adviser to Bridgestone's board of directors.
"The most important issue for the Bridgestone group right now is restoration of our brand and regaining trust," Watanabe, 58, told a news conference.
The company recalled 6.5 million tires and was hit by multiple lawsuits after 148 U.S. traffic deaths were linked to Firestone brand tires made by its U.S. subsidiary, Bridgestone/Firestone Inc. Most of the accidents also involved Ford Motor Co's popular Explorer sport utility vehicles.
Kaizaki and Ford executives have tried to pin blame for the accidents on each other, spurring criticism that Bridgestone was more focused on ducking responsibility than on restoring faith in the century-old Firestone brand.
"Investors were gradually becoming angry with how he was handling the crisis," said UBS Warburg analyst Christopher Redl.
Kaizaki had been a strong manager and his handling of the recall itself was praiseworthy, but his approach to the public relations crisis had fallen short, Redl said.
Some analysts looked upon Kaizaki's resignation favorably, including Seiji Sugiura, auto analyst at Nomura Securities.
"It's probably a sign that the company's near some sort of closure on the recall," he said.
Winning Back Trust
Fallout from the recall dealt a severe blow to both Bridgestone and Ford. The recall cost Ford, the world's second-largest automaker behind General Motors Corp., about $500 million in the third quarter. It prompted Bridgestone to slash profit estimates for last year by 80 percent.
The outgoing Kaizaki underlined the company's commitment to rebuilding its image.
"I decided on this move to strengthen our management in a rapidly changing global environment and to win back the trust of our customers and shareholders," he said.
Kaizaki stressed Watanabe's engineering background at Bridgestone, where he has worked since 1965, and said the change in management was aimed at reinvigorating the company at the top. Bridgestone's two executive vice presidents also stepped aside.
The announcement was made after the market closed, although the company issued a warning late in the session that it would soon announce a management change. Investors showed little reaction, however, with Bridgestone shares closing around their midday levels, up a modest 0.72 percent at 980 yen.
Bridgestone shares have shed more than 50 percent since early August when U.S. officials began investigating the deaths and injuries allegedly related to the tires.
"I've thought since the recall mess started that the bottom price would be 900 yen," said Tokyo-Mitsubishi Securities analyst Hideaki Aonuma. "The question is whether the brand can be recovered."
Watanabe will formally take up his new post following approval expected at a March 29 shareholders' meeting.
Bridgestone had already replaced the head of Bridgestone/Firestone in October, appointing John Lampe as the new chief executive.