Bridgestone CEO Resigns, Names
Engineer Watanabe as Successor

By PHRED DVORAK and MICHAEL WILLIAMS
Staff Reporters of THE WALL STREET JOURNAL

TOKYO -- The hard-nosed chief executive of Bridgestone Corp. is resigning to make way for a new management team, as the Japanese tire giant struggles to recover from its mass recall of Firestone tires in the U.S. Now the question is, can his milder-mannered successors repair the damage?

The embattled Yoichiro Kaizaki, 67 years old, said he was stepping down as president and chief executive and turning over the reins to Shigeo Watanabe, a Bridgestone senior vice president, effective March 29. All three of Bridgestone's executive vice presidents also will resign in the housecleaning. Their exit follows a shaky, five-month damage-control effort that showed mixed results at best.

Mr. Watanabe, a 58-year-old veteran Bridgestone engineer in charge of tire development, production and quality assurance, now faces one of the toughest turnaround jobs in the world. He must rescue Bridgestone/Firestone Inc., the Bridgestone U.S. unit that has suffered a sales plunge and a deluge of lawsuits since its tires were linked to accidents that led to 148 deaths in the U.S. alone, mostly on Ford Explorer vehicles. Bridgestone says it has virtually completed the recall of 6.5 million Firestone tires launched in August.

Management Surprise

Mr. Watanabe was one of two top-level Japanese engineers who parachuted into the U.S. late last year to deal with the tire crisis at its peak. At a news conference, he signaled that he may make substantive changes to the global tire company's management, including a surprise: bringing in the first foreign director to the Japanese parent company's board. Mr. Watanabe hinted he may consider John Lampe, Bridgestone/Firestone's new chief executive, for the post.

"For a company as globalized as ours, it would be natural to think of having a foreigner among the directors," said Mr. Watanabe. "In order to revitalize [the board] and promote globalization, we might consider, to give an example, Firestone's Lampe."

Naming a foreigner to the board is extremely rare for a tradition-bound Japanese company -- even an international player such as Bridgestone, which has two trillion yen ($17.17 billion) in annual global sales. The move could signal to foreign investors, who have been dumping Bridgestone stock, that the company is serious about change.

Mr. Watanabe also said he thinks there are still problems with the way Bridgestone runs its global operations, which include factories in 21 countries. "There are still areas where we haven't achieved true [global] management -- I'd like to strengthen that," said Mr. Watanabe, although he declined to say what measures he was planning to take.

Asked whether Bridgestone would follow Ford Motor Co. in Ford's push to settle all outstanding lawsuits against it in the tire case, Mr. Watanabe was noncommittal, saying only that he wants a swift resolution.

Feisty Reign, Defiant Exit

In departing, Mr. Kaizaki relieves Bridgestone of arguably its greatest liability in the crisis: himself.

The defiant, tough-talking chief executive undercut the company's damage-control efforts in the U.S., Venezuela and other markets. He initially appeared to stonewall the public by declining to disclose information on the recall. Later, he appeared to undercut the more conciliatory remarks of his lieutenants in the U.S., who were admitting Bridgestone must share some of the blame for the rollover accidents involving its tires, by repeatedly asserting there were no problems with the Firestone products.

That defiance was characteristic of Mr. Kaizaki, who made his name by pushing through a painful restructuring of Firestone in the early 1990s, in which he battled U.S. unions and shrugged off criticism of his tough tactics by President Bill Clinton and former Secretary of Labor Robert Reich. Until the tire crisis broke, in fact, his turnaround looked like a success and Japanese deemed him one of the nation's ablest executives.

Mr. Kaizaki on Thursday went out in his trademark defiant style. In prepared remarks, he characterized his departure as a step toward speedier global management and shoring up investor confidence. He will take the ceremonial post of full-time adviser, signaling that he'll no longer play a role in management. But in answer to follow-up questions, he said he had achieved his goals during his tenure, despite "a bit of trouble" last year, and denied his departure was a way of shouldering blame for the scandal. "As far as I'm concerned, this is not taking responsibility for the recall," said Mr. Kaizaki.

Technical Roots

The man who must pick up the pieces, Mr. Watanabe, is a more typically restrained Japanese executive, an engineer by training who lists golf and health-club workouts as his pastimes. His selection is meant to signal a back-to-basics approach in which Bridgestone will mind the nitty-gritty engineering and operational details. "By making someone from the technical side president again, I hope to improve the morale of our engineering staff and improve the level of our technology," said Mr. Kaizaki, who came from the administrative side of the business.

Among Mr. Watanabe's chief challenges will be working with Mr. Lampe to revive Bridgestone/Firestone's U.S. sales, which have plunged. So too has Bridgestone's share price, which has fallen more than 50% since the recall. Bridgestone also faces continued pressure from U.S. consumer groups to widen its recall.

In November, Bridgestone/Firestone announced layoffs of about 10% of its North American work force. Last month, Mr. Kaizaki said sales of Firestone-brand replacement tires in the U.S. had plunged 40% in each of the past three months and warned its Bridgestone parent would post a special loss of $750 million related to the costs of the recall and lawsuits.

Bridgestone avoided a public-relations nightmare earlier this week, when it and Ford settled a high-profile injury suit in Texas involving a single mother paralyzed in a rollover accident last year. To shore up sales, meanwhile, Bridgestone/Firestone has been offering U.S. consumers an incentive plan that lets them buy Firestone and Bridgestone-brand tires without any payments or interest for the first six months.

Bridgestone's shakeup was announced after the Tokyo stock market closed. The stock finished at 980 yen, up seven yen on a day when the overall market fell.