The Business Year

Sergio Prada

COLOMBIA - Industry

Strong Grip

General Manager, Bridgestone

Bio

Sergio Prada Candela is an industrial engineer from the Universidad Nacional Experimental del Táchira and has a specialization in management from the Instituto de Estudios Superiores de Administración IESA. He has close to a decade of experience in sales and trade, seven years of which working for Bridgestone Firestone in Venezuela. He was national sales manager of Bridgestone and, now, he is in charge of consolidating this world-leading brand in Colombia.

"Certification has become a way of life for us, as everything is strictly controlled."

What have been Bridgestone’s key milestones over recent years?

The key achievement was to understand consumer demand, then transmit this information to define each of the channels. Colombia is a country of consumer opportunities where people are not just looking for price, but also for a combination of the value that the product delivers. The other important focus is the business development of original equipment, that is, direct sales to vehicle assembly companies. Therefore, we started supplying tires to General Motors for the Cobalt passenger car. We also began selling tires with specific measurements for its NHR trucks. We are projecting strong growth for the end of 2014 and the coming year. On the list of the top thousand companies in Colombia, while we closed 2012 in 826th position, we were at 497th at the end of 2013. We had an important increase in turnover, and rose two percentage points in terms of market share, which for as competitive a market as Colombia, with more than 180 tire brands, it significant. The consolidation of the original equipment business in addition to the understanding of consumer need is giving us a perfect gold cycle, where people buy our tires for their cars, and return to us for replacements.

Bridgestone was dependent on its Venezuelan subsidiary until 2010. What specific operations have improved since you achieved independence and took responsibility for the Ecuadorean market?

When we separated from the Venezuelan market, we gained a degree of independence, but being a Colombian commercial operation meant that we needed to be supported by a mother plant, and to improve our supply logistics for our clients. To this end, in January 2013, we made the decision to join the Costa Rica operation. This means that we have a plant only five days away by ship that supplies us with products at a rapid pace, which was something we used to lack. We were bringing in products from Japan, the US, or Brazil, which took between two and six months to arrive. Now 60% of the products we sell come from Costa Rica. Ecuador was a complicated market for us in 2013 due to regulatory change at that time. We sought alternatives to complying with these regulations, and now we are growing by 37% more than in that year.

“Certification has become a way of life for us, as everything is strictly controlled.”

What innovative products are you using in your services, and what will these mean in terms of environmental impact?

We just started a program called “Pilots of Life,” which is aimed at children aged 9-15 years, in which we teach them how to be a better pedestrian, better passengers, and better drivers in the future. The idea is that we begin to educate citizens for the future. In terms of our products, we have many ranges that are closely aligned with the environment. The “Think before driving” program is about awareness, where people learn that they must check the air in their vehicles, which we do at all of our outlets. Just having a calibrated tire pressure leads to a significant reduction of up to 20% in fuel consumption, and obviously that means less pollution. We are now selling a product called “ECOPIA,” which is a green product that gives less rolling resistance, saving fuel and reducing emissions. In the same way we are aligning our entire corporate strategy to introduce new products that are much more environmentally friendly and are adapted to the market conditions and consumers in Colombia.

How important is BASC certification for Bridgestone, particularly in Colombia?

Certification has become a way of life for us, as everything is strictly controlled, and all processes are monitored so that we can trust that there is no contamination of the cargo. We are the primary tire company in the world, and we want to change our image in Colombia and demonstrate in both markets, Colombia and Ecuador, that we are environmentally friendly.

Which sectors do you distribute most products to, and which have growth potential?

Our products are oriented to the transport sector, which plays an important role in the development of the economy of Colombia. This was even more so the case once we signed the free trade agreement (FTA) with the US, while three FTAs are about to be signed with Costa Rica, Japan, and South Korea, which are already being discussed in the chamber. We are highly involved in the oil and transport sectors at a national level, in projects such as the “Transmilenio,” and with different transport companies in multiple cities. Beyond that, we are also aligning with these sectors and encouraging rethreading. We own our “Bandag” brand, which is a rethread trademark. We are heavily involved in national development, working closely with Andi on a post-consumer collection program for used tires and their disposal.

To what extent are FTAs affecting your import ratio?

We are directly focused on the FTA with Costa Rica, and are interested in signing it because it hosts our mother plant. Currently, we have a rather significant customs duty rate of 10% with Costa Rica and aim to make this FTA happen. We have welcomed the open approach that the government has toward FTAs worldwide.

How has growth in infrastructure affected your operations here in Colombia?

There has been so much development that we have even been obliged to order extra products to meet our source’s needs. Currently, we are bringing in products from Thailand to supply a quality product and to ensure that work is not held up for a lack of tires. Our other internal focus is to have far tighter logistics management for effective product delivery. We are fully engaged in the infrastructural development of the country through our network of distributors.

What is the strategic significance of Colombia for Bridgestone and how do your local operations differ from others in the region?

Colombia is the third-largest economy in Latin America, while Ecuador is the eighth largest, and when combined they represent a formidable market of close to 9 million tires. Colombia, moreover, is a country with great coverage of other markets, given its access to the Atlantic Ocean and the Pacific Ocean. The Pacific alliance is crucial for us because we have a solid relationship with Mexico. Colombia is set for significant further development, and is taking one step further in matters of the economy. Just the fact that Colombia’s GDP may rise by 7% from 4.29% in 2013, and the signing of the peace treaty means that the eyes of the world are now focused on investment opportunities in Colombia. Bridgestone is watching too, and we are excited to see what progress results.

How do you think the tire industry will evolve over the next few years and what role will Bridgestone play in this?

The tire industry understands that it has to comply with certain international regulations. The problem of used tires is a complicated one to which we neglect to pay sufficient attention. We want consumers to buy our tires, but also to become aware of how to discard tires to better serve the environment. Our business development will continue rising because we are in countries experiencing strong growth, and are in a strategic region where the US is our main trading partner.

What is the outlook for Bridgestone in 2015?

In 2015 we will focus on doing business with original equipment with vehicle assemblers. There are some interesting projects that could be completed in the course of 2015. Fortunately the business is going well, having grown by 26% YoY in 2014. We have outperformed both the industry and GDP. In sales terms we are performing well, and have even had to expand our operations in Barranquilla. For me, the main focus in Colombian tire industry is logistics; it is all about who makes a product available the fastest, so we have operations in Barranquilla and Bogotá to reduce our delivery time. And over the coming years we aim at reducing delivery times even more, which is key to our business.

© The Business Year – December 2014

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