Firestone -- a name synonymous with Ohio, Ford
(F), and the Indy 500 -- is credited as playing an integral role in shaping American culture and its economy over the last century. Once equipped onto the country's fastest vehicles -- setting landspeed records left and right -- the name Firestone represented America's passion for speed and freedom.
But it may come as a surprise that Firestone has been owned by the Japanese conglomerate Bridgestone for more than 20 years.
The history of Firestone goes back to an era when people still believed that the horseless carriage was a sin against nature. Before founding the eponymous company, Harvey Firestone worked as an agent for Columbus Buggy Works in Detroit, Michigan, and manufactured rubber tires to be placed on carriages. A chance meeting with Henry Ford galvanized -- pun intended -- Firestone's path toward the automobile business.
As he was building his first automobile, Ford requested a set of solid rubber tires from Firestone to replace the sub par bicycle tires that were far too weak to hold the vehicle's body. Firestone suggested a pneumatic tire for a softer, smoother ride. It worked.
At the turn of the century, Firestone foresaw the horse and buggy's declining years and the rise of the automobile and, at age 31, he incorporated The Firestone Tire & Rubber Company in Akron, Ohio. Starting out in a run-down foundry with just 12 employees, the Firestone Company hit its stride when Henry Ford ordered 2,000 replaceable tires for the first mass-produced autos in America.
The partnership with Ford and innovations like the "demountable rim" and "non-skid" tread pushed profits past $1 million in 1910.
Firestone's illustrious history with the Indianapolis 500 began the following year when Ray Harroun won the first race in just 6 hours, 45 minutes in a Marmon Wasp decked out with Firestone tires.
Further success awaited the company throughout the '20s. Its involvement in more racing victories provided more high-profile advertising of its quality and dependability. Firestone's "Ship by Truck" campaign jump-started -- again, pun intended -- the trucking industry into a much faster method of shipping packages. The gum-dripped balloon tire proved popular, leading to Firestone opening its first auto center in 1926.
In 1928, the company's first overseas tire plant opened in Brentford, England -- establishing its worldwide industrial presence. Three years later, Shojiro Ishibashi founded Bridgestone in Kurume, Fukuoka, Japan.
Although Firestone's Japanese buyout wouldn't come until 57 years later, the two would begin having run-ins in just a few more years: In 1939, Firestone began manufacturing military equipment in America's fight in World War II. Tank tracks, gas masks, fuel cells, and even rocket launchers, Firestone was not exactly a favorite brand within the Axis.
Continuing with the war effort in 1951, Firestone built the first American ballistic artillery weapon -- the Corporal guided missile. Two years later, profits topped $1 billion for the first time.
Over the next few decades, despite progressive steps in improving business -- like broadening the wheel base and introducing the temporary spare -- Firestone faced increased competition in an over-saturated market.
By 1979, the company was hemorrhaging money, a billion dollars in debt and losing $250 million per year -- much of it stemming from a massive recall of its Radial tires. The defective tires showed tread separation from high speeds and corrosion, leading to as many as 34 deaths and numerous lawsuits.
As a result, the former head of Zenith Electronics, John Nevin, was brought in as chief executive to rescue Firestone from bankruptcy. His method was to shutter under-performing plants and relocate headquarters to Chicago. Nevin also shifted company focus from manufacturing tires to primarily selling them and established the Firestone Country Club to raise company stock value.
But after all was said and done, in 1988 Bridgestone acquired the company for a fraction of what it was worth before the Radial scandal.
Today, Bridgestone has turned the once-struggling company around and has become the world's largest tire manufacturer. Because of its acquisition of Firestone, the company was able to celebrate 100 years in the business in 2000.
The subsidiary remains a staple in the Indy 500 and maintains tradition by continually innovating upon past tire design.
No positions in stocks mentioned.