The Firestone Tire Controversy
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FORD'S RESPONSEAnalysts felt that Ford's
response to the crisis was also not very positive. They chided Ford CEO,
Jacques Nasser (Nasser) for appearing too stiff on Television as a spokesman
for Ford. Analysts also felt that Nasser should have gone to the scene of the
crisis and demonstrated his concerns for the individuals involved. However in
an interview to Fortune[6] , Nasser commented, "We feel morally and emotionally
connected to the people who buy our vehicles. If I could find a magic wand that
would give me 6 ½ mn 15 inch tires that I could personally hand carry to every
customer, I'd do it."
Analysts also felt that during the crisis, Ford's spokesman should have been
its chairman, Bill Ford Jr. (the man with his name on Ford cars and trucks).
The chairman addressed the issue only once at a press conference in mid
September 2000. However, Ford officials said that Nasser was better qualified
to speak in this crisis because of his operational responsibilities and his
knowledge of Ford products.
THE CONTROVERSY DEEPENS
In mid 2001, a committee was formed consisting of the members of the US
House Energy and Commerce to look into the problem of tread separation of
Firestone tires. During the same time, Ford announced plans to replace
about 13 mn Firestone tires used on its vehicles. However, Firestone
insisted that those tires were safe and that Ford was replacing them to
divert attention from safety problems with its Explorer. Nasser said that
Ford had no choice but to replace the tires based on its data. He said
about 1 mn of the 13 mn tires involved in the latest recall had already
been replaced. He also defended the Explorer saying its statistics had
shown it was safer than other vehicles. |
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But Firestone blamed the Explorer for the safety problems.
Said a Firestone spokesman, "No one cares more about the safety of the people
who travel on our tires more than we do. We are doing our part. We are taking
responsibility for our products. We did a massive recall. And now we are doing
what's right by asking the tough questions about Ford Explorer."
Firestone alleged that Ford Explorer without Firestone tires were still
experiencing rollover problems. Nasser conceded that some of the Firestone tires
involved in the recall were apparently world class tires and did not appear to
have safety problems but said the tires needed to be included in the recall
because of loss of customer confidence in the Firestone tires.
The committee after hearing from both the sides said that there was a need for
further analysis by an independent source such as NHTSA about both the Explorer
and the tires.
THE TRIAL BEGINS
In August 2001, out of the hundreds of lawsuits filed by the
victims and their families, only one made it to the trial. This case involved a
South Texas family injured in a crash in a Ford Explorer (Refer Exhibit VIII).
The trial came more than a year after NHTSA said that it was looking into the
problem. The trial involved Dr. Rodriguez (Rodriguez) whose Firestone equipped
1998 Ford Explorer suffered a blowout and flipped over an Mexican highway. This
injured Rodriguez, his brother Jorge and three-year son Joelito and left his
wife Marisa, wheelchair-bound for life. Ford was already out of the lawsuit
having settled the case with Rodriguez for an undisclosed amount. However, the
jury said it would still consider whether Ford was responsible for the crash. If
the jury found that both Ford and Firestone were responsible for the crash, the
companies would have to share the financial liabilities on a percentage basis.
If they found Firestone responsible for more than half of the crash, then
Firestone would be responsible for the entire payment instead of a percentage.
THE FUTURE OF FIRESTONE AND FORDIn mid 2001, Firestone announced that it would shut down one of its US plants, which could be its Decatur, Illinois, plant by no later than December 31, 2001. This would eliminate some 1, 500 jobs. The Decatur Illinois plant produced many of the 6.5 mn Firestone tires recalled in August 2000.
Bridgestone recorded a net loss of 30.57 bn yen ($ 250.3 mn) for the first half of 2001 because of the tire recall. In the first half of 2000, Bridgestone recorded a net profit of 18.90 bn yen. An extraordinary loss of $ 570 mn taken by Firestone in June 2001 to pay lawsuits and clear up other costs related to the tire recall was the main reason behind the loss. Company sourced said that they would try to revive their North American operations by shifting focus to the Bridgestone brand. Shigeo Watanabe, president of Bridgestone said, "I don't think the Firestone brand will disappear, but the Bridgestone brand will grow."
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EXHIBIT I DEATHS AND INJURIES RESULTING FROM FIRESTONE TIRE FAILURES IN US
(AS ON FEBRUARY 6, 2001)
EXHIBIT II
EXHIBIT III
EXHIBIT IV
EXHIBIT V
EXHIBIT VI
EXHIBIT VII CHRONOLOGY OF EVENTS IN FORD/FIRESTONE CONTROVERSY
EXHIBIT VIII THE TRIAL
QUESTIONS FOR DISCUSSION:
ADDITIONAL READINGS AND REFERENCES
[6] September 18, 2000.
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