The Firestone Tire Controversy

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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 Ford In 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."

The recall of 6.5 mn Firestone tires on the Ford Explorer in August 2000 cost Ford about $ 500 mn. In 2001, Ford was expected to take a $ 2.1 bn after-tax charge to replace 13 mn more Firestone tires. Explorer sales had plunged 21% in 2001. The company's earnings were expected to sink by 65% in 2001 to $ 2.3 bn. Ford's share of the US automobile market had fallen by 1.7 percentage points in 2001 to 23.1%.

Nasser felt that the future of Ford (Explorer) would depend on how customers responded to Ford's reaction to the crisis. Said Nasser, "My message to consumers is, if you don't think we have behaved in the way the world's leading consumer company should behave, then tell us, because we want to earn that loyalty and respect."⁷ Commenting on Ford's future relationship with Firestone, Nasser said, "Given the importance of the relationship between tires and vehicle safety, and the importance of brand perception, how can you put Firestone tires on the new Explorer that comes out next January?"⁸

Exhibits

Exhibit I: Deaths and Injuries Resulting from Firestone Tire Failures in US (As on February 6, 2001)
Exhibit II: NHTSA Firestone Incident Database
Exhibit III: NHTSA Firestone Incident Database - Total Crashes
Exhibit IV: NHTSA Firestone Incident Database - Fatality Crashes
Exhibit V: NHTSA Firestone Incident Database - Injury Crashes
Exhibit VI: NHTSA Firestone Incident Database - Crashes with Rollover
Exhibit VII: Chronology of Events in Ford/Firestone Controversy
Exhibit VIII: The Trial

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7] Fortune, September 18, 2000.
8] Fortune, September 18, 2000.