Firestone Recall Hysteria Fuelled By Advocates

Firestone has been forced, for the second time in the company’s history, to recall tyres in North America. 22 years ago, the recall of 14 million “f 500” tyres, almost ruined Firestone. The current situation refers to the recall of 6.

5 million SUV tyres, the ATX, ATX II, and Wilderness line in the size P 235/75 R 15. About 2/3 of these tyres are earmarked for Ford’s OE demand for the Ford Explorer and the Ford Ranger. Bridgestone already announced that it would take a one-time $ 350 million charge and informed analysts that earnings estimates, $1 billion before the recall situation, had to be reduced by the amount of the taken charge.

Whether this is the only financial impact that BFS will have to encounter is more than doubtful. In the US a horde of consumer advocates stand ready to sue BFS, all in the name of consumer advocacy. The likely cost of litigation is not included in the $ 350 million charge.

The extent of the damage to BFS and its Firestone brand cannot be evaluated, it remains to be seen how the entire industry will be affected by this recall. Without any doubt, the Firestone brand has suffered a serious blow despite the fact that up until today it has not been demonstrated that the tyres were the cause of accidents investigated by NHTSA. BFS, so it seems, never really had a chance to manage the ensuing crisis in an optimal way.

Although the crisis didn’t hit BFS completely out of the blue, BFS had to take into consideration the interests of its largest OE customer Ford on the one hand, and its own interest to protect the Bridgestone brand from any spill-over effects. One thing became abundantly clear: two kinds of tyre manufacturers currently exist. One the one hand, there are those who have already had to deal with a disastrous recall situation and on the other hand are those that will have to do just that at some uncertain time in the future.