Bridgestone/Firestone has announced that it is to recall 62,000 tyres sold in the Venezuelan market at an estimated cost of US$ 6.4 m. The tyres have been linked with 60 deaths in the country. The consumer protection agency is recommending investigation into charges of possible criminal negligence against Ford and Bridgestone/Firestone, plus a number of civil law suits are planned.
A tyre expert hired by Bridgestone/Firestone has identified cracks in the belt skim – the rubber compound used to bond steel belts – as the cause of problems with some Firestone tyres. However, another tyre consultant, Rex Grogan, said that he told the company back in April 1999 that he had found the same problem. He blamed the use of inexperienced personnel working at the Decatur plant during a labour dispute.
With court appearances imminent lawyers for Ford and Firestone are still discussing how to consiolidate some 100 cases being brought against them in federal courts. It is still hoped to draw all claims before a single judge for a pre-trial preparation. However, continuing differences between Ford and Firestone may lead to a split defence. Plaintiffs’ lawyers are said to be jubilant at the lack of united front on the recall.
Car manufacturer Ford has – as American news agencies have reported – recalled 876,000 cars of the types Explorer and Mercury Mountaineers because of faulty chassis parts. 262 incidents, mainly occurring in Canada, have been reported to date. The owners of these models will be informed by mail. The Ford press department in Cologne does not regard Germany as being involved in this recall.
King Juan Carlos recently visited Bridgestone/Firestone plant in Burgos, one of the group’s three tyre plants in Spain. The reason for the visit was the 100th birthday of Firestone this year. In 1990 Burgos was the group’s first European tyre factory to start producing Bridgestone-branded tyres, at that time Firestone’s new parent company.
In a step at rebuilding consumer confidence in the Firestone brand Bridgestone/Firestone announced an extension of its limited warranty and 30-day money back guarantee in the United States. The range covered by the warranty will be extended from 53 product lines to 97 covering almost all the company’s products. The programme will replace tyres that become unusable “for any reason attributed to workmanship or factory defect” for the first three years of ownership, the first four years after manufacture, or until the tyre tread depth is worn down to 1/16th of an inch, whichever comes first. The 30 day money back guarantee remains as it says, if the customer is unhappy, he will get his money back if he returns the goods within 30 days of purchase.
The current Firestone recall has led to many in the USA calling for tougher standards in tyre testing. It has been revealed that, following the Firestone recall in 1978, new regulations were drawn up, incorporating more stringent safety criteria. However, the suggested changes were scrapped when Ronald Reagan became President as it was considered that their implementation would adversely affect the car manufacturing industry.
Ford Motor Company has suffered a reduced profit of 888 million US-$ in the third quarter, compared to the same period for 1999 (959 m). Ford Chairman Jacques Nasser attributes the results to the Firestone recall. To provide good tyres to Ford customers is more important than realising short term profits.
According to the Washington Post, the Ford Explorer has a higher than average accident rate compared to other SUVs. The report was based on statistical analysis of national and Florida state crash statistics. The report suggests that there is evidence that there may be a vehicle related problem contributing to the accidents.
At a press conference, Bridgestone president Yoichiro Kaizaki dismissed rumours that claims for damages in the USA could force Bridgestone/Firestone Inc. into bankruptcy. The company has set aside $450 million to cover claims and any extra needed could come from the US company’s reserves, estimated at $2.3 billion. Despite the reassurance, Bridgestone shares fell by over 13 per cent in Tokyo.
North America’s Accuride Corp. (Evansville/Indiana) is an enormously profitable producer of steel and aluminium wheels for trucks and recorded a record jump in sales to more than 500 million US-$ in 1999. Founded by Firestone in 1905, the company was sold in 1986 to Phelps Dodge Corp., cooperated with Goodyear 1992 and was sold again in 1998 to investment group Kohlberg, Kravis and Roberts (KKR). Now the automotive supplier has its eyes set on the European market for investments, maybe also in aluminium wheels for cars.
Bridgestone/Firestone’s chief executive in the USA, John Lampe, has said that the company has not found a defect in its recalled tyres, but he did say that there was “a safety issue with a small percentage.” Lampe’s definition of a defect is “something you can point to and say ‘there is the cause’ and we haven’t been able to find a cause or combination of causes.” He added that he believes the tyres only pose a safety problem when fitted to Ford Explorers.
Ford has conceded that it was aware of problems with Firestone tyres in Venezuela as long ago as 1998. Ford CEO Nasser admitted two weeks ago that, in Venezuela, not only had the tyres been changed, but modifications had been made to the vehicle suspension. Analysts said that attempts to place the entire responsibility upon Firestone have failed.
Lawyers from both plaintiffs and defendants argued in front of a panel of federal judges in Washington as they tried to decide how to deal with the 200 pending lawsuits. The judges will decide within two weeks whether to combine all the evidence and gather all the suits in one process. Ford, Firestone and lawyers for some plaintiffs argued for consolidation, saying it would simplify the process. Others say it might drag out the process unnecessarily. The multi-district panel hearing has caused the postponement of a hearing scheduled for 16th October. This latter case being sought by the Center for Auto Safety (Ralph Nadar’s organisation), seeks to widen the recall of Bridgestone/Firestone tyres. The alleged death toll has risen to 119, with injuries increasing to 500, according to the National Highway Traffic Safety Administration.
Bridgestone/Firestone USA has announced John Lampe as successor to outgoing Masatoshi Ono. John Lampe steps up from the number two position to lead the largest subsidiary of the Bridgestone Group. The announcement was made official at a company press conference in Nashville on 10th October.
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