The erstwhile Tyre manufacturer, now aerospace supplier, BF Goodrich has teamed up with Ford to develop a SmartBelt seatbelt. This is a combination of the traditional seatbelt and the airbag, which inflates to protect vehicle occupants in the event of a collision. BF Goodrich sold its tyre operations to Michelin in 1990 and the brand is still manufactured and marketed as BF Goodrich by Michelin.
The latest comparative study of the European Commission regarding car prices, shows that 46 of a total of 81 passenger car models cost over 20 percent more in Germany than in at least one of the other Euro-zone markets. Companies such as PSA, Fiat, VW, Ford, Opel and some Japanese manufacturers follow a high-price strategy in Germany. The cheapest prices for new cars to be found in the Netherlands, Finland, Spain and Denmark, which does not even belong to the Euro zone.
John Lampe has spent all his working life with Firestone and then Bridgestone/Firestone. He has recently been put in charge of the Bridgestone group’s largest subsidiary, Bridgestone/Firestone Inc. in the USA. In addition – and this is a first for Bridgestone and very rare for large Japanese businesses – Lampe sits on the board. This illustrates how highly he is thought of in what are difficult times for the company. In our exclusive interview, he talks of the relationship between Bridgestone/Firestone Inc. and Ford. However, since the interview, this attitude changed dramatically, with Bridgestone/Firestone Inc. ending its business relationship with Ford. Our follow-up article after the Lampe interview traces this change in attitude and the increasingly-bitter war of words as the companies try to pin the blame on each other.
Continental AG has responded to Ford’s removal of the General Ameri* 550 from its Firestone replacement programme by stating that it will have a negligible effect on sales performance. The company has produced some two million of the tyres and the investigation only affects 4,300 fitted to Ford Explorers. Continental is confident in the quality of the tyre and does not expect any further ramifications. However, other commentators suggest that the incident will have an overall negative effect on the company image, damaging the repositioning of the Conti General brand.
Pit Stop, the fast-fit group belonging to Kwik-Fit (and thus, ultimately, Ford) is pushing ahead with plans to open up to 400 centres in Germany within the next two years. Pit Stop focuses on exhausts, brakes, shock absorbers, etc., as well as selling tyres.
Ford has agreed to settle lawsuits alleging that faulty ignition switches cause vehicles to stall without warning while in use. The problem is said to affect millions of vehicles manufactured between 1983 and 1995. Press and analyst figures vary from 5 to 22 million vehicles. Some months ago, a Californian judge ordered a recall of up to 1.7 million vehicles in the state because of the problem. Ford denies any defect but has already settled a number of cases and the latest offer of settlement will mean replacing ignition switches on vehicles which have travelled less than 160,000 kilometres. The proposal will be reviewed by the judge and, if approved, analysts estimate that the cost to Ford could be up to $1 bn; a figure which Ford says is “substantially overstated.” Among the models affected are the Escort, Explorer and Taurus.
According to an article in the Washington Post, the tyre General Ameri 550 s will be subject to more claims due to tread separations than Firestone. As well as General, some other brands are under the microscope on the NHTSA-list, and their identity has not yet been revealed. It is expected that further explanations will be issued this week. A spokesman for Continental denied the accusation and said the NHTSA statement would be misleading. Ford did not comment.
As US automotive sales figures revealed that the US domestic product was facing a massive slump in sales compared to almost universal increases by imported marques, sales of the Ford explorer held up against the national trend with sales rising 3.8% on the 1999 figure, despite the bad publicity onslaught from the Firestone recall.
Ford has reacted quickly to the NHTSA defect investigation into the General Ameri* 550 by dropping the brand from its replacement campaign. The General Ameri*550 was one of the brands being used to replace the recalled Firestone Wilderness ATs which have been deemed unsafe by Ford. However, Ford stated that the tyre was “performing well” on the F-series pick up, where it is fitted as original equipment.
Ford has issued a comprehensive report in which it places the blame for the fatal crashes involving the Ford Explorer fairly and squarely on the Firestone tyres and not the vehicle. Ford contends that the Explorer is no more prone to rollovers or tyre failures than any other medium-sized SUV. Bridgestone/Firestone disagrees, saying that tyre and vehicle makes up an integrated system and any investigation has to take the vehicle into consideration. It also criticised comparative temperature tests on Firestone and competitors’ tyres, saying that they measured only external temperatures and took no account of internal running temperatures.
An article in a German daily newspaper (“Ford, a terribly nice family”) speculates that CEO Nasser might be fired in the near future. Under his guidance Ford has suffered several recalls of newly launched cars because of quality problems. Furthermore the Ford-family is not happy with the public dispute between Ford and Firestone, says the newspaper.
It is not only the Ford Explorer that might show a tendency to rollover in critical situations; the US Consumer Report has revealed through its own tests that the Mitsubishi Mondero (known in Europe as the Pajero) shows a tendency to lift two wheels in critical situations. That, according to the magazine, is not acceptable and is a safety problem. Mitsubishi denies that there is any safety problem at all.
In discussions with analysts from the DB Group, Goodyear management expressed optimism that it might achieve a larger slice of OE business from the Detroit car manufacturers, at the expense of Firestone. Goodyear said it had received an order from Ford for 1.8 million tyres and is hoping for another big order from General Motors. Spokesmen from Goodyear said that they would resist Chrysler’s request for price reductions in order to overcome the difficult situation at Chrysler. At the end of January, many contracts between Firestone and its dealers expire and Goodyear is confident of winning over many of these dealers. On the other hand, Goodyear admits that the medium and heavy truck business will remain difficult during 2001. All in all, the analysts see more positives than negative risks at the moment, but they did not recommend Goodyear shares.
Ford posted a second quarter loss of $752 million. Excluding a $201million charge attributable to the restructuring of Mazda Motor Corporation, the trading loss stands at $551 million. The cost of replacing the 13 million Firestone tyres more than accounts for that loss. The after tax expense of the tyre recall is expected to amount to $2.1billion. “Our decision in May to replace 13 million potentially unsafe Firestone tires was an unprecedented action,” said Jacques Nasser, president and CEO. “Although we’re disappointed it resulted in a second quarter loss, it was the right thing to do for the safety and trust of our customers.”
As if last year’s voluntary recall of 6.5 million Firestone tyres in the USA had not caused enough damage, the Japanese-owned tyre manufacturer is facing another crisis. May 21 Bridgestone/Firestone was severing all its business connections with Ford. That was it, the 100-year relationship was over, Bridgestone/Firestone had had enough and this was goodbye. It certainly seemed a drastic step to take, but the reason became apparent the next day, when Ford announced that it was recalling 13 million Firestone tyres; an exercise that would take nine months and cost the company up to $3 billion. This is a cost that Bridgestone cannot afford and the company has indicated that any demand from Ford to help with the costs would receive short shrift. Press reports say that Ford President Jacques Nasser has a statistical study which shows that Firestone Wilderness tyres fail three times more often than the industry average. Bridgestone/Firestone suggests that the Explorer design is to blame; something which Ford strenuously denies, saying that Explorers sold with, for example, Goodyear tyres, have had no tread separations. As far as John Lampe of Bridgestone/Firestone is concerned, the company has no obligation to participate in a further recall. In a statement, he said; “No-one cares more about the safety of the people who travel on our tyres than we do.” Bridgestone President Shigeo Watanabe gave the reason for splitting from Ford, saying that the new recall, coming on top of last year’s exercise, would have been “a life or death matter for Bridgestone/Firestone.” Later on, he played down fears that not supplying Ford would have a marked effect on Bridgestone/Firestone, saying that, at most, the group would lose 1.5% of its sales worldwide. On the plus side, freed from the need to be polite to a major customer, Bridgestone/Firestone can now say what it thinks about the part played by the Explorer in the accidents and defend itself more vigorously against the still-vocal consumer and pressure groups, not to mention the lawyers, of course. John Lampe, who wrote to Jacques Nasser, outlining Bridgestone/Firestone’s reasons for severing business relations with Ford: “Business relationships, like personal ones, are built upon trust and mutual respect. We have come to the conclusion that we can no longer supply tyres to Ford since the basic foundation of our relationship has been seriously eroded.”
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