An expert hired by Bridgestone/Firestone has suggested that internal cracks develop in the tires recalled by the company, which could lead to tread separation. It’s that very problem that caused the company to recall 6.5 million tires this summer.
Additionally Ford Motor Co. and Firestone have finally been hit where it hurts – in the pocketbook – as a result of the recall of 6.5 million tires. Each company reported the financial impact of the recall last week.
Cracks lead to tread separation
Sanjay Govindjee, an associate professor in civil engineering at the University of California-Berkeley, issues a preliminary report Oct. 17 that indicated that cracks develop inside the tire and cause the tire to fatigue and eventually lead to tread separation.
Govindjee said he had not determined the final cause of the cracks. He speculated that the combination of the tire design and its interaction with the vehicle dynamics of the Ford Explorer led to the problem. He has visited several Firestone facilities as well as interviewed Firestone employees as part of his investigation.
The investigation is focusing on the materials of the inner belt of the tire, and he has concluded "all evidence to date points to slowly developing fatigue cracks" that eventually affect the tire’s belts and lead to separation. "At some stage the cracks reach a critical size and the tires subsequently fail," he said in a letter to Firestone executives.
Govindjee said he expects to issue a formal technical analysis in the next couple of weeks and wrap up his investigation in the early part of next year. Ford spokesman Jason Vines told the Detroit News that the professor’s initial assessment of the tires "seems very consistent with our thought process and what we have seen in our own analysis. But again, it’s just preliminary."
Firestone lays off 450
The fallout of the recall is hitting Firestone hard as it announced it lost $350 million in the third quarter. It announced that due to sluggish tire sales that it will temporarily close down three plants, and indefinitely lay off 450 people at the Decatur, Ill. Plant that manufactured the majority of the tires subject to the recall.
John Lampe, Bridgestone/Firestone CEO, said the layoffs were not punitive, but necessary due to the stagnant sales. The company will temporarily shut down plants in La Vergne, Tenn. and Oklahoma City for 28 days before the end of the year. The Decatur plant will also be shut down for 14 days.
"Our company must be financially strong and to accomplish this we must make some tough decisions," he said.
Cost to Ford: $500 million
Ford reported its third quarter earnings last week and they showed a $500 million bill for the Firestone tire mess. The company’s earnings were down seven percent versus year-ago figures. Much of that, according to Ford executives, is tied to expenses related to the recall.
The company reported it earned $888 million during the quarter. If not for the Firestone costs, Ford would have had a record third quarter, earning more than $1 billion. It was the first time quarterly profits declined since 1996. However, the company is focused on getting the recall concluded, according to Henry Wallace, Ford CFO.
"The priority this quarter was to get the Firestone recall settled," he said. "We still hope to resolve that by mid-November."
Ford broke out the $500 million into two areas: First was the expenses related to shutting down assembly plants so the tires from those facilities could be sent out to help in the recall effort.
The second portion was related to the shipping of the aforementioned tires, helping purchase tire molds for use in producing additional tires to help with the recall, and advertising related to informing the public about the recall.
Ultimately, the costs are going to trickle down the masses, as some are waiting to see what the final bill will be for the whole recall. Firestone is expected to pick up some of the costs, but Ford will still have to write a check. That check will affect Ford’s hourly workforce as it will reduce the amount the company will hand out in profit-sharing. Ford has set company records with its last two profit sharing payouts of $6,100 and $8,000 on average in 1998 and 1999.
Ford Edges Firestone off ’02 Explorer (Oct. 2, 2000)
Ford Faces Second Tire Recall (Sept. 19, 2000)
Firestone: What Went Wrong (Sept. 18, 2000)
Congress Grills Ford, Firestone (Sept. 9, 2000)
Ford, Firestone Battle over Tire Recall (Aug. 28, 2000)
Feds May Broaden Firestone Recall (Aug. 28, 2000)
Ford, Firestone Battle over Tire Recall (Aug. 21, 2000)
Firestone Recalls Millions of Tires (Aug. 9, 2000)
Firestone Faces NHTSA Investigation (August 7, 2000)