Weekly News: June 18, 2001

June 18, 2001

FORD AND FIRESTONE BATTLE THEIR WAY TO CAPITOL HILL Ford Motor Company officials now say that the company might ask Bridgestone Firestone to partially compensate Ford for the expenses associated with the expanded recall of 13 million Firestone tires on Ford vehicles. Ford ordered the recall recently, without consulting Bridgestone Firestone, continuing a long series of attacks and infighting between Ford and Firestone. Firestone attests that the tires recently recalled are safe, and the tiremaker says that it will not compensate Ford. Meanwhile, with Congressional testimony next week, Ford says that it has a new batch of data that shows the Firestone Wilderness AT tires recently recalled have a frequency of blowouts and tread separations comparable as those recalled by Firestone last year, while Firestone is counting on auto experts' testimony that there is indeed a design problem with the Explorer. Doing its best to steer away from a federal investigation of the Explorer for alleged stability problems, Ford issued a press statement claiming that "Ford's testing, and that of all others known to Ford, confirms that Explorers have similar performance before, during, and after a tread separation." Ford also cited federal statistics that show the Explorer's fatality rate to be 17 percent lower than that of other SUVs.

PR EXECS SAY FORD IS WINNING, BUT BOTH ARE LOSING A new survey of top public relations executives done by the Council of Public Relations Firms shows that PR firms believe that Ford is winning the battle in public image versus Firestone. The survey found that 65 percent of PR people agreed with Ford's decision to begin the new-round recall of 13 million tires on Ford vehicles. Also, 66 percent of the PR executives disagreed with Firestone's decision to stop supplying tires to Ford. An overwhelming 85 percent of respondents said that if Ford and Firestone had worked together, they would have been able to save their business relationship and avoid scars to consumer confidence with both companies. Meanwhile, an informal Detroit News poll found that 31 percent of respondents won't drive an Explorer, while 38 percent won't use Firestone tires and 8 percent will avoid both brands now. Only 14 percent thought that the reports were exaggerated. Said one exec: "The real question is why didn't these two supposedly responsible, respectable companies join forces to discover the root of the problem and solve it together, instead of throwing blame around like two adolescents having a food fight. Where were their crisis counselors -- or weren't they listening to them?"

FORD-FIRESTONE CHILDISHNESS CONTINUES If you think the public-relations fight between Ford and Firestone has been a bit childish, wait 'til you hear this. According to the Detroit Free Press, Ford CEO Jac Nasser said that he would not sit near Firestone chief John Lampe during federal hearings this week. Nasser and Lampe were assigned to the same white-knuckle panel at the hearings, which investigated Ford's decision to recall 13 million Firestone tires mounted on Ford light trucks. A House subcommittee has asked the NHTSA to consider an investigation on the Ford Explorer's safety record, after a Firestone-linked 'independent' study showed the Explorer to have a stability problem. Folks, don't think the dust has settled on the playground.

Ford Points the Finger at Firestone (6/18/01)
TCC's award-winning Firestone coverage

CONTINENTAL AXED According to the Detroit Free Press, unofficial Ford sources have confirmed that the Lincoln Continental's days are numbered. The front-wheel-drive, Taurus-derived model will reportedly be discontinued after the 2002 model year. Continental sales, currently at 26,000 units last year, are at a fraction of 1990's high of 63,000 units.

OKLAHOMA CITY GM PLANT TO MAKE SUVS GM will convert its Oklahoma City assembly plant, which currently makes Chevrolet Malibu models, to an SUV-assembly facility. According to reports, the plant will be retooled to make extended-wheelbase versions of GM's midsize SUVs, the Chevrolet TrailBlazer, GMC Envoy, and Oldsmobile Bravada. The plant is currently undergoing a $750-million renovation.

GM PRODUCTIVITY UP The newest Harbour Report, released by Troy, Michigan-based manufacturing consulting firm Harbour and Associates, shows that GM has gained in productivity while productivity has declined at Ford. GM's productivity, measured by the report in terms of the number of worker hours taken to assemble each car, is anticipated to have risen by up to eight percent, while Ford productivity has declined slightly, probably due to several plant shutdowns related to the tire recall. In previous reports, GM's productivity has been among the lowest in the business. Nissan, Honda, and Toyota again showed the best productivity.

GM Makes Gains In Harbour (6/18/01)

GAS PRICES FALL Gas prices have fallen more than three cents per gallon in the past three weeks, according to the Lundberg Survey, which checks prices at nearly 8000 gas stations across the country. The group said that nationally, the price per gallon of gas is $1.73. Gasoline prices in the Chicago area plunged, after the situation with production from area refineries was not as tight as anticipated.

Gas Prices Don’t Faze Buyers (6/11/01)

COBALT GOING PRIVATE? Seattle's Cobalt Group reportedly wants to get back out of the stock market and go private, reports Automotive News. The company's board is planning to sell all outstanding shares to the investment firm Warburg Pincus, upon a majority approval. The company, which provides e-business services to automakers and dealers, went public in August 1999.

NEW ENGINE PLANT UNDERWAY Toyota has broken ground for its new V-8 engine plant near Huntsville, Alabama. The $220-million plant will employ 350 people and make about 120,000 engines per year, beginning in 2003. The V-8 engines will be used in the Tundra full-size pickup, which is assembled in Princeton, Indiana.

CELLPHONE DRIVING BAN EXPECTED IN NY Pending legislation banning the use of hand-held cellphones while driving is expected to be approved soon in the state of New York. The bill is reportedly on the New York legislature's agenda after the state's budget is passed. Although several localities in the Northeast, as well as three counties in the New York City area, have already passed local laws banning the use of hand-held cellphones while driving, this is the first time such a law has come this close to passing in a state legislature.

GM INVESTS IN TECH COMPANY FOR FUEL-CELL VENTURES General Motors has taken a stake in Impco Technologies. The move kicks off a joint venture between the companies to develop a hydrogen storage system for hydrogen-powered fuel-cell vehicles, which may allow the range of such vehicles to be greatly improved.

TOYOTA'S NEW HYBRID SYSTEM ONLY A 'HELPER' Toyota revealed a new universal hybrid system, called Toyota Hybrid System-Mild (THS-M), that can be applied to all types of vehicles and improve efficiency by about fifteen percent over non-hybrid vehicles. The new 36-volt system essentially takes the place of an alternator, assisting the gas engine and reducing emissions. Unlike the hybrid system already used in the Toyota Prius, it is not intended to have the capacity to launch the car on its own. Toyota plans to introduce a model equipped with the new system later this year.

FORD'S BRAND MARKETERS SPREAD THE LOVE Ford Motor Company has purchased The Beanstalk Group, a leading merchandising and licensing company, according to the New York Post. The purchase of Beanstalk will enable Ford to take advantage of as much as $2 billion per year in merchandising potential for consumer products with Ford company logos. Consumer products might use the Ford name in tool sets, the Volvo name in safety helmets, or the Land Rover name in camping gear, according to the report.

TAKE NOTE, CALVIN AND HOBBES MERCHANDISERS General Motors appears poised for a long-term gain in truck sales, versus long-time leader Ford Motor Company. GM posted a 9.5-percent gain in truck sales for May, and it is now outselling Ford in full-size pickups and full-size SUVs. GM might also outsell Ford in all light truck segments, including minivans, this year. GM has made the gains over a period of many years, although some believe that the Firestone recall likely accelerated the trend over the past year.

GM FARMS OUT INTERIORS TO JCI Supplier Johnson Controls has been awarded an unprecedented contract to assemble entire interiors for GM's minivans, the Chevrolet Venture, Pontiac Montana, and Oldsmobile Silhouette. Johnson Controls will be in charge of all aspects, including seats, trim, and other interior pieces, and the company will, at least at first, have to work with GM's existing suppliers of interior parts, according to Bloomberg News.

CAFE FREEZE LIFTED The U.S. House of Representatives has lifted a ban on raising federal fuel economy standards, but the standards likely won't change with George W. in office, according to an AP report. A House subcommittee left out the moratorium on fuel economy standards, originally attached to the federal transportation bill in 1995. President Bush and the Alliance of Automakers, a lobby group representing automakers, are pushing for the fuel economy limits to be dropped. Since 1995, the corporate average fuel economy (CAFE) standards have been locked at 27.5 mpg for cars and 20.7 mpg for trucks.

FORD Q3 PRODUCTION CUT Ford Motor Company now plans to cut production by ten percent in the third quarter, to 930,000 vehicles, versus 1.04 million in the same period last year. The automaker plans to reduce car production by 19 percent and truck production by less than five percent.

AZTEK SECOND-YEAR FACELIFT CONFIRMED General Motors' Pontiac-GMC division has confirmed that the Pontiac Aztek will get some much-needed styling tweaks later this fall. GM execs revealed that design changes will include new paint schemes with less body side cladding, and bigger tires and wheels (suggestions already made by our insightful readers). The automaker is still considering a price reduction, although no firm decision has been made on that.

TCC's Draw Aztek Winners (4/23/01)


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