Weekly News: July 2, 2001

July 2, 2001

FORD TO SCRUTINIZE REPLACEMENT TIRE LIST Ford Motor Company might drop some tires from its list of valid replacements for recalled Firestone tires, after Congressional investigators alleged that pending National Highway Traffic Safety Administration (NHTSA) data shows the accident rate with some of those replacements to be higher than the recalled tires. The investigating committee would not release the actual data until the NHTSA reviews it. Although the NHTSA has thirty days to do so, it is soon expected to make a preliminary recommendation to the committee. Ford says that it will wait until it can scrutinize the Congressional data before it makes a move to stop using any of the tires. About sixty different models of tires are currently on Ford's replacement list.

NEW YORK CELLPHONE BILL MOVES THROUGH The State Assembly in New York has approved a new measure that would ban the use of hand-held cellphones in the state. The measure passed through New York's Senate last week, and Governor Pataki signed it into law late last week. The new law would go into effect in November, and after a phase-in period violations will bring a $100 fine. The use of hands-free cellphone devices is allowed under the new law, a boon for the burgeoning industry.

FIRESTONE TIRE TROUBLES KNOWN IN '96 The New York Times reported that personal-injury attorneys associated with the group Strategic Safety, along with one of the country's top safety consultants, knew about cases of Firestone tire failure on Ford Explorers in 1996—a year before the federal government had been alerted to a possible problem. The attorneys chose not to report the findings to the government for fear that a study would be inconclusive, causing their lucrative injury settlements to be dismissed. In a response, Strategic Safety asserted that Ford and Firestone were aware of these findings at that time, long before they went public.

CAFE GETTING NEW LEASE ON LIFE Lawmakers are once again considering an increase in the federal government's Corporate Average Fuel Economy (CAFE) standards, pending the results of a study due next month from the National Academy of Sciences. Until recently, experts thought that the whole idea of CAFE would probably be phased out under the Bush administration, but higher gas prices are stimulating lawmakers' renewed interest in the standards. Senator Dianne Feinstein has challenged automakers to make sport-utility vehicles with fuel economy that matches the fuel economy of passenger cars. For years now, the fuel economy standards for cars have been locked at an average of 27.5 mpg while light trucks have been allowed an average of 20.7 mpg. Proposed legislation would gradually bring light truck mpg in line with that of cars by 2007. Many argue that light trucks now fill the same consumer role as passenger cars, so the same higher rules should apply.

DAEWOO, ROUND TWO GOES SOUR Daewoo creditors in South Korea early last week started a new round of negotiations with General Motors, although later in the week negotiations have reportedly broken off. Daewoo's majority creditor, the Korea Development Bank, released the information about the new talks, but details have not been revealed. One of the main issues is the sale of Daewoo's main Bupyong plant, which creditors want to see sold, although GM is hesitant because of the plant's size and age. GM is expected to bid less than $2 billion for Daewoo, drastically less than Ford's $6.9 billion bid last year. Ford pulled out of the deal in negotiations last year, leaving Daewoo to find a new buyer.

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