Ford, Firestone Bottom Out

Talking Points
-Ford to recall tires not covered in original Firestone recall
-Firestone says it won't supply Ford's U.S. operations any more
-Ford recalls 52,000 '02 Explorer/Mountaineers for separate tire problems

-Firestone CEO's Letter to Ford
-TCC's award-winning coverage of the Firestone recall
-Talk about the Firestone mess in the TCC Message Boards

DETROIT--It was a bad Monday at Ford Motor Co.

Ford Motor Co., possibly as early as today, is expected to announce a program through which owners of several of its models, yet to be named, can get their Firestone tires replaced at Ford dealerships. USA Today is reporting that Ford CEO Jacques Nasser will offer to replace as many as 13 million tires -- those made at Firestone's Decatur, Ill. plant -- because it considers them potentially unsafe.

Ford says its researchers have identified other Firestone tires with two and three times as many defects than is tolerable. Though not as bad as the tires recalled last fall, which had 100 times as many defects as normal, the tires Ford has identified as being sub-par are a ticking time-bomb and PR nightmare in the wake of last fall’s debacle. Ford last August spurred Firestone to recall 6.5 million tires that were mostly on Ford Explorers and Mercury Mountaineers.

The move comes in the wake of an angry letter by Firestone's CEO John Lampe , who, citing "eroded" trust, says his company will no longer solicit new Ford business in the U.S. Existing contracts will be fulfilled, however.

Meanwhile, the company is battling a recall on its new 2002 Explorer/Mountaineer sport-utes, in which cuts to the sidewall of tires have been discovered. This recall is separate of the prior Firestone tire recall last summer.

Defect hunt

Since last fall, Ford chief Jacques Nasser has said that Ford’s standard going forward would be so-called SixSigma, or six defects per million. That is a standard adopted by General Electric, a company Nasser benchmarks for quality and management processes.

Ford has not yet announced what or how many tires are involved, but indications are that it could run into the millions.

Explorer RecallThough Ford has not made its plans known yet, sources say they expect to identify the tires they view as being potential problems, and will make an offer to consumers to have them replaced.

Ford cannot formally issue a recall, because they do not make the product. Only Firestone could issue a voluntary recall. And the National Highway Traffic Safety Administration is the agency that issues mandatory recalls.

Sources confirm published reports Friday that the tires worrying Ford have not been traced to fatal accidents as was the case last fall with the Firestone Wilderness AT, ATX and ATXII tires on Ford Explorers and Mercury Mountaineers. But, as Ford’s own research supports allegations by consumer watchdog groups and plaintiff lawyers that there are more bad tires on the road that should be recalled, the company is boxed in.

Ford spokesman Jason Vines said Friday, “We are continuing to work with NHTSA on finding the root cause that led to the Firestone tire recall last fall.”

Ford has been sharing its data effecting the additional Firestone tires with NHTSA, but not with Firestone. Nor has Ford communicated to Firestone that it plans to start replacing tires on its own.

Angry Lampe

Firestone chief executive John Lampe fired off an angry letter to Nasser on Friday after Ford’s alleged findings of more bad Firestone tires was reported in The New York Times.

“It is difficult to understand why that company [Ford] would choose to go to the media and not review their data and analysis first with Firestone,” said Lampe in a statement.

“Let me state categorically -- tires supplied to Ford Motor Co. and other customers are safe, and the tires are not defective. As we have said since last August, the role of the vehicle must be taken into account," Mr. Lampe wrote in his letter to Nasser. "Prior to your making any final decision to take action with respect to our tires, you owe it to Bridgestone/Firestone to share the findings and analysis which brought Ford to its conclusion. Likewise our people are prepared to show you and your management team why our tires are safe and contain no defects," Mr. Lampe's letter said.

NHTSA is reportedly months away from coming to any conclusions about the true cause of problems that led to last fall’s recall, or what to do with Ford’s findings on the additional tires.

But Ford, say sources, will not wait to act.

Dragging feet

Ford was terribly frustrated with Firestone’s foot dragging last summer and fall, and saw up close that it could not trust Firestone management to act in Ford’s best favor.

One incident in particular left Ford management very cool to Firestone. A Firestone contingent visited Dearborn in September to discuss a possible recall of tires in Venezuela where hundreds of incidents of tire failure and fatal accidents were reported. Firestone left Dearborn on a Friday having assured Ford that it would issue a recall. But by Monday, the company had changed its mind.

Firestone’s public relations and customer response apparatus was also heavily criticized. The company’s response was so poor that the PR firm it hired to help through the crisis resigned the business rather than be tarred with the same brush that was coating Firestone.

Lampe took over from Japanese management that was running Firestone’s North American management last year when the crisis hit. Firestone is owned by Japanese Bridgestone Corp., and the Japanese management appeared ill-equipped to handle the pressure put on the company by the American press or angry legislators on Capitol Hill.

The chief source of new data that is leading Ford to make the move is warranty data, which Ford did not have access to until recently. The release of Ford’s findings from the warranty data may not only show a higher defect rate than normal, but that Firestone has not acted in good faith with its dealers in the collecting and processing of the data.

Ford has lost two points of market share since last year. And the all-new Explorer is not flying off the dealer lots the way Nasser had hoped. That, plus the softening of the overall auto market, means Ford cannot afford to be caught in another drawn out PR nightmare in which all the headlines about Ford are negative.

Nasser, say sources, is planning to try and make lemonade out of the new lemons the company has identified, leaving Firestone to fend for itself.

It was Nasser who told USA Today on August 16 that “Spring is not acceptable,” referring to statements made by Firestone and his own people that it would take at least until spring 2001 to replace 6.5 million tires.

Nasser boldly said in the paper, “If people can’t find replacement tires where they are, call us and we’ll get you tires.” By marshaling other tire companies to produce more tires and even paying for more tire molds, Ford got the replacement campaign done by early December.

No faith

Ford sees first-hand that its customers have no faith in the Firestone brand. The old Explorer came mostly with Firestone tires as standard equipment, which left Ford over exposed to a tire defect. Customers of the all-new 2002 Explorer have a choice between Firestone, Goodyear and Michelin. The take rate on Firestone’s has been below two percent.

Firestone dealers have had to add other brands to keep afloat.

Ford chairman William Clay Ford’s wife is a Firestone, though the family sold the company to the Japanese in the 1980s.

Ford has sought to settle all lawsuits filed against it for deaths resulting from Explorers that rolled over when a Firestone tire lost its tread. Firestone had a session with trial lawyers last February to discuss settlements, and another session was scheduled for this month.

Arkansas lawyer Tab Turner has said that he would not entertain settlements with Firestone unless the tire company agrees to expand its recall of 6.5 million Firestone ATX, ATX II and Wilderness AT tires. Firestone maintains the recall announced last summer is adequate.

NHTSA has collected reports of at least 174 fatalities and more than 700 injuries among more than 6,000 complaints citing tread separations, blowouts and other problems with certain Firestone tires.

In January, Ford said it had about 200 individual suits involving Explorer rollovers pending. At that time, Ford launched an effort to settle all pending individual suits in the U.S. over injuries and deaths from the rollovers, offering victims and their families generous settlements.

Turner has backed a position that puts most of the blame for the accidents on Ford. The watchdog group Public Citizen and, a group of attorneys for tire victims, say the report is the "consumer reply to the official Ford/Firestone story."

Design problems

Both companies have analyzed what caused the tires to fail and concluded there was a problem with the design and a unique manufacturing process at Bridgestone/Firestone's plant in Decatur, Ill.

But the Public report said Ford created the tire specifications, recommended a lower inflation pressure than suggested by Bridgestone/Firestone and had a poor Explorer design that made it difficult for motorists to control the vehicle when a tire failed.

"Although Firestone's role in the debacle cannot be downplayed, the root of the problem lies with Ford Motor Company," the report asserted.

The Nashville-based tire maker insists a broader recall is not necessary and has prepared documents to highlight what it says is the Explorer's role in scores of fatal and serious-injury accidents involving their tires.

Nasser began calling on Firestone to recall tires in South America early in 2000 when Explorer rollovers began piling up and reports of treads coming off the tires in hot weather and at high speed were mounting. Firestone refused, so Ford began replacing tires on its own. That action by Ford received attention in the U.S. where accidents were reported as well.

Firestone denied that there was a problem that would prompt a recall until Ford ran tons of data through its mainframe computers and isolated the problems to tires of certain years produced at the Illinois plant.

“No way Jac [Nasser] is going through even half of what he went through last fall,” said a Ford executive. “And if Firestone thought it got thrown under the bus last year, wait until this round starts,” said the executive.

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