Journal of Public Affairs Volume 3 Number 3

Case Studies

Ford Motor Company and the Firestonetyre recall

Robert MollReceived: 29th May, 2003

The George Washington University School of Business and Public Management, 2131 G Street NW,Washington, DC 20052, USA; tel: +1 202 994 2492; e-mail: rmoll@gwu.edu

Journal of Public AffairsVol. 3 No. 3. 2003, pp. 200-211O Henry Stewart Publicaf ions,ISSN 1472-3891

Robert Moll is Director of Communications forThe George Washington University (GW) Schoolof Business and Public Management in Washing-ton, DC. He is also an MBA student studyingstrategic management and public policy there.He would like to thank Nick L. Laird and Dr Rita K.Roosevelt of Laird & Associates for asking him towrite a case about this issue for a corporate publicaffairs course at GW. He also thanks Dr JenniferJ. Griffin, assistant professor of strategic man-agement and public policy at GW, for her encour-agement to rework this case study into apublishable piece, as well as for her wise counselas a mentor.

ABSTRACT

77(;.s paper u>as prepared as the basis jor a class

disaission rather than to illustrate either effective or

incffectiue handling of an adniinistratii'e situation.

It may be appropriate for public affairs, business

and public policy, and/or crisis management

courses at the undert^raduate or <^raduate level. In

conjunction with this case, it tnay be useful to use

the framework for crisis nianaf>ement developed by

Dr Ian I. Mitroff] the Harold Quinton Distin-

guished Professor of Business Policy at the Mar-

shall School of Bu.<:iness, University of Southern

California. This best practice model is discussed in

'Managing Crises Before They Happen', which

Mitroff published in 2001 with Gus Anagnos,

Vice President of Comprehensive Crisis Manage-

ment.

This case leads the audience through the Ford-

Firestone tyre crisis from 1997 — when Ford

began to learn of a problem with Firestone tyres on

its popular Explorer sport-utility vehicle — up

until the summer of 2001, just after Ford recalled

13 million Firestone tyres and the National High-

way Tramportation and Safety Administration

cleared Ford of further investigation into potential

defects in the Explorer.

The case addresses potential causes of the tyre

problem, how Ford handled the crisis from a

corporate public affairs perspective and, tangen-

tially, how Firestone handled the issue.

KEYWORDS: Ford, Firestone, Explorer,tyre, Nasser

INTRODUCTIONIn 1997 and 1998, the Ford Motor Companybegan receiving reports from Saudi Arabia,Venezuela and Malaysia about accidents in-volving the Explorer, Ford's popular sportutility vehicle (SUV). Firestone tyresmounted on the vehicles were blowing outor experiencing tread separations that led toviolent accidents, vehicle rollovers, injuries

and some fatalities. At Ford's request, Fire-stone, the US division of the Japan-basedBridgestone Corporation, checked its data-base of failure claims and tested its tyres todetermine whether MI intensive evaluationought to be undertaken by the firms. Fire-stone explained to Ford that the failures wereattributable to extreme driving conditions,improper maintenance and under-inflatedtyres(Mullert(a/. 2000, 2001).

Early in 1999, Ford again asked Firestoneto review its claims data, this time to deter-mine if US customers were experiencing tyreproblems similar to those occurring abroad.Firestone a.ssurod Ford that there were noproblems, and Ford data and governmentsafety data did not reveal any problems either(Ford Motor Company 2000g, 2001 g). Butas reports of accidents in the Middle Eastcontinued. Ford and Firestone decided inJuly 1999 to replace Firestone tyres on4.5,000 Explorers there. While the same Fire-stone tyres were mounted on Ford Explorerssold in the USA and other countries. Fordand Firestone were not legally required tonotify US regulators of their overseas repla-cement program (Grimaldi 2000). Bridge-stone/Firestone lawyers had 'majorreservations' about conducting the pro-gramme without notifying the US Depart-ment of Transportation, but the firmsproceeded without alerting the US regulator(Grimaldi 2000). Seven months later. Fordand Firestone launched a similar tyre replace-ment programme in South-east Asia, and athird programme was initiated in Venezuelain May 2000 (Ford Motor Company 20()0b,2001b).

Between February and April 2000, a teamof Ford and Firestone engineers inspectedactual tyres that had failed in south-westernstates of the USA like Arizona, Nevada andTexas to determine if the problems that thefirms had seen in Saudi Arabia were mani-festing them.selves in the US market. Their'Southwest Study' concluded that the failuresin the USA were not analogous to those

occurring abroad (Ford Motor Company2000b, 2001b).

The US National Highway TransportationSafety Administration (NHTSA), the federalagency responsible for tracking informationabout potential automobile .safety issues, hadbeen receiving letters from Explorer ownersin the USA since the early 199()s. Theauthors detailed stories of accidents that in-volved Firestone tyre fiiilures on their FordExplorers. In July 1998, The NFITSA re-ceived data from the State Farm InsuranceCompany documenting 21 cases in whichFirestone tyres were implicated for Exploreraccidents (Skrzycki 2000).

After news reports of fiital accidents invol-ving Explorers equipped with Firestone tyresin the USA, the NHTSA launched an initialevaluation of Firestone ATX and ATXlltyres in March 2000. Two months later,having discovered 90 complaints about Fire-stone tyres on Ford Explorers in its d;itabase,the NHTSA announced a formal defectinvestigation into 47 million ATX, ATXlland Wilderness tyres manufactured by Fire-stone.

FORD'S EXECUTIVE SUITEFord chairman and CEO Alexander J. Trot-man stepped down in 1998, a year earlierthan anticipated. He explained that his jobwas complete: a global reorganisation hadconverted Ford into the world's most profit-able car manufiicturer. Three of America'stop four vehicles in 1995, and five of the topten, were Ford products (PR Newswire1996). In 1995, Explorer outsold the secondbest-selling SUV by 57 per cent. In the USA,Ford's F-Series pickup trucks were the topsellers in this category for 14 years; Rangerwas the top compact pickup truck for nineconsecutive years; Escort was the best-sellingsub-compact pickup truck for 14 consecutiveyears; the Taurus was the best-selling car forfour consecutive years and the Mustang wasthe small specialty loader for ten years. Thun-derbird topped the list for best-selling speci-

Ford Motor Company and the Firestone tyre recall

alty cms. Moreover, new products, like theContour, were outselling their most directJapanese brand competitors (Ford MotorCompany 1996). Ford held $14bn in cash in1999.

To replace Trotman, Ford developed apower-sharing arrangement. Jacques Nasser,who had been Ford's president under Trot-man since 1996, was promoted to chiefexecutive officer. Described by the businesspress as 'hard-nosed' and 'blunt-talking', theAustralian was credited with transformingFord 'from struggling with the worst per-forming profit margins in the business toscoring record earnings. .. surpassing GeneralMotors' (Naughton and Kervvin 1998). Nas-ser earned the moniker 'Jac the Knife' forinitiating a dramatic reorgani.sation and cost-cutting plans, louring his first 1 8 months asl-'resident, he had laid off 5,300 salariedpersonnel and slashed )>4.3bn in costs.

Ford's new chairman, and Nasser's coun-terpart, was William Clay 'Bill' Ford, Jr, whohad joined the firm directly after graduatingfrom Princeton in 1979. He had worked invarious positions throughout the company inwhat BusinasWeeh described as 'an appren-ticeship for a chairman-in-training' (Naugh-ton and Kerwin 1998). Bill Ford, Jr was thefirst of his family to run the company sincehis uncle retired in 1979, and the Ford familystill controlled 40 per cent of Ford MotorCompany.

THE FORD EXPLORERFord launched the Explorer in March 1990,when the SUV market was in its infancy.The new vehicle replaced Ford's Bronco II,and during development was even referredto as the '4 door lironco II'. Ford laterchanged the product's name to Explorer,when an increasing number of deaths wereconnected to Bronco Us that had rolled over(Safetyforum.com 2001 b).

The new Explorer had few competitors,more interior room and was considered to bemore comfortable than other vehicles in its

class. During its first year. Explorer salestotalled 140,059 vehicles.

Explorer sales rose by 56 per cent to249,640 vehicles only one model-year later.By 1997, nearly half of Ford's annual $6.9bnprofits came from domestic sales of SUVsand light trucks (Naughton and Kerwin1998). Alone, the Explorer accounted for 15per cent of Ford's North American profits in2000 (Klein and Stem 2001). Since its intro-duction. Ford has sold more than 3.6 millionExplorers. From 1990 until 2001, the Ex-plorer was the best-selling SUV on themarket. It also has been among the top tenbest-selling vehicles — car or truck — since1990.

When de.signing the Explorer, Ford askedFirestone to develop a tyre for its new SUV.Ford was Firestone's largest customer, andthe Ford—Fire.stone relationship was nearly100 years old, one of the oldest partnershipsin American business (Mayer and Swoboda2001). It began through the friendship ofHenry Ford and Harvey S. Firestone, and thetwo firms entered into a business relationshipin 1906, when Firestone .sold Ford 2,000 setsof tyres (Klein and Stern 2001). The Ford-Firestone relationship was further cementedwhen Henry Ford's grandson, William ClayFord, married Harvey Firestone's grand-daughter, Martha Peake Firestone. Theirson. Bill Ford, Jr, was Ford Motor's chairmanand Nasser's colleague.

With specifications oudined by Ford, Fire-stone developed new tyres for the Explorer.In the 1995-1997 model-years, 50 to 60 percent of the new Explorers produced cameequipped with Firestone tyres. Goodyear andother tyre manufacturers also producedtyres for the Explorer according to Fordspecifications.

During the Explorer's design phase. Fordengineers considered various modificationsto address the Explorer's instability. Theyrecommended increasing the vehicle's width,lowering the centre of gravity and usingsmaller tyres, but management decided not

to adopt these changes (Safetyforum.com2()()1,b). Ford engineers then suggested redu-cing the tyres' pressure: Firestone originallyrecommended 30 pounds per square inch(psi). Ill consultation with Firestone, Fordmanagement agreed to a range hctween 26and 30 psi — which lowered the vehicle'sheight, or centre of gravity, by 90 thou-sandths of an inch (Ford Motor Company2001 e). Ford management told its engineersthat it would consider their other recom-mendations for subsequent mociel years. De-sign changes late in the product developmentprocess were unacceptable to managementbecause they would increase the cost anddelay production of the new Explorer, andsubsequently delay it.s launch (.Safetyforum.com 2001 b).

However, the ;\greed-upon lower tyrepressure increased friction between the tyreand pavement, meaning lower fuel mileage.Ford, like other car manufiictures, was underpressure from governinent regulators to meetfuel economy standards. Furthermore, Fordwas concerned that the Explorer's fuel econ-omy wiis 7 per cent wone than that ofcompetitors already in the market. Becauseincreasing the psi of the tyres had caused theExplorer's wheels to lift ofF the pavementdtiring turning test manoeuvres. Ford askedFirestone to modify the tyre's componentsand develop a lighter tyre. Firestone re-sponded by reducing some of the tyres'rubber and steel components, which de-creased the tyre's weight by 10 per cent andcaused it to have less friction with the road(Safetyforum.com 2001 b).

FIRESTONE'S RECALLOn 9th August, 2000, Firestone and Fordjointly announced that Firestone would vo-luntarily recall 14.4 million tyres under in-vestigation by the NHTSA. Firestoneestimated that only 6.5 million of the' tyreswere still in use. The recall included allFirestone ATX and ATXII tyres of theP23.S/7.SR1.'S size manufactured since 1991

and all Wilderne.ss AT tyres of that same sizemanufactured since 1996 at Firestone's Dee-atur, Illinois, USA, plant (National HighwayTransportation Safety Administration 2(){)0).These tyres would be linked within weeks tomore than 1,400 accidents and 88 deaths(Taylor 2000).

The replacement tyres would primarily benew Firestone Wilderness AT tyres producedat Firestone's Joliette, Quebec, and Wilson,NC plants. Ford also provided its dealerswith a list of 30 replacejiient tyres that wereproduced by other tyre manufacturers. Morethan 500,000 Explorers had been deliveredto customers equipped with Cloodyear tyreswith the same vehicle suspension system andthe .same recommended 26 to 30 psi tyrepressure. None had experienced tread separa-tions (Ford Motor Company 2()()0b, 2001b).

Ford estahlished a 'war room' on the 11thfloor of its headquarters in Dearborn, Ml,shortly after the NHTSA announced itsinvestigation. Directly linked to Nasser's of-fice, the war room was the site for dailymeetings of a special task force that drewemployees from Ford's manufacturing, engi-neering, finance, purchasing, legal, regula-tory and public affairs units. Tom 15aughman,the lead technical person responsible for theExplorer and Ford's other light trucks, andHelen Petrauskas, vice president of environ-mental and safety engineering, chaired thetask force. The objectives were three-fold:'Protect Our Customers, Protect Our Busi-ness, Protect Firestone' (Safetyforum.com.2001c.

Ford worked to replace its customers' tyresquickly. To increase the pool of availablereplacement tyres, for three weeks beginningin August 2000, Ford shut down assemblyplant') in St Louis, MO (which lDanufacturedExplorei"s), Twin Cities, MN (which manu-factured Rangers) and Edison, ' Nj (whichmanufactured Rangers and Mazda B seriestrucks). The shutdowns enabled Ford todivert 7(),()0() tyres to dealerships. Many ofthe 6,000 hourly paid plant workers helped

"ord Motor Company and Ihe Firestone tyre recall

nearby dealerships with tyre shipments, en-abling dealership personnel to focus on assist-ing customers with tyre inspections andreplacements. All plant employees continuedto receive as much as 95 per cent oftheirbasepay during the layoff period. Analysts calcu-lated that Ford lost about $4,()()() in pretaxprofit for each imbuilt Explorer, suggestingthat the shutdown cost $U)Oni (Taylor2()()()). To further improve supply of replace-ment tyres, Goodyear and Michelin in-creased production of their 15- and 16-inchmodels (Ford Motor Company 2000c,2001 c). By the end of September 2000, theentire tyre industiy had increased productionof 15-iiich tyres by more than 250,000 tyresper month (Ford Motor Company 2(){)0d,2001 d).

FORD'S PUBLIC FACEFord launched a multi-million dollar publicrelations campaign with the August 2000recall announcement. Nasser became Ford'sprimaiy spokesperson to the firm's manystakeholders. He appeared in television com-mercials and national newspaper advertisingcampaigns designed to reassure customersthat Ford was moving quickly to replace tyreson its affected vehicles. Nasser told viewers,'Your safety is our utmost priority. We willwork around the clock until this situation isresolved, and we will continue to keep youupdated with current information' (FordMotor Company 2()00r, 2001 f). In otherpublic communications, Nasser said, 'Youhave my personal guarantee that all theresources of Ford Motor Company are direc-ted to resolve this situation' (Ford MotorCompany 2001 i). In an interview about thestrategy months later, Nasser said, 'Wewanted to communicate with cveiyone —customers, dealers, the government, othersuppliers — about where we stood and whatwe were doing' (Taylor 2000).

At its customer call centre in Denver, CO,Ford increased the number of operators from150 to 700 within four days; all phones were

manned 24 hour per day. It also opened anadditional call centre. It posted banner adver-tisements on major Internet sites like AOL,Yahoo!, and MSN, with links to a Fordv/ebsite dedicated to the tyre issue, whichhad been developed within about 48 hoursof the recall announcement.

Pages on the website targeted many ofFord's stakeholders: customers, the media,suppliers, regulators and legislator. Throughall of Ford's outreach, the message was con-sistent: Ford wanted its stakeholders to knowthat it was cooperating with Firestone andthe NHTSA to understand the problem, andthat its customers' safety . was its primaiyconcern.

Ford also presented messages that the Ex-plorer was one of the safest vehicles on theroad — safer than many competing SUVsand safer than passenger cars. To bolster itsargument about the Explorer's safety. Fordcited crash-test data from the NHTSA: 'overthe past 10 years Explorer consistently hasranked among the safest vehicles in its classbased on. .. the Federal government's realworld database of crash statistics'(Ford MotorCompany 2001 e).

POLICY IMPLICATIONSWhen Ford developed its war room shortlyafter the August 2000 recall announcement,Nasser reminded the 500 members of thetask force that Ford did not want to be forcedto act by legislation. The findings of theNHTSA could potentially warrant regulatoryor legislative action that could harm Ford's'bottom line'.

Within weeks after the Firestone recall.Ford began to direct the public discourseabout the tyre failures, with messages thatFirestone alone was responsible for the tyrefailures. 'This is a tire issue and only a tireissue', Nasser testified to subcommittees ofthe House Committee on Energy and Com-merce in August 2000. He also made twopromises: 1) Ford would work with the tyreindustry to develop an 'early warning system'

to detect the first signs of vehicles already onthe road; and 2) in a reversal from its decisionin 1999, Ford announced that it wouldvoluntarily alert US regulators to any futureproblems with its products overseas: 'Whenwe know it, so will the world' (Muller ct al.2000,2001).

On Capitol Hill, again, in September2000, Nasser testified that Ford had to urgeFirestone to protect its customers: 'Firestonefailed to share critical claims data with Fordthat might have prompted the recall of thesebud tires sooner... ISjenior Firestone execu-tives not only acknowledged that Firestonehad analyzed its claims data, but also identi-fied significant patterns of tread separations asearly as 1998. Yet, they said nothing toanyone, including Ford Motor Company',Nasser said. 'We virtually pried the data fromFirestone's hands and analyzed it ourselves. Itwas only then — a few days before the recallwas announced — that Ford engineers dis-covered conclusive evidence that the tyreswere defective. We demanded that Firestonepull the tires from the road... We started byinsisting that Firestone recall the baci tyres.To encourage — even prod — Firestone totake immediate action. Ford offered to sharethe cost and requested the use of competitors'tires' he said (Ford Motor Company 2000g,2001 g).

Over the next several months, as regula-tory and Congressional interest in the issueincreased. Ford stepped up its presence inWashington, DC. For decades. Ford hadbeen well known in Washington, DC,spending an estimated $8m per year onlobbying. Ford's in-house lobbying staff wereexperienced, and headed by Janet MullinsCrissom, who worked in the Department ofState during the George W. Bush, Sr, admin-istration. During the spring of 2001, 17lobbyists from Ernst & Young's Washingtonoffice registered to work for Ford, as did stafffrom Boland & Madigan. (Michael Boland isa former aide to Senator Trent Lott |Repub-lican, MS] and a member of the Senate

Committee on Commerce, Science, andTransportation. The committee has jurisdic-tion over consumer affairs and transportationissues) (Skrzycki andjohnson 2001).

Other Washington insiders on Ford's teamincluded law firm O'Melveny & Myere andthe Alliance of Automobile Manufacturers, atrade association with extensive policy ex-perience. Ford also added Cassidy &' Associ-ates and Michael Barrett, jr, a long-time aideto Representative John 1). l^ingell (Demo-crat, Ml), to its roster of Washington powerbrokers. Dingell was the ranking Democraton the House Committee on Energy andCommerce, which has jurisdiction over con-sumer affairs and consumer protection. Manymajor legislative battles begin vvitli tliat com-mittee, and its members are constantly sub-jected to intense industrial lobbying. Dingell,meanwhile, lived within a mile of Ford'sDearborn headquarters (Skrzycki and John-son 2001).

Lawsuits also were a concern to Fordbecause they carried financial, public rela-tions and potential regulatory or legislativeimplications. In 1996, then Head of NorthAmerican Operations for Cieneral Motors,Kichard Wagoner, told automobile industryexecutives that 'the biggest threat t(5 UScarmakers are not foreign competition ornew technology but product liability laws...We've got to start working together more inthis countiy, on a basis of mutual trust, andstop suing eveiybody for everything' (Sinio-nian 1996).

Ford had adopted a new product liabilitystrategy in the niid-1990s. Under the tenureof the late Ford chairman, Henry Ford 11, thefirm had developed a reputation for quickand quiet out-of-court settlements. In 1994,Ford's general counsel James Brown, in-itiated the reversal of Mr Ford's unwrittensettlement policy, which was designed toquell negative publicity. Ford began forcingcustomers who claimed they had been hurtby a defective Ford product to prove theircase in court. While more cases went to trial.

Ford Motor Company and the Firestone tyre recall

Ford stated that one in three plaintifFs wasturned nwny, and that the firm won four outof five trials. As a result, Ford's annualexpense for judgments and settlements wasreduced from $2()0m in 1993 to $1()()m in1995 (Adler 1996).

As the Ford-Firestone tyre issue matured,Ford was working through several productliability suits, including some stemming fromfires caused by faulty ignition switches. Thedefective switches had been installed in 7.8million vehicles manufactured between 1988and 1992. Ford settled a suit in October 2001by agreeing to recall the switches. The recallcost was estimated between S700m and$2.7bn(Swoboda2001).

Ford also had agreed to a $425,000 civilpenalty to settle a di.spute with the NHTSAabout the switches. The regulator disputedthe timeliness of the notification Ford hadprovided to the agency regarding the defect.It also challenged the completeness and accu-racy of Ford's response to information re-quests during its investigation. Previously,Ford had been reprimanded by NHTSA tentimes for failing to make full disclosuresduring other unrelated agency defect investi-gations, resulting in financial penalties ofabout $1m (Safctyforum.com 1999, 200] a).

UNRAVELLING A PARTNERSHIPShortly after the August 2000 recall, Petraus-kas. Ford's Vice President for environmentaland safety engineering, reported that Fordhad opened its own investigation into theFirestone tyre failures and would share itsfindings with the NHTSA and Firestone."We are moving as quickly as possible tounderstand the issue. We are committed todoing what's right for our customers' (FordMotor C:ompany 2000a, 2001a).

Tyres were the only part ofa vehicle notcovered under the vehicle manufacturers'warranty, so complaints about Firestone'styres weren't being reported directly to Ford,as a problem with another vehicle part wouldbe. 'We're in a data driven industry, but

we're in an awkward position because inmost cases we don't collect tire data', Na.ssersaid (Taylor 2000).

There were more than 2,()()() claims asso-ciated with the Firestone ATX and ATXIIP235/751H5 tyres. Ford's engineers aggre-gated the data and analysed it using severalmethods to ensure that they understood theproblem, isolated the suspect population oftyres and determined that other populationsof tyres did not need to be included in therecall (Ford Motor Company 20()0b, 2001b).Firestone's data revealed that many of thetyres that had failed were manufactured at itsr^ecatur, IL, plant and that about 80 per centof the accidents had occurred in Arizona,California, Florida and Texas. Firestone en-gineers were speculating that there was acorrelation between heat, tyre pressure andtyre performance (Muller and St Pierre 2000,2001). "We crunched thousands of pieces ofdata. Once we understood the prtiblem, wewere out there with Firestone and the gov-ernment recommending the replacement ofthe tires', Nasser said. Ford estimated that therecall would cost the fn-m about $500m.

On 17th October, 2000, John Lampe,CEO of Firestone, met with Nasser at hord'sheadquarters. Only on the job for a week,Lanipe hoped to mend Firestone's relation-ship as a supplier to Ford. Ford was upsetwith Firestone for publicly criticising theExplorer and suggesting that the NHTSAinvestigate it (Safetyforum.com 2001c).

Firestone had written to the NHTSAalleging that Explorers are niore likely thanother SUVs to over-steer following a treadseparation on a rear tyre, making the Ex-plorer less stable. To support its claim, Fire-stone had funded a study that demonstratedExplorers were more likely to roll over aftera tyre failure.

In December 2000, Firestone issued areport and press release that blamed bothitself and Ford for the tyre failures. It identi-fied design problems in the Explorer that ledthe firms to reduce the p.si on the Explorer's

tyres. This lower inflation rate 'increased therunning temperature of tyres and contributedto a decreased belt-adhesion level' (Safetyfor-um.com 2001 b). Firestone acknowledgedproblems in the manufacturing process in itsDecatur, IL, plant, as well as in the design ofthe tyre. Lastly, Firestone said that Explorerowners were misusing their tyres (Safetyfor-um.com 2001b).

Ford agreed with Firestone's as.sessmentregarding the tyre's design flaw and manufac-turing problems, and announced the thesis itsengineers and scientists were testing: 'thedesign of the tire generates high stresses andheat in the wedge and belt area. Manufactur-ing processes at Firestone's Decatur Plantreduce the cohesion level of the rubber inthat same area of the tire. This reducedstrength permits cracks to propagate betweenthe steel belts. We believe it is a combinationof manufocturing factors and the reaction ofthe tire design to field operating conditionsincluding hot weather and very low tirepressure, that have caused the increased fail-ure rate of these tires' (Ford Motor Company2000h, 2001 h). But Ford denied any designproblems with the Explorer.

The corporate blame game continued asthe number of accident claims increased andfatalities resulting from Firestone tyre failuresgrew. This led to unravelling of the 100-year-old Ford—Firestone partnership. On21st May, 2001, John Lampe announced thatFirestone was severing its relationship withFord. The firm reported that Ford was 'cast-ing doubt' on the quality of Firestone tyres to'divert attention' from safety problems in theExplorer (Klein and Stern 2001). Ford re-sponded that same day: 'We are deeplydisappointed that. . . Firestone decided not towork together for the safety of our sharedcustomers, which is the only issue that mat-tei-s' (Ford Motor Company 2()01j).

FORD'S TYRE RECALLOn 22nd May, 2001, after a nine-monthstudy. Ford announced a tyre replacement

programme for ^3 million Firestone Wild-erness AT tyres on certain Ford, Mercuryand Mazda SUVs and light trucks. Fordestimated the recall would cost $3bii — halfof its 2001 projected profits (Butters 2001).'Since last year, we have closely monitoredfield data from Firestone, worked closelywith NHTSA, and conducted extensive la-boratory and road testing. Taken together, allthe data and analysis do not give us sufficientconfidence in the future durability and per-formance of the non-recalled Wilderness ATtires on our vehicles' (Ford Motor Company20011), Ford reported.

Earlier in May 2001, Firestone had pro-vided Ford with fourth-quarter 2000 war-ranty and claims data. Ford engineers gleanedthat claims rates for Wilderness AT tyresmanufactured at Firestone's Wilson, NC,plant— one of the plants where replacementtyres used in the recall announced in August2000 were manufactured — were three timesthe industi7 norm (Mayer and Swoboda2001). Ford reported in June 2001 that Fire-stone's data revealed that the Wilson, NC,Wilderness AT tyres had a failure rate of 19tread separation claims per million tyresproduced for the 15-inch tyre and 17 fiiiluresper million for the 16-inch tyre. A similarmodel of Cioodyear tyres only had a faihireclaim rate of 1 per million tyres (Ford MotorC^ompany 2001 m).

Nasser stated that Ford's action was 'aprecautionary and preventive step', and thatWhile the tyres' rate of fiilure was 'relativelysmall', it was three times the industry average(Swoboda and Mayer 2001). In an openletter from Nasser to Lampe, Ford explained:'we are concerned that die performance ofcertain Wilderness AT tires not included inlast summer's recall is not at a level consistentwith the performance of similar usage tiresfrom competitive manufacturers. This con-cern rests significantly on data supplied byFirestone and NHTSA, which shows thatfailure rates for many of the Wilderness ATtires are already worse than competitive

Ford Motor Company and the Firestone tyre recall

standards and may deteriorate further in thefuture. Our own laboratory and vehicle testsconfirm these results' (Ford Motor Company2001k).

Ford recalled all 15-, 16-, and 17-inchWilderness AT tyres on its vehicles. Thetyres were to be replaced at Ford and Mer-cuiy dealerships at no cost to customers withtyres manufactured by Firestone's competi-tors. Furthermore, Ford offered to reimbursecustomers who had purchased tyres fromother authorised dealers, with proof of pur-chase up to $110 to $130, depending on tyresize. Ford again suspended production atcertain plants, to make more tyres available asreplacements. The Twin Cities, MN, andEdison, NJ, plants (where Rangers weremanufactured) were shut down for twoweeks, and the Louisville, KY, plant (whereExplorer Sport, Explorer Sport Tiac andExplorers were produced) was closed for oneweek. Ford announced it would take af2.1bn after-tax charge in the second quarterof 2001 to cover some of the recall costs. Italso suspended $2.8bn from a planned S5bnstock buyback programme (Ford MotorCompany 20011).

'Once we had doubts about the .safety ofour customers... we just decided to moveahead with the recall'. Ford spokespereonKenneth Zino said (Klein and Stern 2001).'We no longer have confidence in the designof these tires based on our intensive studyand Firestone's inability to convince us thatthese tires are safe' (Skrzycki 2001).

In June 2001, Michael P.Jackson, DeputySecretai"y of Transportation, commendedFord before the House Committee on En-ergy and Commerce subcommittees onCvOmmerce, Trade, and C'onsumer 1^-otec-tion. Oversight and Investigation, and Tele-communications. 'The Department applaudsFord for its strong connnitment to safety andits efforts to retain the confidence of con-sumers'. Jackson continued, 'NHTSA hashad no credible evidence that the FordExplorer's design is in any way responsible

for causing tread separation or other suchcatastrophic tire failure' (United States De-partment of Transportation 2001).

The NHTSA ruling cleared Ford from aformal investigation of the Explorer, butcriticism from Wall Street analysts and hun-dreds of personal injury and wrongful deathlawsuits remained.

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Butters, J. (2001) 'Ford Fears SUV Recall' (onlineat lutp://www.safetyforuiii.coiii/cgi-bin/sn_senrch.cgi?lD=002217) accessed on 21stJune, 2001; 13th November, 2001.

Ford Motor Company (1996) 'Ford Sets SalesRecords; Leadership Streaks Extended', PRNewsu'ire, 4th Jan nary.

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FURTHER READING

'Ford Chief Says Firestone Rejected '99 Suspi-cions of Tire Problem', The New York Times,31stAiigust, 2001: CIO.

'Ford May Sue Uridgestone over Tire Recall',t^ow joiie.< Iiiterriatioiinl News, 10th October,2001.'

Garsten, E. (2001) 'Tire Recall Order is GoodNews for Ford but Issue Not Yet in RearviewMirror', The Coitadian Press, 5th October.

Garsten, E. (2001) 'Tire Suit Settlement GoodNews for Ford, Analysts Say', Associnted Press,24tb August, 16th C5ctobcr, 2001.

C;eyelin, M. (2()0i) 'Firestone Tries to i'in Blameon Ford in Suit', The Asian Wail Street Joiiriial,21st August: 5.

'2002 Explorer Designed to be Safer Than Ever'http://wvvw.ford.coni.

'All-New 2002 Ford Explorer - On Sale Today',accessed 29th Marcb, 2001, 17tb October2001 iittp://\vvvw.ford.com.

Bartikoski, T. (2001) 'The Ford vs. Firestonei^-oblem: What Would You Do?', PiMic Rela-tions Tactics, August: 17.

Brezosky, L. (2001) 'Firestone Chief LampeBlames Ford', AP Online. 18th August, 2001,16th October, 2001. Iittp://wvvw.nrstg1p.djnr.com/cgi-bin/DJInteractive?cgi=WEB_MNS_STORY&'GJANum=538163834&page= newsstand/article.

ElBoghdady, D. (2001) 'New Chief OperatingOfficer Vows to Return Ford to Basics', TheWnsiiiii};toii Post, 31st October: ElO.

'Firestone Is Seen Taking "Enormous Gamble"

in Texas Tire Trial,' Associated Press, 23rdAugast, 2001, 17th October, 2001.

Healey,J. R. (2001) 'New Explorer Passe.s Maga-zine's Test: Ford Finally Gets Some GoodNews,' USA Today, 8th August: ()6B.

Klein, A. and Sugawara, S. (2000) 'On SuspectTires, Cultures Collide,' The Washiin>toii Post,23rd August: A1+.

Miller, K. (2001) 'Analysts Say Bridgestone/Fire-stone May Have Hit Bottom With Latest Re-call', A.'i.wciated Press, .5th October.

Muller, J., (2001) 'Ford: Why it's Worse ThanYou Think,' BusinessWeek Online, 25th June,13th November. http://www.businessweek.coni/magazine/content/01_26/h37380()l.htm.

Muller, J., Welch, 1)., Green, J. and St Pierre. N.(2001) 'Ford's Gamble: Will it BackHre?' Busi-nessWeek Online, 4th June, 13th November.http://vvvvw.businessweek.com/magazine/content/01 _23/b3735050.htm.

Muller, J. and St Pierre, N. (2001) 'Ford vs.Firestone: A Corporate Whodunit,' Business-Week Online. 11th June, 13th November.http://www.bu.sinessweek.com/magazine/content/01 _24/b3736073.htm.

'NHTSA Concludes Some Firestone WildernessAT Tires Contain Safety Defect, Wbile Mon-itoring Remaining Tires,' 4th October, 2001,17th October, 2001. littp://www.ford.com.

'One of the Safest Vehicles on the Road is NowSafer than Ever.' http://www.ford.com.

Shirouzu, N. (2001) 'Ford Executive PledgesTurnarounds in Sinking CJuality, SwellingCosts,' The Wall Street Journal Btirope, 5thOctober: 5-f.

Shirouzu, N. (2001) 'Ford Has Big ProblemBeyond the Tire Me.ss: Making Quality Cars,'The Wall Street Journal, 25th May, 2001.

Shirouzu, N. (2001) 'Ford Setdes Suit Filed byFamily ofa Victim of Rollover Accident,' TheWall Street Journal, 19tli September: B6.

Swoboda, F. and Deane, D. (2001) 'Ford's Goal:Replace and IDestroy,' The Washini;ton l'ost,26th May: E l+ .

United States Department of Transportation, 'En-gineering Analysis Report and Initial DecisionRegarding EAOO-023: Firestone Wilderness ATTires.' (Washington, DC). http://www. nhtsa.gov/hot/Firestone/firestonesummary.htnil.

United States, Department of Transportation,'Kcplaccnicut Tire Report Sent to HouseC.oniniittec' US I^epnrtnient of Transporta-tion. NHTSA 38-01." (Washington, DC,24tlijuly,

White, J. 15., l^ower, S. and Aeppe, T.(2001) 'Agency to Conmieiit on F'ord TireSafety While Inquiry into Explorer is Con-sidered,' The Wall Strcd. journal, 29th June: