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News > Companies
Firestone Sept. hearings set
August 28, 2000: 11:01 p.m. ET

Congressional committee to meet next month to discuss safety of recalled tires
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NEW YORK (CNNfn) - Congress plans to hold hearings on Bridgestone/Firestone tire problems on Sept. 6 at 1 p.m., according to Congressional spokesman John Tripp. The House Subcommittee on Telecommunications, Trade and Consumer Protection, chaired by Rep. Billy Tauzin, R-La. will hold the hearings, he said. An official announcement is expected Tuesday.

Congressional investigators spent Monday at Firestone's headquarters near Nashville, Tenn., to probe the recall of 6.5 million tires as company officials struggled with published reports of possible criminal charges in Venezuela, and another report of a strain in its relationship with Ford Motor Co.

Congressional staffers said the investigators are trying to find out what the tire maker knew about the problems that caused tread separation failure that has been linked to hundreds of accidents and as many as 62 fatalities. The Aug. 9 recall involves the Firestone ATX, ATX II and some Wilderness AT tires. Ford trucks and SUVs, especially the Explorer, are among the chief users of the tires.

"As you all know, staff representatives from the House Commerce Committee are in Nashville today, and we have had full and open discussions with them," Chris Karbowiak, Bridgestone/Firestone's vice-president for communications said in a prepared statement late Monday. "It's not unusual for a consumer recall to be of interest to a variety of parties. We look forward to providing Congress information that will help them better understand the complexities of the issues involved.

"Since May we have been working closely with NHTSA (National Highway Transportation Safety Administration) to determine what problems, if any, may exist with these tires," Karbowiak added. "While we all would like to have the specific cause identified for the incidents involving these tires, the research and process takes time. As we continue to investigate this issue, we will also cooperate fully with the Congressional hearings."

The investigators will return to Washington Monday night where they will continue to gather information in preparation for next month's hearings.

"We intend to ask Firestone the tough questions the [House] Commerce Committee and the American people are demanding the answers to," committee staffer Tom DiLenge told reporters before entering the Firestone complex. "What did Firestone know? Did Firestone act soon enough, and did Firestone's actions go far enough to ensure the safety of the American public?"

In addition to gathering records of accident reports and other documentation from the company, various personnel from the tire maker were to be interviewed during the visit.

DiLenge said that Ford officials had been cooperative when the investigators visited the company's Dearborn, Mich., office Friday. Firestone officials pledged the same cooperation.

Bridgestone/Firestone officials have tried to assure the public, saying they now have replaced 1 million of the recalled tires. The company also is looking at possibly increasing production of the replacement tires at the Japanese plants of its Bridgestone parent as a way of filling the demand for new tires in the United States.

Also on Monday, Ford urged Bridgestone/Firestone to recall its tires made in Venezuela. Ford said it has asked Firestone to follow its example and replace tires manufactured in Valencia, Venezuela, which are labeled as having three nylon layers, but actually only have two. Safety advocates say the nylon layers help the tread from separating from the tires under high stress.

"Ford of Venezuela folks have suggested to Firestone people that they want to have their own recall," said Ford spokesman Mike Vaughn. "We stepped up to the plate and did it early. Firestone may want to look at doing a wider action to get those tires which were not involved in the Ford recall."

However, Firestone spokesman Ken Fields said there are no plans for a recall, and suggested that there was a misunderstanding at Ford about a recall.

"We have been made aware of an unintentional mistake in the labeling process. We have corrected it," he said.

Meanwhile, a Texas judge has ordered Bridgestone/Firestone's chief executive officer, Masatoshi Ono, to testify on Sept. 15 in the case of a couple killed in May 1999 when their Ford Explorer, equipped with Firestone ATX tires, overturned, a company official confirmed Monday.

"We'll certainly comply," Firestone spokesman Walt Sharp said.

Lawyers representing the children of Patricio and Nidia Leal issued a statement Sunday saying Texas State District Judge John Pope on Friday ordered Ono and other Firestone executives to give a deposition in the lawsuit in Nashville next month.

The Wall Street Journal reported Monday that the recall has strained relationships between the tire maker and the world's second-largest automaker, and may lead Ford to avoid a single source for tires in the future. It also said Ford officials are weighing whether they can continue to use Firestone tires on the best-selling Explorer sport/utility vehicle, due to the negative publicity.

Sharp said that Firestone had no comment on the Journal's report, and Ford public affairs officials did not return phone calls seeking comment.

In a separate story, the Journal reported that Venezuelan authorities are expected to submit a report to the country's attorney general Tuesday blaming both Bridgestone/Firestone and Ford for numerous accidents there, and opening the two companies to possible criminal charges as well as civil lawsuits.

Firestone's Sharp said that the company has not yet had a chance to examine the tires at issue in Venezuela, and that it is cooperating with authorities there. He pointed out that there has been no formal statement from the Venezuelan consumer affairs officials now handling the investigation.

"We are cooperating with the authorities in Venezuela. We will work with them concerning the facts surrounding any of our tires, and we're confident that when this situation is reviewed, it will be demonstrated that our company did the right thing," Sharp said, adding that consumer affairs officials had not yet filed their report with the Venezuelan attorney general.

Also on Monday, Ford urged Bridgestone/Firestone to recall its tires made in Venezuela. Ford said it has asked Firestone to follow its example and replace tires manufactured in Valencia, Venezuela, which are labeled as having three nylon layers, but actually only have two. Safety advocates say the nylon layers help the tread from separating from the tires under high stress.

"Ford of Venezuela folks have suggested to Firestone people that they want to have their own recall," said Ford spokesman Mike Vaughn. "We stepped up to the plate and did it early. Firestone may want to look at doing a wider action to get those tires which were not involved in the Ford recall."

However, Firestone spokesman Ken Fields said there are no plans for a recall, and suggested that there was a misunderstanding at Ford about a recall.

"We have been made aware of an unintentional mistake in the labeling process. We have corrected it," he said.

graphicFacing increasing pressure from some advocacy groups and attorneys to broaden the recall, Firestone executives also said they would hire a tire expert to conduct an independent analysis of the types of tires involved in the fatal accidents.

"We appreciate the patience and understanding that so many of our Firestone customers have shown during this major undertaking," said John Lampe, executive vice president of Bridgestone/Firestone Inc. "We're doing everything in our power to replace all recalled tires as quickly as possible."

The company got some measure of support Monday when Fujio Cho, president of leading Japanese automaker Toyota, told reporters there that it has no plans to change its relation with Bridgestone/Firestone. Also on Saturday, U.S. Secretary of Transportation Rodney Slater said U.S. authorities do not see a need to broaden the recall to other models at this time.

In Japan Monday, Bridgestone officials said they are considering further accelerating production in Japan to support the U.S. recall. A company spokesman said details of the plan, such as the amount of additional production and the number of plants involved, likely will be announced early Tuesday afternoon in Tokyo.

Bridgestone/Firestone manufacturing plants in the United States have increased production by 7,000 tires daily to meet the replacement demand created by the recall.

Ford also announced last week that it is halting production at three of its SUV and pick-up plants for three weeks starting Monday in order to make 70,000 tires slated for new production available to replace recalled tires instead.

The idling of Ford plants caused analysts to lower third-quarter estimates for Ford, but raise them for the fourth quarter. The latest to do so was Gary Lapidus of Goldman Sachs, who Monday cut the third-quarter earnings estimate for Ford by 6 cents to 52 a share, and raised the fourth-quarter estimate by 2 cents to 92 cents a share.

The idling of plants is being felt by Ford suppliers as well. Late Friday, parts maker Lear Corp. (LEA: Research, Estimates) said that second-half earnings would be 9 cents a share lower in each of the third and fourth quarters. Joseph Phillippi, auto analyst for PaineWebber, said about 6 cents of that shortfall is due to the closing of plants, and the rest to the strength of the dollar compared to the euro and the Mexican peso.

On the litigation front, a Chicago law firm filed suit there Monday against both Firestone and Ford seeking class action status to cover injury and medical costs of victims of accidents that followed the tire failure.

The plaintiffs in the suit are Martha and Harry Benford, who were injured after an accident on a highway outside El Paso, Texas, two years ago, said Ted Rzeszewski, attorney with the firm, Kenneth Moll & Associates.

Shares of Bridgestone gained 82 yen (77 cents) to 1,598 yen ($14.96) in Tokyo Monday, while Ford (F: Research, Estimates) closed down $1.50 to $26.12 in U.S. trading. Back to top

-- from staff and wire reports

  RELATED STORIES

Ford defends tire recall - Aug. 25, 2000

Ford, Firestone to testify - Aug. 24, 2000

Ford curtails production - Aug. 21, 2000

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.