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News > Companies
Firestone, Ford face Congress
September 6, 2000: 12:15 a.m. ET

Ford pins blame on tire maker for ignoring reports of tread separation
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NEW YORK (CNNfn) - Ford Chairman Jacques Nasser has made his plea to American consumers through a series of television spots but Wednesday he and his counterpart at Bridgestone/Firestone must convince congressional investigators that their companies are handling a massive tire recall in a timely and responsible manner.

Ford attempted to strengthen its case late Tuesday by releasing documents that indicated the automaker had no reason to doubt the safety of tires linked to at least 88 deaths. The documents, which included correspondence between Ford and Bridgestone/Firestone, support the contention that the tire maker ignored requests that it examine cases of tread separation reported worldwide, Ford said.

The hearings, which will feature testimony from Nasser; Masatoshi Ono, CEO of Bridgestone/Firestone Corp.; a researcher at State Farm Insurance and officials from the U.S. Transportation Dept., are scheduled to begin Wednesday morning.

The Senate Appropriations subcommittee on transportation has set its hearing for 10 a.m. EDT. Two House Commerce subcommittees on consumer protection and investigations follow with a joint hearing at 1 p.m.

graphicAs the hearings get underway, one question is likely to stand out above all others: When did Bridgestone/Firestone first know it had a serious problem with some of its tires?

"What we are interested in is: What went wrong with this recall? Why didn't it happen sooner?" Rep. Billy Tauzin, R-La., the House Commerce Committee chairman who is overseeing the hearings, told CNNfn's In the Money program Tuesday. "Why didn't Ford, for example, ask Firestone to test at high speeds? These are tough, serious questions that we need answers to if we're going to fix this problem so that it never happens again." [WAV 603KB] [AIFF 603KB]

Tauzin will also want to know if Firestone tried to convince Ford to keep quiet about tire problems in the Middle East, as evidence obtained by the committee suggests.

"There's an interesting document that indicates there were discussions by Ford and Firestone as to how they would handle the Mideast problem," Tauzin said. "One of the motivations to not recall the tires, but to have Ford to assume responsibility, was Firestone's concern that it would trigger action by DOT (the Department of Transportation) here in America."

Late Tuesday, Ford executives warned that the company will reevaluate its supplier relationship with the Firestone "day to day" in light of the tire maker's handling of the recall.

"We are lately disappointed in their efforts and we are going to look on a day-to-day basis at the future of our relationship," Ford Vice President Jason Vines told reporters in a conference call.

Vines said the two companies' relationship dates back to 1906 and that Ford has no immediate plans to drop the tire maker as a supplier.

Ford is not the only disappointed Firestone partner. Also late Tuesday, public relations firm Fleishman-Hillard International Communications Inc., dropped the tire maker as a client.

"We resigned because it became evident we could no longer be of service to Bridgestone/Firestone," said Dave Senay, general manager of Fleishman's St. Louis office.

Authorities began investigating the tires in August after receiving reports that the rubber peeled off the tire casings on some versions of the Firestone Wilderness tires, as well as its ATX and ATX II models. The tires are used on a number of sport/utility vehicles, but most of the complaints have focused on the Ford Explorer. The National Highway Traffic Safety Administration Thursday raised the number of deaths it is investigating as possibly being caused by the defective tires to 88.

Groups call for wider recall


The hearings come as some safety advocates, lawyers, customers and even government officials are calling for a broader recall of tires to include the Wilderness tires not made at Firestone's Decatur, Ill., plant, as well as some 16-inch versions of the recalled models.

The National Highway Traffic Safety Administration warned consumers Friday to consider replacing about 1.4 million of the non-recalled tires, although Firestone officials resisted the calls for a broader recall. Tauzin told CNNfn that he wants to see more tires recalled.

"I'm disappointed, frankly," he said. "NTSHA is now telling us that the 16-inch Firestone tires ought to be recalled as well. They have as much risk as the 15-inch tires subject to the recall. They're going to have to answer questions about that tomorrow.

"It's my understanding is that those are the tires that were replaced in the Middle East," he added. "If they were bad in the Middle East, if human life in the Middle East was sacred enough for them to be replaced on trucks there, why not in America?"

A Ford spokesman said engineering studies found that the ways the 16-inch tires were being used in the Middle East caused problems there and led to the recall. He said there is still no indication that the tires had a problem in use in the U.S.

One safety-advocacy group, The Safety Forum, a research group that supports the work of plaintiff attorneys, issued a statement Tuesday that it has found 95 incidents of cracking, bulging or flattening of the non-recalled tires, 25 incidents of tread separations or blowouts and five accidents that resulted in injuries related to tires that were not subject to recall.

"Ford and Firestone are playing a shell game with people's lives by using these very tires as replacement tires," said Tab Turner, an attorney with The Safety Forum.

A Firestone spokesman said the company had not seen the Safety Forum's data and could not comment on its findings. Ford's Vaughn said that while Ford can support NHTSA's call for a wider recall, it does not believe the Safety Forum's analysis is valid.

"Sure, tread separations, blowouts happen with any tires," he said. "It's possible to come forward with examples with any model. What we've determined through the analysis is the (recalled tires) have higher failure rates than other tires. What these plaintiffs' shills are saying is we should replace good tires with good tires, which would take our eye off the main goal, which is taking bad tires off the road."

Ford a buy?


Some auto analysts have started issuing statements saying that battered Ford stock is getting to be a good investment, given current prices.

graphic"We believe that the Firestone recall is a storm that will intensify with the upcoming congressional hearing and then quickly pass," said John Casesa, analyst with Merrill Lynch. "Based on our analysis of the outcome of other high-profile, controversial recalls, the stock should make a recovery."

Casesa Tuesday reiterated his recommendation on Ford stock as a short-term accumulate and long-term buy. Joseph Phillippi, analyst with PaineWebber, said that Ford stock may fall some more before it recovers, but that a recovery is expected.

"While we view the current Firestone issue as serious (but temporary), we expect a solid 2001 performance with the launch of the new Explorer, Escape, Volvo S60, and Jaguar X400," Phillippi said.

Shares of Ford (F: Research, Estimates) gained $1.31 to close at $26.31 in trading Tuesday, while shares of Firestone's Japanese parent Bridgestone ended a recent slide to gain 138 yen, or $1.30, in Tokyo trading Tuesday, to close at 1,338 yen, or $12.64. Back to top

-- from staff and wire reports

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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.