Originally created 08/20/00

Wheels of misfortune



In the past few years, Bridgestone/Firestone Inc. has been gaining ground on competitors, in part, analysts have said, because of its relationship with Ford and the success of its sport utility vehicles.

The Nashville, Tenn.-based company opened a tire factory in Aiken two years ago and soon afterward announced the factory would be expanded so it could make about 25,000 tires a year.

Ford Explorer sales were booming, driving demand.

But on Aug. 9, Bridgestone/Firestone announced the second-largest tire recall in the United States. Without admitting there was anything wrong with 6.5 million truck and sport utility vehicle tires it was recalling, the company said it would replace them at no charge to customers.

The tires, under investigation by the National Highway Traffic Safety Administration, are possibly related to hundreds of accidents and more than 60 deaths.

Incidents showed that the recalled tires - radial ATXs, radial ATX IIs and some Wilderness ATs - have shredded. The tire tread appears to have peeled off.

Bridgestone/Firestone apologized for its slow response. It said it would cooperate fully with the investigation and doubled production of its replacement tires - some of which are made in Aiken.

But will this be enough?

Controversy

This is not the first tire recall involving the Firestone brand. Firestone Tire & Rubber recalled more than 14.5 million steel-belted radial tires in 1978 because they were losing air. After that, some customers never trusted the Firestone name again.

That recall was, and still is, the largest tire recall in U.S. history.

The 100-year-old company, named after founder Harvey S. Firestone, survived - but in a somewhat different form. The recall nearly bankrupted the company. It was acquired by Tokyo-based Bridgestone Inc. and renamed Bridgestone/Firestone Inc. in 1988.

The corporate headquarters moved from Akron, Ohio, to Nashville in 1992.

But analysts say Bridgestone - also named after its founder, Shojiro Ishibashi (Ishibashi is translated into English as "stone bridge") - is in a much different position now than Firestone was more than 20 years ago.

Parent company Bridgestone is a multinational corporation with sales of more than $20.4 billion. But about 20 percent of the company's revenue comes from products other than tires, including building materials, tennis shoes and golf balls.

So its chances for survival are good.

In addition, Ford Motor Co., a Firestone partner, is standing behind the tire. Ford founder Henry Ford and Harvey Firestone forged the relationship a century ago.

About 70 percent of the recalled tires are installed on Ford vehicles, and the automaker said Wednesday it believes Firestone has actively responded to concerns. Ford strongly defended the company against charges that it failed to recall tires until threatened with NHTSA action.

Still, the recall - and how it is being done - has stirred controversy and litigation. In just the past few days, the number of complaints to the NHTSA about the latest recalled tires has risen dramatically.

The agency now has received more than 750 complaints, including 100 injuries and 62 deaths. A week ago, there were 300 complaints, including ones about 80 injuries and 46 deaths.

In addition to the rising numbers of incident reports, Bridgestone/Firestone has been battling customer confusion about which tires can be replaced and when motorists can get new ones.

Several states are concerned that the recall process - which the tire company said could take almost year - is inherently unfair. South Carolina's attorney general already has filed a lawsuit seeking a court injunction to change the process.

Priority is being given to four states - Arizona, California, Florida and Texas - where 80 percent of bad tire claims have been made. Other states will have to wait longer to get replacement tires.

Contradictions

So far, one of the biggest problems with the recall is that Bridgestone/Firestone has not sent clear messages. Executives have made statements that don't seem to jibe.

The most obvious instance was last week, when the company appeared to flip-flop on its position regarding the replacement of bald tires. Executive Vice President Gary Crigger initially said the company would replace recalled tires "no matter how many miles they have on them."

But the next day, the company sent a memo to retailers that said the recall "does not include tires previously removed from service or tires worn below two-thirty-seconds (of an inch) tread depth."

Another executive vice president reiterated that policy Tuesday.

But on Wednesday, officials reversed it again.

Other examples of apparent contradictions include:

  • The company asserted its tires are among the safest on the road and stated that it is recalling tires to "ensure consumer safety." If nothing is wrong with the tires, consumers and some state attorneys general have asked, why is Bridgestone/Firestone spending an estimated $350 million to recall them?
  • The company stated it does not know why the tires are involved in an unusually high number of accidents, and said that warm climates and heat are key factors in the reported incidents. Why does the company seem so certain about a cause it says it does not yet know?
  • The company stated the recall would be rolled out in three phases, with some states getting priority over others - based on where the incidents occurred - and offered to replace any customer's tires immediately. If the recall is open to everyone, why prioritize who will get replacements?
  • Questions

    Bridgestone/Firestone representatives said they just do not have the answers to many of the questions being put to them. Right now, they have said repeatedly, they are concentrating on getting information about how, where and when customers can get new tires.

    The company has employed a St. Louis-based public relations company, Fleishman-Hillard, to help and is holding news conferences daily.

    But many questions linger.

    The company is not responding, for example, to questions about how the increased production has affected the Aiken factory, or to questions concerning litigation.

    But as the questions mount, so do the lawsuits.

    Some published reports put the lawsuit count at more than 100, and that might be what ends up costing the company the most - litigation and settlement fees.

    Personal injury lawsuits filed by those injured or by families of those killed in wrecks involving tires could drag on for years.

    In comparison, one of the principal manufacturers of silicon breast implants, Dow Corning, was forced into Chapter 11 bankruptcy protection in 1995, three years after getting out of the implant business.

    Dow lost multimillion dollar lawsuits concerning its controversial product, and by the time it filed for court protection it was up against about 20,000 legal cases against the company.

    The true impact of the recall, depending on what NHTSA investigators discover, might end up being far more than the $350 million, or $54 per tire, that the company is estimating.

    And the Firestone name - the legacy of the company's founder - might be tarnished forever in ways that are impossible to measure in dollars.

    Bridgestone/Firestone Inc.

    Parent company: Bridgestone Inc.

    Headquarters: Nashville, Tenn.

    Annual sales: $7.4 billion

    Employees: 45,000

    Local employees: 750

    Tires produced locally: About 25,000

    Tire-related incidents

    Reports: 750

    Injuries: 100

    Deaths: 62

    Recalled tires

    15-inch radial ATX

    15-inch radial ATX II

    15-inch Wilderness AT (made in Decatur, Ill., only)

    Consumer hot line: (800) 465-1904

    Reach Frank Witsil at 823-3352.