The Firestone Tire Controversy
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Case Code : BECG005
Case Length : 12 Pages
Period : 1991 - 2002
Pub. Date : 2002
Teaching Note : Available
Organization : Firestone tire company, NHTSA, NUTS
Industry : Automobile Industry
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Ford and Firestone seemed to have known about the flaws in the tires for almost a year prior to the recall but it wasn't until NHTSA launched a preliminary investigation that Firestone announced a voluntary recall. Questions were raised about how Ford and Firestone responded to the first evidence of tire problems...
Firestone's Response to the Crisis
Ever since Firestone announced its voluntary recall of Firestone tires in August 2000, its Chief Executive, Yoichiro Kaizaki (Kaizaki) did not make a public appearance. In September 2000, Business Week wrote that Firestone's behavior spoke volumes about the huge gap that existed between the US and the Japanese management...
Analysts felt that Ford's response to the crisis was also not very positive.
They chided Ford CEO, Jacques Nasser (Nasser) for appearing too stiff on
Television as a spokesman for Ford...
The Controversy Deepens
In mid 2001, a committee was formed consisting of the members of the US House
Energy and Commerce to look into the problem of tread separation of Firestone
tires. During the same time, Ford announced plans to replace about 13 mn
Firestone tires used on its vehicles...
The Trial Begins
In August 2001, out of the hundreds of lawsuits filed by the victims and their
families, only one made it to the trial. This case involved a South Texas family
injured in a crash in a Ford Explorer (Refer Exhibit VIII). The trial came more
than a year after NHTSA said that it was looking into the problem...
The Future of Firestone and Ford
In mid 2001, Firestone announced that it would shut down one of its US
plants, which could be its Decatur, Illinois, plant by no later than
December 31, 2001. This would eliminate some 1, 500 jobs. The Decatur
Illinois plant produced many of the 6.5 mn Firestone tires recalled in
Exhibit I: Deaths and Injuries Resulting from Firestone Tire Failures in Us (As
on February 6, 2001)
Exhibit II: NHTSA Firestone Incident Database
Exhibit III: NHTSA Firestone Incident Database Total Crashes
Exhibit IV: NHTSA Firestone Incident Database Fatality Crashes
Exhibit V: NHTSA Firestone Incident Database Injury Crashes
Exhibit V: NHTSA Firestone Incident Database Crashes with Rollover
Exhibit VII: Chronology of Events in Ford/Firestone Controversy
Exhibit VIII: The Trial