The Firestone Tire Controversy

"This is a test of character for Jac. He's been saying we are a consumer focussed company, and the way he handles this will determine his credibility going forward—both internally and externally."

- A Ford insider, commenting on the Firestone tire controversy (Fortune, September 18, 2000)

"Firestone is dead brand driving."

- Jack Trout, Consultant, Trout & Partners, a marketing strategy firm, commenting on Firestone's brand image after the tire recall.

The Firestone Tire Controversy: Introduction

In May 2000, the National Highway Traffic Safety Administration (NHTSA)1 in the United States (US) issued a letter to the Ford Motor Co. (Ford)2 and Firestone Inc. (Firestone)3 asking for information about the high incidence of tire failures on the Ford Explorer Sport Utility Vehicles (SUVs). During July, Ford analyzed the data on tire failures. The analysis revealed that Firestone Radial 15 inch ATX and ATX II tires produced in North America and Wilderness AT tires produced at Decatur, Illinois Plant had very high failure rates with the treads peeling off. When the tires failed, the vehicle often rolled over and killed the occupants. In August 2000, Firestone amid concerns over tread separation, accidents, injury and death announced a voluntary recall of all Radial ATX and ATX II and Wilderness AT tires. Around 6.5 mn tires were recalled which included 3.8 mn Radial ATX and ATX II tires, and 2.7 mn Wilderness AT tires. These tires were original equipment on certain Ford Explorer SUVs, Mercury Mountaineer, Ford Ranger pick up trucks and Mazda Navajo and B-series pick up trucks. (Refer Table I).

TABLE I
FIRESTONE TIRES INSTALLED ON VEHICLES

The Firestone tire recall was perhaps the biggest auto safety crisis in the US history. NHTSA put the death figure in February 2001 at 174 (Refer Exhibit I) which has risen from 101 deaths reported in September 2000. However, analysts felt that there were as many as 250 deaths and more than 3000 injuries associated with the defective tires. Most of the deaths occurred in accidents involving the Ford Explorer and the victims and their families filed hundreds of lawsuits. (Refer Exhibits II-VI for a history of Firestone /Ford related incidents in the US).

In May 2001, Firestone announced that it was severing its ties with Ford and alleged that the problems in the Ford Explorer caused 174 deaths. Firestone alleged that Ford was trying to divert attention from the problems with Explorer. (Refer Exhibit VII for a chronology of events leading to Firestone's decision to stop supplying new tires to Ford.)

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1] The US Federal agency entrusted with powers to investigate safety defects in vehicles.
2] Ford was the second largest automobile manufacturer in the world.
3] Firestone Inc based in Nashville, Tennessee, US was the largest subsidiary of Bridgestone Corporation of Japan, the world's largest tire and rubber manufacturer. Bridgestone/Firestone Inc manufactured Bridgestone, Firestone, Dayton and other private brand tires.