The Firestone Tire Controversy

The Controversy Deepens Contd...

Firestone alleged that Ford Explorer without Firestone tires were still experiencing rollover problems. Nasser conceded that some of the Firestone tires involved in the recall were apparently world class tires and did not appear to have safety problems but said the tires needed to be included in the recall because of loss of customer confidence in the Firestone tires. The committee after hearing from both the sides said that there was a need for further analysis by an independent source such as NHTSA about both the Explorer and the tires.

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 trial involved Dr. Rodriguez (Rodriguez) whose Firestone equipped 1998 Ford Explorer suffered a blowout and flipped over an Mexican highway. This injured Rodriguez, his brother Jorge and three-year son Joelito and left his wife Marisa, wheelchair-bound for life. Ford was already out of the lawsuit having settled the case with Rodriguez for an undisclosed amount.

However, the jury said it would still consider whether Ford was responsible for the crash. If the jury found that both Ford and Firestone were responsible for the crash, the companies would have to share the financial liabilities on a percentage basis. If they found Firestone responsible for more than half of the crash, then Firestone would be responsible for the entire payment instead of a percentage.

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 August 2000. Bridgestone recorded a net loss of 30.57 bn yen ($ 250.3 mn) for the first half of 2001 because of the tire recall. In the first half of 2000, Bridgestone recorded a net profit of 18.90 bn yen. An extraordinary loss of $ 570 mn taken by Firestone in June 2001 to pay lawsuits and clear up other costs related to the tire recall was the main reason behind the loss.

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Case Details

Case Code : BECG005
Themes: Ethics in Business
Case Length : 12 Pages
Period : 1991-2002
Organization : Firestone tire company, NHTSA, NUTS
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Automobile Industry

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