Firestone And Ford: The Ride Gets Bumpier
With each day since the voluntary recall of 6.5 million Firestone tires in the U.S., the situation facing Ford Motor Co. and Firestone's parent Bridgestone Corp. gets increasingly dire. Government investigations in the U.S. and South America are intensifying, and Venezuelan investigators are now expected to recommend criminal charges against both companies. The crisis has become a public relations nightmare, with Ford acknowledging it knew of tire failures on its Explorer SUVs in Venezuela as far back as 1998 and Firestone failing to act when Ford first alerted the company of a potential problem.
It gets worse. BUSINESS WEEK has learned that the National Highway Traffic Safety Administration will launch an engineering analysis within the next few days of all 47 million 15- and 16-inch ATX, ATX II, and Wilderness tires made by Firestone. The decision to upgrade the investigation means the NHTSA isn't satisfied with Firestone's voluntary recall. "If we felt it was sufficient, we would have ended our investigation," says NHTSA spokesman Ray Tyson. "We don't know if it was sufficient."
At the same time, the federal safety agency expects to raise the official U.S. death toll of 62, announced in mid-August. The new number, which NHTSA declined to make public on Aug. 30, is expected to include fatalities from accidents in which Firestone tires other than those recalled on Aug. 9 were involved. NHTSA has also contacted Ford requesting details about what they learned about the faulty tires that they replaced for overseas customers.
FINGER-POINTING. So what must Ford and Firestone do? For the sake of their brands and consumer confidence, they should find a better way to work together. So far the two have been squabbling, pointing fingers, and providing an unclear picture of what is going on. The result: The pair has been pummeled by a constant stream of daily revelations that suggest neither has been totally forthcoming. "It's real clear they've done nothing to help this story go away," says Owen Blicksilver, a crisis management expert at New York-based Citigate Dewe Rogerson. And even Ford consultant Noel M. Tichy, a management professor at the University of Michigan, acknowledges that the fact that two companies are involved has dramatically complicated getting out a coherent explanation.
The confusion about what really caused the problems and why the companies appear to be dragging their feet has piqued Congress. Top executives of both Ford and Firestone have been summoned to Washington for congressional hearings starting Sept. 6. "We need to find out who knew what and when," says an aide to Representative W.J. "Billy" Tauzin (R-La.), who heads the House Commerce subcommittee on telecommunications, trade, and consumer protection. "Did Firestone ignore the law, or was the law not tough enough? That is a burning question that Congress will be looking at." So far, only Masatoshi Ono, Firestone's CEO, has agreed to testify. Ford CEO Jacques A. Nasser has said it was more important for him to stay in Dearborn, Mich., to work on the problem.
The companies will have more to contend with than just the U.S. government. On Aug. 31, Venezuelan consumer protection officials were expected to recommend that both Ford and Firestone be charged with criminal negligence after investigating more than 60 deaths in that country linked to accidents involving Ford Explorers equipped with Firestone tires. Ford's Venezuelan subsidiary is already racing to voluntarily replace Firestone tires with Goodyears on 30,000 Explorers at a cost of $15 million.
Further out, the unsettling prospect of a raft of lawsuits awaits Ford and Firestone. This has led to much jockeying over blame. But with the number of U.S. deaths potentially creeping above 80 according to consumer safety advocates, and damage to their brands mounting, Ford and Firestone should focus their energies on explaining the problems better and finding a solution.