Made in China: Faulty Tires

Richard Kuskin was sitting in the dingy basement office of his Union (N.J.) import firm one day in May, 2006, when the phone rang. One of his distributors in New Mexico was on the line. There had been an accident involving an ambulance riding on Chinese-made tires sold by Kuskin's firm, Foreign Tires Sales Inc. The tires had blown out, causing the driver to lose control. No one was hurt. Still, the incident scared Kuskin. For several months he'd had a nagging feeling that his Chinese partner, Hangzhou Zhongce Rubber Co., had cut out a key safety technology. For Kuskin, the ambulance incident was like a flashing red warning light.

After hanging up, Kuskin called his engineer, Gary Eiber, and dispatched him to New Mexico with instructions to inspect the shredded tires. Then Kuskin called a product liability attorney. Kuskin knew the costs of a recall could crush his company, which has 13 employees and last year sold just 700,000 tires. He also knew that getting Hangzhou Zhongce to pay for some of the recall would be hard. Chinese companies aren't legally obligated to execute U.S.-ordered recalls, and, says Kuskin, his supplier was denying there was a problem. "I didn't sleep too good that night," he recalls.