WASHINGTON (Sept. 8, 2000)—It may have been the worst day ever in the corporate life of Bridgestone/Firestone Inc. And, as one congressman noted, it´s far from over.
"This is not the end, but just the beginning of this inquiry," said Rep. W.J. "Billy" Tauzin, R-La., who chaired a joint House Commerce subcommittee hearing on the Firestone Radial ATX, Radial ATX II and Wilderness AT tire recall Sept. 6.
In back-to-back Senate and House hearings which together lasted more than 13 hours, Bridgestone/Firestone CEO Masatoshi Ono and two other company executives faced hostile questioning on what they knew about possible defects in the 6.5 million recalled tires, when they knew it, and why they didn´t act faster to prevent at least some of the 88 highway deaths thus far attributed to the tires.
Mr. Ono—who answered questions with the help of an interpreter—read a prepared statement at both hearings in which he "accept(ed) full and personal responsibility" for the events leading to the recall and the hearings.
BFS execs on the hot seat
Legislators at the hearings, however, were in no mood to accept Mr. Ono´s apology. They were upset, among other things, by:
*An internal memo released by Ford Motor Co., dated March 12, 1999, stating that Bridgestone/Firestone´s legal department had "serious reservations" about replacing Firestone tires on Ford Explorers in Saudi Arabia because it felt the companies would have to notify the Department of Transportation. (The tires subsequently were replaced—without notifying the DOT.)
*BFS´ refusal to include an extra 1.4 million tires in the current recall at the behest of the National Highway Traffic Safety Administration.
*BFS´ failure to supply requested test data on the recalled tires from 1989 and 1990, particularly data on whether the tire maker had ever run high-speed tests of the tires at Ford´s recommended air pressure of 26 psi. Whether Ford Explorers are unstable at a higher tire pressure, and whether the 26-psi recommendation exacerbated the tread separation problem, was a major topic of discussion at the hearings.
Mr. Tauzin and others at the House hearing appeared unconvinced by Bridgestone/Firestone´s explanations about the Ford memo.
Bob Wyant, vice president of quality assurance, said he had only been made aware the day of the hearing regarding the March 1999 discussions about Ford´s "customer satisfaction action" in Saudi Arabia.
Gary Crigger, executive vice president of business planning, said the company´s legal department told him "there was a question about this issue," but not a decision to decline to participate because of fears the DOT would find out.
Messrs. Wyant and Crigger promised to get the high-speed testing data to Mr. Tauzin, but said they had trouble finding it despite "a round-the-clock search" because it was "old data."
They also said the company would make a decision "within days" about whether to include the 1.4 million tires identified by NHTSA in the recall. The agency had relied on claims data to identify the tires as having high tread separation rates, they explained. But claims data in tire populations as small as the ones NHTSA studied can easily be skewed, and BFS needs to study other data to determine whether the tires are, indeed, defective, they said.
Conversely, Messrs. Wyant and Crigger said Bridgestone/Firestone erred in the case of the ATX, ATX II and Wilderness AT tires because it didn´t study claims data. The warranty, adjustment and police information it usually studies to determine a tire line´s performance covered up the defect trend in those tires, because so many of the reports involved underinflation, faulty repairs and other normal circumstances.
"We´re looking for a needle in a haystack.|.|.|, but when the needle is there, it´s terrible," Mr. Wyant said. "We´ve used adjustment data because it´s a more accurate indicator of defects. But based on claims data, not really knowing the cause, we took out 14.4 million tires." (The figure of 14.4 million represents all the recalled ATX, ATX II and Wilderness tires made; the figure of 6.5 million represents company estimates of how many are still on the road.)
Nasser blames BFS
Whereas Bridgestone/Firestone suggested the blame should be shared, Ford officials were true to their message of the past couple of weeks: that the recall is strictly a tire issue.
Ford CEO Jacques Nasser depicted Bridgestone/Firestone as hampering Ford´s efforts at every step to uncover the truth about the Explorer´s OE tires.
The auto maker asked BFS for its claims data on the tires four times in June and July before BFS finally surrendered them on July 28, Mr. Nasser said.
"Ford did not know that there was a defect with the recalled tires until we virtually pried the claims data from Firestone´s hands and analyzed it ourselves," he said. "It was only then—a few days before the recall was announced—that Ford engineers discovered conclusive evidence that the tires were defective."
To prevent future situations like the current recall, Mr. Nasser said, Ford is implementing two reforms:
*Ford will notify NHTSA immediately of all foreign recalls and customer satisfaction programs from now on, and;
*The auto maker will work with tire makers, NHTSA and Congress to develop an "early warning system" to detect the first signs of tire defects.
"This early warning system must use comprehensive, real-world data that—we now know—is so critical to spotting defect patterns," he said.
Not having claims or warranty data from Bridgestone/Firestone was a large part of Ford´s difficulty in identifying the tires as defective, Mr. Nasser said.
He said it was standard practice for auto makers to leave tire warranty data to their suppliers. But an Associated Press story Sept. 7 quoted Brook Lindbert, General Motors Corp.´s director of tire and wheel systems, as saying it started covering tires under its vehicle warranties in 1996.
Regarding Bridgestone/Firestone, Mr. Nasser said, "When you look at the data on many of their tires, they have the best tires." The two companies have a relationship "that goes back to our beginnings," but "recently events have been disappointing to us." Nearly 3 million Goodyear OE tires on the Explorer, he said, have shown no problems like those with the Firestone tires.
"We value our customers´ safety and peace of mind above all," he said. "Our relationship with Firestone, as with any other supplier that let us down, is on a day-to-day basis."
Just how day-to-day was demonstrated by reports that Ford has made overtures to Goodyear to join Michelin North America Inc. as an alternative tire supplier for the 2002 Explorer. A Goodyear spokesman confirmed that Ford has approached the company, but "nothing has been finalized," he said.
Ford, like Bridgestone/Firestone, received its share of hostility from the Senate and House panels. Perhaps the high point of anger came from Sen. Arlen Specter, R-Pa., who suggested that murder indictments against Ford and BFS officials might be appropriate.
"When corporate officials know there is a defect and permit that situation to continue, that is reckless disregard for the lives of others, and that rises legally to the level of second-degree murder," Mr. Specter said.
Clarence M. Ditlow III, executive director of the Center for Auto Safety, and Joan Claybrook, president of Public Citizen, also insisted that Ford and BFS are equally to blame.
Mr. Ditlow, who led the fight for a recall of the Firestone 500 radial in 1978, said the current recall is very similar. But "there is a key difference—the role of the vehicle on which the tires are mounted," he said.
"Although the Explorer superficially drives like a passenger car, it is easier for a driver to lose control of an Explorer than a passenger car when a tire fails," Ditlow said. "When the Explorer goes out of control, it is more likely to roll over than a passenger car, and when it rolls over, its occupants are likely to be injured."
Ms. Claybrook, who presided over the Firestone 500 recall as NHTSA administrator under Jimmy Carter, blamed not only Ford and BFS, but also NHTSA for not catching the problem before it escalated.
"NHTSA was caught flatfooted because it rarely pushes companies to obey the law," she said. She recommended various changes to current regulations, including tougher penalties for corporate officials, extending Uniform Tire Quality Grading to cover truck as well as passenger tires and updating Federal Motor Vehicle Safety Standard 109, which covers tires.
"The tire safety standard is 32 years old, and it is not effective for testing radial tires," Ms. Claybrook said.
Sue Bailey, newly appointed NHTSA administrator, said her agency plans to propose just such an update in spring 2001, and has set an October deadline for comments from tire makers.
Ms. Bailey mentioned the work the tire industry has performed since 1997 to revise the standard internationally through the Transatlantic Business Dialogue. (The Rubber Manufacturers Association petitioned the agency for a revision of 109 in January 1999.)
Ms. Bailey, who herself faced hostile questioning, also said NHTSA would take steps to require that all auto and tire makers report foreign recalls and mass consumer adjustments in the future.
Simultaneously, Sen. Patrick Leahy, D-Vt., introduced legislation in the Senate to require U.S. tire and auto makers to notify DOT of foreign recalls within two days. Mr. Leahy also petitioned the Justice Department to investigate the Firestone recall for possible civil or criminal penalties, a request U.S. Attorney General Janet Reno has granted, according to the Associated Press.