WASHINGTON (Oct. 5, 2000) — Goodyear lost the Explorer and other Ford original equipment contracts because it couldn´t match the pricing of Bridgestone/Firestone Inc. and other competitors, according to a letter from Ford Motor Co. to Goodyear.
Another document, meanwhile, says that nearly one-third of 32 possible tread separation accidents involving the 1995-99 Ford Explorer and Mercury Mountaineer could be traced to Goodyear tires. According to at least one BFS official, this contradicts Ford´s assertion that Goodyear OE tires for the Explorer were virtually flawless compared with Firestone tires.
A Goodyear spokesman, however, said both documents must be understood in context. OE pricing is a complex issue, he said, and the tread separation document says nothing about Goodyear´s real-world experience with its OE tires for the Explorer.
Goodyear tires were priced at "a 2-5 percent premium" over tires supplied by Goodyear´s competitors, according to a Jan. 26, 1996, letter from C.J. Hole, Ford director of chassis core purchasing, to Les Connolly, Goodyear director of OE tire marketing and sales.
"As we discussed in our meeting last week, the material cost increases incurred at Goodyear are not consistent across the industry and, therefore, are not addressed by the material clause in our agreement," Mr. Hole wrote. "The pricing level disparity between Goodyear and your competitors is a significant concern to us...Either an economic increase or foregoing the January 1996 contractual price reduction would obviously make the situation unacceptable."
Mr. Hole identified size P235/75R15 tires for the Ford Explorer and Ranger, as well as tires for the F-series trucks and Econoline vans, as being overpriced from Ford´s standpoint.
The Ford letter is one of 135 documents released to date by the House Commerce Committee as part of its ongoing investigation of the alleged defects involving Firestone OE tires on the Ford Explorer. Another document from House Commerce, dated Sept. 14, 1999, and titled, "1995/99 Explorer/Mountaineer Firestone P255/70R16 Tire Separation in the United States," is not identified as to source but appears to be an internal Ford document.
Under "Problem Description," the document states, "While driving vehicle, the tire tread separated from the main carcass of the tire." Of 4,236 "Master Owners Relation System" reports mentioned in the document, 32 involved "possible" tread separation claims, of which 22 involved Firestone tires and 10 involved Goodyear tires.
BFS Executive Vice President John Lampe cited this document — the so-called "Document 54´´ — at a press conference last month in which he blasted the claims of Ford CEO Jacques Nasser that Firestone tires alone were to blame in the problems with the Ford Explorer.
The Goodyear spokesman, however, said "possible" was the operant word in the document. If you want an "apples-to-apples" comparison between Firestone´s experience on the Explorer and Goodyear´s, he insisted, you have to look at the damage claims Goodyear received from consumers.
"In trying to make some comparison between 101 fatalities and our experience, what we see when we look at our data is that out of 2.9 million tires we supplied to Ford, we had no accidents, no injuries, no rollovers and no fatalities," he said. "What we do see are four damage claims for tread separation, two of which we paid, for a grand total of slightly more than $2,000."
As for the pricing letter, "when you´re involved in the OE business, the bottom line is the transaction price," he said. "But you must consider a lot of factors in reaching that price, such as the cost of materials, manufacturing, support services and research and development...We put a transaction price on the table to Ford, and it was an acceptable price to us, but not to Ford."
Goodyear supplied OE tires for the Ford Explorer for model years 1995 through 1997.