NASHVILLE, Tenn. (Dec. 4, 2000)—When John T. Lampe took over as chairman, CEO and president of Bridgestone/Firestone Inc. Oct. 10, he assumed one of the most daunting tasks in tire-industry history.
Mr. Lampe started with the old Firestone Tire & Rubber Co. in 1973, and therefore was around for the "Firestone 500" scandal of 1978, which led to the recall of 14 million tires, the public and financial humiliation of the firm and its eventual sale to Bridgestone Corp.
Twenty-two years later, the company was embroiled in yet another massive recall—this one involving 6.5 million ATX and Wilderness AT tires, most of them installed on Ford Explorers. The publicity, if anything, was vastly more adverse than during the earlier recall.
While consumer advocates, plaintiffs´ attorneys and even members of Congress vilified the Nashville, Tenn.-based tire maker in every conceivable print, broadcast and Web forum, Ford Motor Co. CEO Jacques Nasser proclaimed Bridgestone/Firestone entirely to blame for the problems with the tires on the Explorer, betraying a corporate friendship which had flourished for nearly a century.
The scandal devoured Masatoshi Ono, Mr. Lampe´s immediate predecessor as Bridgestone/Firestone CEO. Mr. Ono returned home to Japan, to an uncertain future—only 10 months after being named "Rubber Executive of the Year" by Rubber & Plastics News, a sister publication of Tire Business.
Now Mr. Lampe was expected to step into the spotlight and redeem the reputation of the company he loved—at a time when many were publicly speculating whether it could survive.
However, most observers agreed that if anyone could save Bridgestone/Firestone, Mr. Lampe could. With a resume that included various foreign assignments, the presidency of Dayton Tire Co. and the executive vice presidency of Bridgestone/Firestone, he combined the breadth of experience, savvy and enthusiasm the company sought as its leader in a crisis situation.
Adding to Mr. Lampe´s appeal as CEO were his vigorous, intelligent answers to the often hostile questioning that occurred on Capitol Hill and in the news media. Mr. Lampe´s performance before the Senate Commerce Committee in September proved his ability to present a positive face for the company.
The following is a transcription of a telephone interview with Mr. Lampe in a conference call between Washington and Nashville Nov. 30:
TB: How did Bridgestone/Firestone get involved in a second controversy of this magnitude? I would have thought after the Firestone 500—knowing what I do about the quality of the products you make—that you would have moved heaven and earth to avoid something like this happening again.
Mr. LAMPE: "We do make excellent products, and continually improve the performance of our products on a day-to-day basis. Specifically referring to the recalled tires, we continually reviewed what we consider the more traditional measures of product performance—we tracked our adjustment data and field surveys. All those indicators showed we didn´t have a problem. It wasn´t until we started analyzing, with the help of Ford, the specific claims data—minor product damage claims as well as more serious claims of injuries and fatalities—that we noted an overrepresentation of claims in two types of tires.... We didn´t wait around, we acted very proactively before any investigation had been completed by the government. We acted to take charge of this and announce the recall on Aug. 9 and complete the recall as quick as we can.
TB: Now that the end of the recall is in sight, you say your chief goal is to restore Firestone´s good name. How precisely do you plan to do this?
Mr. LAMPE: "I don´t want to have any misunderstandings. We are saying the end is in sight for not having any waiting list and not having any customers waiting in line for replacement tires. It´s very hard to say when the end of the recall will be; that´s something we´re working with NHTSA (the National Highway Traffic Safety Administration) on establishing. We´re saying the waiting list for the Firestone replacement products is very, very close to being exhausted.
"Clarifying that, certainly our two priorities at this time are getting the waiting list completely done so customers can come in and get their tires replaced without any waiting at all...and No. 2 is reporting our findings on the cause or combination of causes of what could have been the problem with a very, very small percentage of the tires in the recall.
"We´ve been working night and day. There´s nothing more important to us than establishing the cause or causes.|.|.When we get that finished, certainly our brand rebuilding efforts will continue through 2001. We´re very confident the Firestone brand has a long history and lots of loyal dealers and customers. We´re very confident we can restore our good name and the confidence on our customers in the Firestone brand.
TB: Dr. (Sanjay) Govindjee has made some preliminary findings in his investigation, and I assume there are also some preliminary results from the special team BFS appointed in-house to study the recall question. Is it still premature to say what factors or combination of factors you think went into creating this problem?
Mr. LAMPE: "Yes, we think it is premature to draw conclusions. We have said and Dr. Govindjee has said that we´re looking at the specific tread designs involved. The incident rate of the ATX is completely different from that of the Wilderness, which indicates to us the design of the ATX is a factor.
"We are looking at the placement of certain materials in the construction of the tires, and of the interaction of the tires with the vehicles—why so many of the incidents occurred on the rear of the vehicle, and why so many on the left rear."
TB: Let´s get back to the question of your game plan for regaining public confidence in the company´s products. I assume there would be two different ones—one for original equipment customers, and one for replacement buyers who read the adverse publicity every day. At this point, can you say anything about either one?
Mr. LAMPE: "We continue to work very closely with our OE customers. We´ve got tremendous support from most of our OE customers, GM and Toyota and on and on. They´re very proud of our products and the quality of our products.
"We continue working with Ford. They´re an important customer, we´re an important supplier, and we want to do everything possible to continue this fine relationship we had for 96 years with Ford.
"From the consumer standpoint, as we announced at Las Vegas...we announced we are extending customer-focused customer warning and guarantee programs on our products, to instill confidence in our customers. That should go a long way toward restoring the trust that we need."
TB: Let´s delve more into your relationship with your OE customers. What percentage of your business is OE?
Mr. LAMPE: "Probably about 20 to 23 percent of our total dollar business. Ford represents about 5 percent of our total revenue in North America and South America."
TB: So Ford represents about 20 to 25 percent of your total OE revenue?
Mr. LAMPE: "Yes."
TB: Has Ford said anything more about offering "consumer choices" with any other models that you supply, besides the Explorer?
Mr. LAMPE: "I´m not aware of anything like that. With the Explorer, please remember it was always Ford´s intention to have two suppliers for the 2002 Explorer, and they recently announced a third supplier as an option. It´s not really anything new, except for the third supplier. We continue to supply Ford tires for a number of platforms including the Explorer, and we want to continue that."
TB: You mentioned you had a great deal of support from your dealers at the meeting in Las Vegas. Can you make any estimate of the business they might have lost because of the publicity from the recall?
Mr. LAMPE: "Certainly there´s been an impact to the business because of the recall. Our dealers have been so supportive in helping us finish this recall, taking up some of their time, some of their space. But we´re still selling a lot of tires, and I can´t be too complimentary about our dealer organization. They´ve stood by us, they´ve been extremely important to us in replacing these tires, they´ve been extremely loyal.
"To think we could get the largest attendance at a dealer meeting in our history at a time when we´re going through a pretty tough situation speaks volumes about our support throughout the dealer organization."
TB: What special compensation deals are you offering to dealers to make up for business lost during the recall?
Mr. LAMPE: "We continue to work with our dealers on an individual basis. We´ve done some things with terms.|.|.Dealers had recalled tires coming back in, they needed to get those turned around and their credits processed. We don´t want the recall to be a financial hardship on them."
TB: In the most recent figures released by Bridgestone Corp., Firestone brand replacement sales are down 40 percent. What can you do to arrest that slide?
Mr. LAMPE: "It goes back to restoring the confidence of consumers. Two important steps are eliminating the waiting list for replacement tires...and announcing our findings of the root cause. Once we do those two things, we´ll start back on a strong campaign to rebuild the image of the Firestone brand.
"The Firestone brand has been impacted, and we expected it would, but we continue to see strong sales in the Bridgestone and associated brands we produce, and even strong sales in Firestone lines in trucks, agricultural and off-highway tires. We´ve seen very little impact in those Firestone lines."
(At this point, a BFS public relations spokesman interjected a qualification. "`Arrest the slide´ implies there is a slide," he said. "When we announced that slide, we noted that dip was smaller than many analysts had predicted.")
TB: There are some suggestions that women replacement buyers in particular are shying away from Firestone tires. Do you have anything in mind to overcome female consumer distrust?
Mr. LAMPE: "Certainly the female consumer population is extremely important to us. Fifty-one percent of our customers are females, and we certainly want to include them as part of our brand rebuilding campaign. We´ve made a real effort in our company stores and with our dealers to provide an environment that´s very customer-friendly—someplace that´s very clean, a healthy environment where they can come in and feel they´re getting the straight scoop."
TB: Bridgestone/Firestone has announced several production cutbacks in the past several months. How many more do you anticipate having to make, and what would have to happen to make them unnecessary?
Mr. LAMPE: "Certainly we´ve made some difficult decisions. The financial stability of our company is very important. We were very preoccupied with the recall, making sure we had proper procedures in place, so we took our eyes off our inventories a little bit....
"We tend to build up our inventories in anticipation of a labor disruption, and we were very fortunate to avoid that. Put that together with the impact on Firestone brand sales, and we were in a position where we could not support our current inventory levels. We´ve announced layoffs and two-week slowdowns.
"We think we´ve announced the actions necessary to get our inventories back in line. We want to bring back our employees at all our facilities as quick as we can. It´s very painful to have those people impacted by this, and our goal is to get them back."
TB: We´ve heard reports that Bridgestone/Firestone sent letters to its materials suppliers after the recall was announced, asking them to cut prices. What do you know about this?
Mr. LAMPE: "I don´t know anything about that. I hope our purchasing department continues to convince our suppliers that we need better costs and better pricing. That´s their job. But I don´t know anything that we´ve done specifically as a result of the recall."
TB: Since the recall started—and in the last few weeks in particular—several other tire companies such as Goodyear, Conti General and Cooper are starting to be scrutinized in the press and seeing an increase in lawsuits filed against them. I´ve seen some suggestions that this is the result of the negative publicity Bridgestone/Firestone has received—that this negative perception is filtering throughout the tire industry. How fair do you think is this assessment?
Mr. LAMPE: "I think we have some plaintiffs´ attorneys out there who are willing to start anything with anybody´s brand. But when you´re in the business, you know—and Dr. Bailey (NHTSA Administrator Sue Bailey) has pointed this out—that any tire can fail, and any tire will fail if it´s abused. That´s nothing new—that was true when tires started to be made at the turn of the century.
"I think there´s more scrutiny, and there´s certainly more frenzy on the part of plaintiffs´ attorneys in going after all manufacturers. I think we have to look at each and every case to determine if the tire was a factor, and if so, what caused it to be a factor....
"People have asked if anything good can come out of what is going on, and I think we´d say that if the public becomes more aware of the importance of good tire maintenance, I think that will make things easier for everybody—consumers and manufacturers."
TB: How are Bridgestone/Firestone officials and assembly-line
workers bearing up under the publicity you´ve been receiving? How is company morale at this point?
Mr. LAMPE: "I think the morale is very good. Certainly there are people who are very concerned that we get this recall completed, but we´ve had tremendous support from employees. We´ve gotten a number of notes not only from staff employees but also from on the line at our facilities. They´re very proud, they´re pledging their support of the company; they´re proud of the work they do and the products they produce.
"I met with Mr. Becker (George Becker, president of the United Steelworkers of America) a couple of weeks ago, and we want to work closely with him. It´s hard to describe how strong the support and commitment has been, not only from our dealers, but also from our employees and co-workers."
TB: What sort of support are you getting from Bridgestone in Tokyo?
Mr. LAMPE: "Bridgestone has always been a strong supporter. We´ve had a number of Bridgestone technical people over here, helping us review our quality control procedures, our reviewing procedures, and so forth.
"I´ve been very fortunate in that I have one of the top manufacturing and technical people in the whole corporation as president of manufacturing and technology. Mr. (Isao) Togashi has a tremendous manufacturing and technical background. I could not be more pleased with the support we´ve received from Tokyo."
TB: Is it possible to think of Bridgestone/Firestone´s future post-recall? What do you envision for the company 10 years from now?
Mr. LAMPE: "We´re going to be a strong player, a key factor in the American tire industry. We´re going to have not only the Firestone brand, but the Bridgestone brand and associated brands that will be strong, consumer-oriented brands.
"We will have a much closer working relationship with NHTSA than in the past. I think that´s very important; we´ve been very supportive to them in their efforts to change some things and implement the TREAD Act.
"I think we´ll be a stronger company, a leader in the industry, certainly in the vanguard of safety and an advocate for consumers."