The National Highway Traffic Safety Administration (NHTSA) has ordered a recall of an estimated 450,000 Chinese-made light truck tires that allegedly have been implicated in at least two road accidents in the past year, one of which resulted in fatalities.
The tires, all manufactured by Hangzhou Zhongce Rubber Co. Ltd. in Hangzhou, China, are being recalled for a possible defect-a situation some commentators say brings up serious defects in the U.S. tire recall process.
Foreign Tire Sales (FTS) Inc., the Union, N.J.-based importer of at least some of the tires, notified NHTSA that the tires reportedly were made without gum strips or with insufficient gum strips between the belts to prevent belt separation.
Though it said it stopped buying tires from Hangzhou Zhongce in June 2006, FTS is technically the manufacturer of record, responsible by law for conducting the recall. In its June 11 defect and noncompliance report to NHTSA, however, FTS told the agency the full cost of a recall would bankrupt the company.
Furthermore, FTS claimed Hangzhou Zhongce has not provided FTS with the necessary Department of Transportation (DOT) identification numbers to conduct a recall, and FTS received very few product registration cards from buyers of the tires.
NHTSA's Office of Defects Investigation made the recall official June 25, despite FTS' demurrers. It listed FTS as the manufacturer and said: ``The manufacturer has not yet provided the agency with a remedy and notification schedule.''
FTS could face penalties of up to $6,000 per violation-or a maximum $16.4 million-if it violates regulations, NHTSA said in a June 26 letter.
According to the New York Times, Hangzhou Zhongce had nearly $1 billion in sales in 2006 and employs about 8,000 workers. Xu Youming, director of the company's legal administration office, denied the charges against the recalled tires, telling the Times they were ``concocted out of thin air.'' At presstime, Mr. Xu could not be reached by Tire Business for further comment at his office in China.
Lawrence N. Lavigne, attorney for FTS, said the firm is trying to make Hangzhou Zhongce live up to its obligations regarding the recall.
``We have followed the regulations to a T,'' Mr. Lavigne said. ``We are going full-tilt to try to get this company (Hangzhou Zhongce), a big, big company, to answer the call.'' He told news sources the recall could cost as much as $50 million.
According to FTS' report to NHTSA, the Hangzhou Zhongce LT tires were sold under the Westlake, Telluride, Compass and YKS brand names, in sizes LT235/75R15, LT225/75R16, LT235/85R16, LT245/75R16, LT265/75R16 and LT31x10.5-15. Hangzhou Zhongce's DOT tire manufacturer's code is 7D, according to the DOT's database.
FTS first contacted Hangzhou Zhongce in 2000 about making light truck radials for the U.S. market, the report said. After testing performed in 2001 showed the tires could run 40,000 miles without separations, FTS contracted with the Chinese manufacturer for tires.
``At some point in time, unbeknownst to FTS, (Hangzhou Zhongce) unilaterally changed the construction of the subject tires by omitting belt edge or gum strips between the belts,'' the report claimed. FTS first became suspicious in October 2005, it said, when adjustment rates on the Hangzhou Zhongce tires began to skyrocket.
FTS ordered testing that, though inconclusive, suggested the tire had either no gum strips or inadequate ones. Further testing was ordered in May 2006 after a New Mexico ambulance accident involving a Hangzhou Zhongce-made tire, and this time tests showed conclusively that the tires lacked gum strips. FTS said it dropped Hangzhou Zhongce immediately.
In September 2006, Hangzhou Zhongce finally admitted its unilateral decision to omit gum strips, FTS asserted. Officials of the two companies met that month to discuss the situation, but Hangzhou Zhongce refused to provide FTS with certain documents, claiming they were proprietary and confidential, according to the report.
FTS, Hangzhou Zhongce and General Motors Corp. are among the defendants in a lawsuit filed May 4 in the Common Pleas Court of Philadelphia County, Pa.
The suit arose from an August 2006 accident on Pennsylvania Route 476, in which a Compass Telluride tire mounted on a 2000 Chevrolet Express 2500 Cargo Van allegedly suffered a belt and tread separation. The vehicle rolled over, ejecting three passengers-two died and the third suffered irreparable brain damage, according to the suit.
The families of the dead and injured men sued the companies involved, as did the van driver, who suffered lesser injuries.
``We will hold Hangzhou Zhongce responsible,'' said Jeffrey Killino, attorney for the plaintiffs. ``If the American people wouldn't stand for the Ford Pinto or Firestone and Ford with the Explorers, they certainly won't tolerate Hangzhou Zhongce omitting the gum strips.''
The 450,000 tires in the recall are ``only the tip of the iceberg,'' Mr. Killino added.
The same day the recall was announced, Mr. Killino and Sean Kane, president of Rehoboth, Mass.-based Safety Research & Strategies (SRS) Inc., wrote NHTSA asking the agency to issue a consumer advisory about the Hangzhou Zhongce tires.
According to Mr. Kane, it was a foregone conclusion that NHTSA would list FTS as the manufacturer of record in the recall once the defect report was filed. ``The question now is what will happen if the company files for bankruptcy because of the recall,'' he said. ``This points up significant cracks in our system. If importers can't afford a recall, they can fold, and the recall never happens.''
The Pennsylvania lawsuit was a catalyst to FTS's filing suit against Hangzhou Zhongce May 30 in the U.S. District Court in Newark, N.J., seeking unspecified monetary damages and an injunction against the importation of Hangzhou Zhongce tires. FTS on June 4 filed an amended complaint.
Mr. Lavigne said the suit was filed under the regulations of the Hague Convention, which among other things requires all court filings to be translated into Chinese and notice of the lawsuit served on the Chinese Ministry of Justice as well as Hangzhou Zhongce. The tire maker has acknowledged receipt of the complaint, he said.
News of the recall comes at a bad time for Chinese manufacturers. In recent weeks, there have been extensive news reports on dogs and cats that have died because of pet food containing gluten from China contaminated with melamine, as well as poisoned Chinese toothpastes and Chinese toys coated in lead paint.
Four Democratic senators-Carl Levin and Debbie Stabenow of Michigan, Robert Casey of Pennsylvania and Sherrod Brown of Ohio-contacted President Bush June 26 urging him to push NHTSA on the tire recall and the Chinese government on obtaining the DOT numbers for the tires.
``Chinese companies have too often demonstrated a flagrant disregard for U.S. safety laws,'' the senators wrote. ``With lives potentially at stake, the NHTSA must take an aggressive stance and ensure that a recall goes forward without delay.''
For years, the Rubber Manufacturers Association (RMA) has insisted that the federal government must enforce safety and compliance standards stringently for all tires sold in the U.S., including imports. In a May 14 speech before the Society of Automotive Engineers, Laurie Baulig, RMA senior vice president and general counsel, noted that safety and compliance problems in tires, vehicles and auto parts have increased in proportion with the boom in imports.
``There's not enough manpower to track down noncompliant imports,'' Ms. Baulig said.
SRS's Mr. Kane blasted the RMA for its lawsuit seeking to keep all early warning data under the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act confidential.
``We don't have access to early warning data, thanks to the RMA,'' he said. ``Laurie Baulig's speech was very prescient, yet the RMA is an obstacle in finding out which tires are problematic.''
An RMA spokesman said the problem in the Chinese case is related not to data availability or TREAD Act compliance, but enforcement.
``Compliance is not a problem with RMA members-they are responsible and consistently reliable,'' he said. ``The question here is how to ensure that responsible foreign parties are held responsible when their products have a defect.''
The controversy surrounding this recall has led to speculation that this could be the first recall resulting in criminal penalties under the TREAD Act, though others insist it is premature to even mention any such penalties at this point.
``I think that's a fairly good suspicion,'' Mr. Kane said about the speculation on criminal penalties. ``Certainly all the trappings are there.''
Under the TREAD Act, tire and auto executives found guilty of knowingly selling defective products face prison terms of up to 15 years and fines of up to $100,000. Corporations can be fined up to $15 million for the same conduct.
In its report to NHTSA, FTS named six other tire distributors it said may have imported or sold at least some Hangzhou Zhongce-made tires ``of similar construction.''
Dan Marsh, CEO of K&D Tire Wholesalers L.L.C. in Carlsbad, Calif., one of the importers named by FTS, said he has never dealt with Hangzhou Zhongce in any way, though he does import other Chinese tires. Mr. Marsh said he tried several times to contact FTS and Mr. Lavigne on their naming him in the report.
``It's too bad,'' Mr. Marsh said about the recall. ``When Firestone tires are recalled, no one says all U.S.-made tires are bad. But when one Chinese manufacturer's tires are recalled, all Chinese tires are bad.''
Steve Tamietti, president of Omni United (U.S.A.) Inc. in Fairfield, Calif., said his company has imported Hangzhou Zhongce-made tires since December 2005, but they were not the tires named in the recall. Omni United handles Goodride-brand tires made by Hangzhou Zhongce.
``Hangzhou Zhongce...has assured us of the quality of their products, which is also evident by the fact that well-known, large tire manufacturers like Goodyear, Cooper, Kumho and Yokohama were having their tires produced in this factory,'' Mr. Tamietti said in a written statement.
Vernon Kuehn, director of operations for Orteck International Inc., Gaithersburg, Md., and Victor Qiu, national sales director for Tireco Inc. of Compton, Calif., said at Tire Business presstime that their companies were still gathering information about the situation. Of the other importers named in the report, TB could not find telephone numbers for Strategic Import Supply in Wayzata, Minn., or Robinson Tire in Laurel, Miss. There is a tire distributor in Laurel named Robison Tire, but Robison Tire officials could not immediately be reached.
Patricia Brown, vice president of global branding and communications for Cooper Tire & Rubber Co., said the firm bought tires from Hangzhou Zhongce until November 2006, when Cooper opened capacity of its own in China. ``Hangzhou Zhongce was a stopgap for us,'' she said.
As for the recall, she said, ``If we import tires to the U.S., we ensure they meet our standards.''
Cooper voluntarily recalled in 2006 about 101,582 tires manufactured by Hangzhou Zhongce in the off-take agreement between the two companies.
A Goodyear spokesman acknowledged that Hangzhou Zhongce produces some private brand tires for Goodyear. He declined to say which brands, saying such information is revealed only at the discretion of the private brand owner. None of the tires is involved in the recall, he said.