A State Judge Orders Recall Of 1.7 Million Ford Vehicles
                    October 12, 2000

                    By NORIHIKO SHIROUZU
                    Staff Reporter of THE WALL STREET JOURNAL

                    DETROIT -- In a highly unusual move, a California state judge ordered
                    Ford Motor Co. to recall 1.7 million Ford cars and trucks, dealing a blow
                    to a company struggling to contain damage to its reputation from the
                    Firestone tire debacle.

                                         Alameda County Superior Court Judge Michael
                                         Ballachey said in his order Wednesday that the
                                         No. 2 auto maker had known for nearly two
                                         decades that vehicles were prone to stalling
                                         because of "flawed" ignition modules, but failed
                    to cooperate with federal safety regulators or alert consumers. Judge
                    Ballachey's decision is a major step forward for plaintiffs in the case,
                    who had argued that top company officials, including the board, knew
                    there were widespread problems with the ignition systems.

                    The order also said the California judge may force Ford, in addition to
                    the recall, to pay restitution for replacing the ignition system and award
                    reasonable attorney fees and other costs incurred.

                    One internal Ford document that plaintiffs' lawyers presented to the
                    judge showed that the Dearborn, Mich., auto maker was proposing in
                    1986 a $200 million provision to deal with the ignition problem. The
                    same document said Ford estimated a per-unit warranty repair cost to
                    fix the problem to be $176.

                    Ford "knew from the very beginning ... that the TFI module was
                    vulnerable to thermal stress and that heat was the enemy of electronic
                    devices," the judge wrote in his 21-page order. "Ford failed to meet its
                    obligations to report safety related defect information to relevant
                    governmental agencies and, by so doing, concealed vital information
                    related to vehicle safety from the consuming public."

                    Judge Ballachey had signaled his intention to order a recall in August,
                    but had allowed Ford more time to argue its position that a recall was
                    unwarranted. The case is being watched closely, not just in the auto
                    industry, but by other manufacturers worried by the prospect of state
                    judges ordering product recalls.

                    The court now will have to determine what kind of recall Ford would
                    have to conduct. But Ford is expected to appeal as soon as that
                    decision comes, among other moves. The company is seen as likely to
                    argue that a state judge has no power to order automotive recalls.

                    "The judge doesn't have the authority to order a recall. No state-court
                    judge does; that's the NHTSA's job," said Jim Cain, a Ford spokesman,
                    referring to the National Highway Traffic Safety Administration in
                    Washington. "Even if he did have the authority, the recall would serve
                    no purpose, because there is absolutely nothing to fix."

                    Harsh Questions

                    The order comes at a bad time for Ford, which has been facing harsh
                    questions from regulators, consumers and members of Congress over
                    its handling of safety concerns surrounding its popular Explorer
                    sport-utility vehicle and Firestone tires used on the truck.
                    Bridgestone/Firestone Inc. has recalled 6.5 million Firestone tires, many
                    of them installed on the Explorer, amid charges that sudden tread
                    separations caused accidents linked to about 150 deaths in the U.S.
                    and overseas. Ford is trying to help complete the recall months earlier
                    than expected, by the end of November, to put the furor to rest. But
                    the harsh language in Judge Ballachey's order is a setback for the auto
                    maker.

                    The order stemmed from a class-action suit filed on behalf of 3.5 million
                    Ford owners in California. According to Jeff Fazio, the lead lawyer for the
                    case, the plaintiffs claim the vehicles are prone to stalling because poorly
                    placed ignition devices were exposed to excessive heat from the engine
                    block. Similar class-action lawsuits are pending in Alabama, Maryland,
                    Illinois, Tennessee and Washington, according to Mr. Cain at Ford.

                    The California class-action claims refer to more than 20 million Ford
                    vehicles, of many models, from the 1983 model year through 1995, but
                    Judge Ballachey's order applies to only a portion of them, 1.7 million
                    vehicles in California and currently on the road.

                    Repeated Deception Alleged

                    In his ruling, the judge said Ford had been aware of the stalling problem
                    at least since 1982. He said Ford repeatedly deceived U.S. regulators by
                    insisting there were no ignition-system problems.

                    Wednesday, Ford maintained its position. "We have looked at
                    government stalling data and accident data, and there is absolutely
                    nothing to suggest that our cars stalled any more or any less than
                    anyone else's," said spokesman Mr. Cain. "If we honestly believed that
                    there was a safety issue, money would not be an object; we would go
                    out there and we would fix the vehicles. But this is courtroom
                    engineering; it's amazing the case has gotten this far."

                    The internal Ford document plaintiffs' lawyers presented during the trial
                    described a Ford board meeting on Oct. 9, 1986. That document, other
                    than discussing a possible estimate of cost to deal with the problem,
                    showed an effort by a number of Ford engineers to find ways to deal
                    with the stalling issue. The most critical factor behind Wednesday's
                    decision, Mr. Fazio said, was "a sheer volume of evidence that pointed
                    to the huge problem Ford tried to hide for years."

                    Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com