May 21, 2001

                    Business Focus

                    Ford Will Recall 47,000 Redesigned SUVs To Replace Tires Damaged During Assembly

                    Car Maker May Also Move to Replace More Firestone Tires on Older Explorers

                    Staff Reporters of THE WALL STREET JOURNAL

                    The controversy over Ford Explorers and their tires is about to

                    Ford Motor Co. plans to recall about 47,000 of its redesigned
                    2002 Ford Explorer and Mercury Mountaineer sport-utility
                    vehicles to replace tires damaged during assembly, a
                    company official said. An announcement could come as soon
                    as Monday.

                    At the same time, the auto maker is preparing for a broader
                    action, possibly this week, to replace millions more Firestone
                    tires mounted on older Explorers and other vehicles.
                    Firestone last summer recalled 6.5 million tires, mounted as
                    standard equipment on Explorers and other Ford trucks, after
                    tire-tread failures were linked to hundreds of accidents, 174
                    deaths and 700 injuries in the U.S. alone.

                    Ford has a lot riding on how the latest
                    chapter in the tire controversy plays out.
                    Ford is trying to crank up sales of its
                    2002 Explorer four-door SUV, recently
                    slapping on new sales incentives. The
                    new Explorer is wider and lower than the
                    old model, changes made to improve the
                    vehicle's stability. And new Explorers are
                    being shipped mainly with Goodyear and
                    Michelin tires, instead of the Firestones
                    that were standard equipment through
                    last year's model. But the planned recall
                    of 2002 models and a fresh round of bad
                    publicity about Firestone tires on older
                    Explorers is the last thing Ford and its
                    dealers need.

                    Ford notified federal regulators over the
                    weekend that it would recall the 2002
                    models, all assembled at Ford's
                    Louisville, Ky., plant through April 27,
                    because about 7% of them could have
                    horizontal cuts in the treads
                    inadvertently made by a metal edge in
                    the plant's vehicle conveyor system. A
                    Ford spokesman said the tires, primarily Michelin or Goodyear
                    brands, may have four- to eight-inch cuts about a half-inch
                    deep on the right-side tires. While the tires should be safe in
                    the short term, the cuts could cause long-term problems.

                    Ford's actions come in the midst of an escalating row with
                    tire maker Bridgestone/Firestone Inc. over whether Firestone
                    should significantly widen last summer's recall, one of the
                    largest tire recalls ever. The National Highway Traffic Safety
                    Administration continues to investigate whether other
                    Firestone tires that weren't part of the recall are unsafe.

                    Even as that probe continues, Ford likely will act in a matter
                    of days to initiate replacement of all Firestone Wilderness
                    tires sold on previous-generation Explorers and certain other
                    models, according to people familiar with the situation. As
                    many as 16 million Wilderness tires could be affected. Ford
                    officials last week shared their analysis of Firestone's claims
                    data with NHTSA and have begun lining up replacement tires
                    from other manufacturers, people knowledgeable about the
                    discussions said.

                    Officially, Ford says only that it is working closely with
                    NHTSA on its continuing review of 44 million Firestone tires.

                    Ford officials have told regulators they are concerned by
                    Firestone claims data, arising from customer warranty claims,
                    that show that unrecalled Wilderness tires have
                    tread-separation rates several times higher than Goodyear
                    tires used on the same vehicles, though still far less than the
                    tread-separation claims rates for tires covered by last
                    summer's recall.

                    The Wilderness and ATX tires recalled last year had
                    tread-separation claims rates as high as 241 per million,
                    compared to three to five per million for Goodyears, according
                    to Ford. It couldn't immediately be determined what the
                    separation rates were for the unrecalled Wilderness tires on
                    Ford Explorers.

                    Other tire makers say they are gearing up to supply Ford with
                    tires that would be needed in an expanded recall. The
                    industry was caught by surprise by last summer's recall and
                    had to scramble to supply replacement tires. This time, the
                    biggest tire makers, including Goodyear Tire & Rubber Co.
                    and France's Groupe Michelin, both have the extra molds
                    needed to supply replacement tires, and extra capacity freed
                    by the market slowdown.

                    At least one big tire company, which didn't want to be
                    named, has even developed contingency plans for supplying
                    all types of tires Ford currently buys from Firestone, not just
                    Explorer tires. While extreme, the action still reflects industry
                    perceptions of the evolving battle between Ford and

                    Goodyear is focusing on supplying tires for the Explorer that
                    weren't subject to last year's recall. "We can start delivering
                    to them in two or three days," said a Goodyear official
                    familiar with the planning.

                    Michael Fanning, a spokesman for Groupe Michelin, said:
                    "Certainly we are aware of Firestone [applications] on Ford
                    vehicles, and if a recall is announced we'll do all we can to
                    help consumers who may be affected."

                    Ford's urgency can be linked to several factors. Summer is
                    approaching, and there is evidence tire failures occur more
                    often in warm weather. The move also puts the focus on
                    Firestone at a time when Ford is sensing more heat on
                    questions about older Explorers' safety. In Venezuela, where
                    Firestone-equipped Explorers were implicated last year in
                    dozens of deaths, there have been recent reports of new
                    accidents involving rollovers on Explorers equipped with
                    non-Firestone tires. Also, a high-profile injury lawsuit against
                    Ford and Firestone is coming to trial in June in Hidalgo
                    County State Court in Texas.

                    Ford says it doesn't believe the latest accidents in Venezuela
                    are related to the Explorer's design and that it isn't clear
                    what were the causes of the accidents.

                    But Ford's push for a wider Firestone recall, which contradicts
                    months of assurances from both companies that all the
                    unsafe tires were captured in the previous action, is drawing
                    a furious counterattack from Bridgestone/Firestone officials.

                    After last year's damaging recall, Bridgestone/Firestone, a
                    unit of Japan's Bridgestone Corp., is struggling to salvage the
                    storied Firestone brand in the U.S. and has launched a major
                    marketing effort to win back consumers. Now, the tire maker
                    is stepping up efforts to focus regulators and the media on
                    questions about the safety of the older Explorer itself.

                    Bridgestone/Firestone points to data that Explorers have
                    seven to 10 times the rate of tread-separation claims
                    involving Firestone Wilderness and ATX tires similar to those
                    recalled as do Ford Ranger pickup trucks riding on the same
                    tires. Firestone officials have said for months that failures of
                    the previously recalled tires result from a combination of
                    factors, including the Explorer's weight, the way that weight
                    is distributed to the rear axle, and the SUV's higher center of

                    Ford officials dispute that interpretation, saying Goodyear
                    tires installed on Explorers have resulted in a negligible
                    number of tread-failure claims compared with the Firestone

                    Ford and Firestone officials are expected to meet early this
                    week to discuss the controversy, and tensions are expected
                    to be high. John Lampe, Bridgestone/Firestone's chairman
                    and chief executive, on Friday fired off a letter to Ford Chief
                    Executive Jacques Nasser stating that he was "outraged" by a
                    story in Friday's New York Times that reported Ford's
                    concerns that a wider recall could be necessary.

                    "Let me state categorically -- tires supplied to Ford Motor Co.
                    and other customers are safe, and the tires are not defective.
                    As we have said since last August, the role of the vehicle
                    must be taken into account," Mr. Lampe wrote.

                    Wall Street on Friday took a dim view of the rekindling of the
                    Ford-Firestone controversy. At 4 p.m. in New York Stock
                    Exchange composite trading, Ford shares were down 43 cents
                    to $27.13.

                    "Ford has had this image as a flight to quality: the best
                    margins, the best brands and the best balance sheet," said
                    Morgan Stanley Dean Witter analyst Stephen Girsky. "If they
                    are not careful this could unravel very quickly."

                    -- Stephen Power contributed to this article.

                    Write to Joseph B. White at, Clare
                    Ansberry at and Timothy Aeppel at

                                           The Tire Saga

                         Late 1998 Ford learns of problems with Firestone tires
                         suddenly failing on Explorer sport-utility vehicles in

                         1999 Ford replaces Firestone tires on Ford vehicles in
                         Persian Gulf countries after reports of tread failures.

                         May 2, 2000 Federal highway safety regulators
                         announce they are formally investigating complaints that
                         as many as 47 million Firestone ATX, ATX II and
                         Wilderness tires could be defective.

                         Aug. 9, 2000 Following reports of 46 deaths linked to
                         sudden failures of its tires, Bridgestone/ Firestone
                         announces it is recalling 6.5 million Firestone ATX and
                         ATX II p235/75R15 tires made since 1991, and all
                         15-inch Wilderness tires made at Decatur, Ill., plant.
                         Most of the tires are mounted on Ford Explorer
                         sport-utility vehicles. Ford and Firestone officials say
                         there are no unusual defect trends affecting 16-inch
                         tires. Worried customers flood Firestone and Ford

                         Aug. 30, 2000 Federal regulators recommend that
                         Bridgestone/Firestone expand the recall to include an
                         additonal 1.4 million tires. The company refuses. NHTSA
                         recommends consumers replace the tires.

                         Aug. 31, 2000 NHTSA seeks information from State
                         Farm Insurance on possible problems with 16-inch
                         Firestone tires.

                         Sept. 12, 2000 Top Bridgestone/Firestone officials
                         admit the company made "bad tires" and blamed the
                         design and manufacturing flaws for problems with the
                         recalled tires.

                         Sept. 2000 Ford and Firestone executives testify before
                         a congressional committee, defending their handling of
                         the crisis but criticizing each other.

                         Oct. 1, 2000 Federal regulators say they are
                         investigating another brand of Firestone tires, Steeltex,
                         for tread- separation defects.

                         Dec. 18, 2000 A Firestone study cites the weight of the
                         Explorer and the relatively low 26 psi recommended tire
                         pressure as a possible factor in crashes.

                         Jan. 8, 2001 Ford and Firestone settle high-profile
                         Texas case, agreeing to undisclosed compensation for a
                         woman paralyzed in an Explorer rollover crash.

                         April 2001 Ford launches redesigned 2002 Explorer,
                         most of them equipped with Goodyear or Michelin tires.