Major Business News
Bridgestone's Firestone Quits Relationship Of 95 Years as Supplier of Tires to Ford
Auto Company Is Accused of Refusing To Concede to SUV Safety Concerns
By TIMOTHY AEPPEL, JOSEPH B. WHITE and STEPHEN POWER
Staff Reporters of THE WALL STREET JOURNAL
Bridgestone/Firestone Inc., facing pressure from Ford Motor
Co. to recall millions more tires, abruptly ended its 95-year
relationship as a supplier to Ford and accused the auto maker
of refusing to acknowledge safety concerns about its
best-selling Explorer sport-utility vehicle.
Ford rejected Firestone's accusations, and moved ahead with
plans to announce Tuesday an initiative to offer
replacements for as many as 10 million to 15 million
Wilderness tires to customers who request them. The action
potentially could be bigger than last summer's
6.5-million-tire Firestone recall. Meanwhile, Ford Chief
Executive Officer Jacques Nasser arranged to press his case
on the Explorer's safety directly with key members of
Congress. Ford also said it would disclose Tuesday an
analysis of safety problems with Firestone Wilderness tires
currently on the road.
The acrimonious disintegration of the
Ford-Firestone relationship poses big
risks for the companies. Both are
struggling to regain customer confidence
in the wake of last summer's recall of
6.5 million 15-inch Wilderness, ATX and
ATX II tires that have been linked to 174
deaths and hundreds more injuries in the
U.S. alone, mainly involving rollovers of
Ford Explorers. The companies launched
separate efforts to quietly lay safety
concerns to rest by settling as many as
possible of hundreds of individual
lawsuits. The fact that each company is
now blaming the other for rollovers in
the Explorer resurrects the safety
controversy while handing plaintiffs'
lawyers ammunition to use in court.
"We couldn't possibly be in a better
situation in any case than to have the
two defendants fighting each other,"
said Miami plaintiffs' lawyer Mike Eidson,
co-lead plaintiffs' counsel for more than
200 individual death and injury cases
filed in federal courts nationwide against
Ford and Firestone. The cases have been
consolidated for pretrial purposes in U.S.
District Court in Indianapolis. "It's like a
malpractice case when the doctor and
the hospital blame each other," he
Firestone estimates that losing Ford as a
customer will cost the tire maker less
than 5% of its revenue, which totals
about $7.5 billion. Firestone's parent,
Japan's Bridgestone Corp., downplayed
Tuesday the impact of the breakup on
earnings. "We may revise in June or July
our group earnings estimates for the
current fiscal year ending December. But we don't think the
impact on our overall group sales will be big," a Bridgestone
Bridgestone said its U.S. subsidiary's deal with Ford in North
and South America only accounts for about 1% to 1.5% of its
total group sales. Even the parent Bridgestone group's sales
to Ford, including sales in regions other than the Americas,
make up just 2% of its total group sales, Bridgestone said.
However, it remains to be seen how the severed relationship
will play out. Firestone has pledged to "fulfill our contractual
obligations." That means different things for different
vehicles, since auto makers award a separate contract for
each car model's tires. Rival tire makers, such as Goodyear
Tire & Rubber Co. and France's Groupe Michelin, have excess
capacity and will eagerly snap up new business -- particularly
if it promises to lock in future contracts with Ford.
Firestone launched its attack on Ford at a hastily called news
conference at the tire maker's Nashville, Tenn., headquarters.
Chief Executive John Lampe said Firestone hired an outside
expert to conduct a full engineering analysis of Ford's leading
SUV model. That study isn't complete, but Mr. Lampe said
the information they have already gathered "heightens our
concerns about the Ford Explorer."
The attack hits Ford in a highly sensitive
area. The Explorer is one of Ford's
best-selling and most-popular vehicles, with
more than four million on the road. Ford
currently is launching a redesigned 2002
Explorer four-door model that is critical to
its profits at a time when U.S. and
European margins are under pressure.
Earlier Monday, Mr. Lampe, still hoping to
avert a divorce, personally went to
Nashville's charter airport to pick up a
contingent of Ford officials. The meeting
was tense, with Ford first presenting information it had
gathered on tire problems, then Firestone presenting its own
material about the Explorer.
Ford officials say their interpretation of the Firestone claims
data for Wilderness tires is that, while the unrecalled
Wilderness tires don't have as serious a tread-separation
rate as those that were recalled last summer, there is still
enough evidence of a safety risk to warrant a substantial
widening of the tire recall. However, Firestone has refused to
broaden the recall.
According to Firestone officials, the critical moment of
Monday's meeting came when Mr. Lampe asked the Ford
officials whether they could then discuss how the two
companies could work together to look at the Explorer's role
in the accidents. The Ford officials declined. After, Mr. Lampe
sent a letter to Mr. Nasser, which said, "Our analysis
suggests that there are significant safety issues with a
substantial segment of Ford Explorers. We have made your
staff aware of our concerns. They have steadfastly refused to
acknowledge those issues."
People familiar with the situation say the crisis was brewing
for months. There was always a contingent inside the tire
maker that didn't want to trust Ford, while another insisted
they should seek to smooth things over. Even exchanging
documents had become a tense tug of war.
Mr. Lampe confirmed in an interview after the news
conference that Firestone agreed to hand over its updated
warranty-claims information to Ford on May 11. But he said
this decision came only after Ford agreed to produce figures
that would allow Firestone to compare the performance of its
tires on two separate Ford models, the Explorer and the
"The day we got the Ranger data, we gave them our updated
figures," said Mr. Lampe. He emphasized that Firestone
wasn't seeking to conceal the warranty-claims information,
but rather had grown frustrated at Ford's refusal to discuss
the role of the Explorer in the accidents. Mr. Lampe said he
had personally appealed to Mr. Nasser last October to
cooperate on such work, but Ford never responded to
requests for such cooperation.
"We responded" to Mr. Lampe's proposals last October, a
Ford spokesman said late Monday. "The teams have been
working together and sharing information. They are looking at
In charts made available to the media, Firestone said
tread-separation claims occur as much as 10 times more
frequently on the Ford Explorer as on the Ranger pickup with
the same tires, based on a sample of claims data on Radial
ATX tires. For trucks equipped with Wilderness AT tires,
Firestone said there were no warranty claims for Ranger
rollovers linked to tread separation. However, rollover claims
for Explorers with these tires occurred at a rate of 23 per
million vehicles, the tire maker said.
In a statement Monday, Ford officials rejected Firestone's
charges about the Explorer, saying that for 10 years the
model "has ranked at or near the top in terms of safety
among the 12 SUVs in its class." And Ford said 2.9 million
Goodyear tires mounted on more than 500,000 Explorers have
"performed with industry-leading safety."
Ford stock was down 48 cents Monday to $26.65 in 4 p.m.
New York Stock Exchange composite trading.
The sudden outbreak of warfare between Ford and Firestone
comes after months during which the two companies said
they were trying to cooperate to resolve a continuing federal
investigation into the causes of the catastrophic
tread-separation accidents. The rupture ends an unusually
close commercial alliance that began in the early 1900s,
when Henry Ford first tapped Harvey Firestone's company to
make tires for Ford cars. That alliance led to more-personal
ties between the Ford and Firestone families: Current Ford
Chairman William Clay Ford Jr.'s mother is a Firestone.
Meanwhile, executives from Ford and Firestone were working
aggressively Monday to head off any possible backlash from
Capitol Hill. Ford's Mr. Nasser scheduled a meeting for
Tuesday with the chairman of the House Commerce
Committee, Rep. W.J. "Billy" Tauzin (R., La.), who led last
fall's hearings on the Firestone recall and was one of the
toughest critics in Congress of both companies. Separately,
Firestone's Mr. Lampe sent Mr. Tauzin a letter early Monday
informing him of the company's decision to terminate its
business dealings with Ford. He also said he spoke with Mr.
Tauzin by phone.
-- Milo Geyelin contributed to this article.
Write to Timothy Aeppel at firstname.lastname@example.org, Joseph
B. White at email@example.com and Stephen Power at