May 24, 2001

                    Tire Threat: The Road to Recall

                    Bridgestone Gives U.S. Unit Control Over the Tire Crisis

                    By TODD ZAUN
                    Staff Reporter of THE WALL STREET JOURNAL

                    TOKYO -- When Bridgestone Corp. replaced its tough-talking
                    former president five months ago with a reserved engineer, it
                    was a move typical of a Japanese company under fire. The
                    changing of the guard was a signal that Bridgestone, hoping
                    the crisis over deadly accidents involving its Firestone brand
                    tires was fading, would take the more diplomatic tack of
                    quietly waiting for things to get better.

                    But the storm battering its U.S. subsidiary,
                    Bridgestone/Firestone Inc., has returned. Bridgestone and
                    Ford Motor Co., whose Explorer sport-utility vehicles suffered
                    fatal accidents involving failures of Firestone tires, are again
                    trading accusations as Ford embarks on a second,
                    even-bigger recall of Firestone tires. And so Bridgestone's
                    new chief executive, Shigeo Watanabe, is shifting to a
                    strategy that in some ways is even more aggressive than
                    that of his combative predecessor to protect his critical U.S.

                    A key part of that strategy is to give more autonomy than
                    ever before to an American management team, led by
                    Bridgestone/Firestone CEO John Lampe, to run the U.S.
                    operation's crisis-control effort without having to seek
                    constant approval from Tokyo.

                    Local Decision

                    That change was strikingly apparent on Monday, when
                    Firestone moved to sever business ties with Ford, as the
                    companies traded blame over the traffic accidents leading to
                    last year's recall of 6.5 million Firestone tires. In planning
                    talks before the announcement, Mr. Watanabe and Mr. Lampe
                    discussed the possibility of making such a break. But "Lampe
                    is the person who ultimately made the decision" to break
                    with Ford, Mr. Watanabe told reporters Monday in Tokyo,
                    stressing that he fully backed Mr. Lampe.

                    The move was in response to reports that Ford was planning
                    to vastly expand the tire recall, which it did Tuesday when
                    Chief Executive Jacques Nasser said Ford would replace 10
                    million to 13 million Firestone Wilderness tires that weren't
                    subject to the earlier recall initiated by

                                      Leaving such a critical decision to its
                                      American managers is unprecedented for
                                      Bridgestone, and unusual among even the
                                      most international of Japanese
                                      conglomerates. Before Mr. Lampe took over
                                      in October, the Japanese tire maker
                                      essentially ran its Firestone subsidiary by
                                      remote control from Tokyo, dispatching
                                      Japanese executives, such as Mr. Lampe's
                                      64-year-old predecessor Masatoshi Ono, to
                                      serve as the link between local managers
                                      and the headquarters.

                    Bridgestone spokeswoman Setsuko Ozaki said Mr. Watanabe
                    and other Bridgestone officials weren't available to comment.

                    A Losing Battle

                    The shift in strategy stems from a recognition by Bridgestone
                    executives in Tokyo that they were badly losing the public
                    relations battle with Ford, and needed to move quickly and
                    decisively to counter Ford's claims that problems with
                    Firestone's tires were the sole cause of the accidents.

                    The accidents have been linked to 174 U.S. deaths and more
                    than 700 injuries, mostly involving Ford Explorers that rolled
                    over after Firestone tires suddenly lost their treads.

                    Insiders acknowledge a shift. "We
                    have stated for a long time that
                    we didn't think the problem was
                    just with the tires. But Ford is
                    such a huge company and we are
                    just a supplier, our argument
                    wasn't having the same impact,"
                    said a Bridgestone executive. "In
                    the end, if we didn't make a big
                    announcement, such as ending
                    business ties, we didn't think we
                    could get our message out."

                    With Bridgestone's backing, Mr.
                    Lampe has also moved to give
                    the company a bigger voice in Washington by opening an
                    office there early this year and hiring a high-profile lobbyist.
                    Mr. Lampe has taken a more active role in publicly speaking
                    for the company than his predecessor, Mr. Ono, who
                    struggled through testimony before the U.S. Congress last

                    Trading Punches

                    "It's a credit to the management of Bridgestone in Tokyo that
                    they did replace the linguistically challenged Japanese
                    manager with an American who is prepared to trade punches
                    with Jacques Nasser," said Howard Smith, an auto analyst at
                    ING Baring Securities in Tokyo.

                    To be sure, Bridgestone CEO Mr. Watanabe has so far shown
                    himself to be a much-less controversial figure than Yoichiro
                    Kaizaki, his predecessor, who originally made his name
                    turning around Firestone in the early 1990s after Bridgestone
                    bought the troubled U.S. tire maker. Mr. Kaizaki became
                    legendary in Japanese business circles for his toughness,
                    including the way he withstood withering criticism in the U.S.
                    over his attempt to break a strike by Firestone workers.

                    That attitude backfired in the recall crisis last year, when Mr.
                    Kaizaki compounded Bridgestone's public-relations woes in
                    the U.S. by maintaining a long public silence over the issue.
                    Mr. Watanabe, by contrast, held a news conference a day
                    after Mr. Lampe unveiled the rupture with Ford.

                    The question now is how far Mr. Watanabe will go in pursuing
                    the more aggressive public-relations campaign.

                    Distancing itself from Ford will allow Bridgestone/Firestone to
                    be more aggressive in making its case that Ford shares some
                    of the blame for the accidents. Bridgestone concedes there
                    were problems with the tires it recalled in August, but insists
                    that the design of the Explorer and Ford's decision to
                    recommend a lower tire pressure also played a role. Low tire
                    pressure can contribute to tire failures.

                    But Bridgestone's decision to fight back more fiercely against
                    Ford naturally entails big risks. "It seems likely that both
                    sides will end up covered in mud," says Clive Wiggins, an
                    analyst at Commerz Securities in Tokyo.

                    Write to Todd Zaun at