THE FORD-FIRESTONE CASE

I. Background of the Case

In 2000, Bridgestone-Firestone recalled 6.5 million Firestone Wilderness, AT, ATX and ATX II
P235/75R15 tires (15 tires). Firestone tires included in the recall were installed as original equipment
on Ford Explorer (model years 1991-2000), among other vehicles. This recall was a major blow to
Firestone, which was one of the most admired corporations in the United States (US). It has been
caused by thousands of complaints involving hundreds of deaths and injuries as a result of vehicle
rollover after Firestone tires failed through sudden tread separation from 1992 to 2000.

II. Statement of the Problem
What is the best remedy by Firestone, Ford and/or US regulators in order to end the problem on fatal
accidents being caused by tread separation on tires?

III. Objectives of the Case
This case aims to:
Identify the significant operational and policy lapses of Ford, Firestone and US regulators that
led to the fatal accidents caused by tread separation from the Firestone tires.
Establish a sound recommendation on the best solution/remedy to end the problem on fatal
accidents caused by tread separation on tires of Ford, Firestone and/or US regulators based
on the analysis of their respective lapses.

IV. Areas of Consideration
Presented below are the lapses of key stakeholders that led to the fatal vehicular accidents across
US and overseas:
A. Lapses of Firestone (including the tire industry)
Firestone was aware of overseas complaints on their tires, but it hesitated at sending
Ford Explorer owners a letter offering the option of upgrading their original tires from
Fords World-wide export division for fear that US authorities would have to be
notified and that the Saudi government would react dramatically.
Cost pressures could have resulted in low quality of tires being produced by
Firestone. Makers of autos and tires around the world were overly concerned about
price and market share but not safety.
Tire makers rely on their own knowledge of what type of tire works on what types of
cars.
Some suspect that a strike in the Decatur plant of Firestone, poor process control
and non-standard operating procedures could have led to tread separation.
During manufacturing, tire rubber was allowed to sit too long that solvents were used
haphazardly to try to improve the rubbers adhesive properties and that efforts to
speed up the vulcanization process may have led to flawed tires.
After Firestone encountered worker strike, the company started a schedule of 7 days
a week and 12 hour shifts. Production workers voiced complaints and maintained that
with the new work schedule it was very hard to do good quality work.
Workers at Decatur say they commonly gassed or sprayed a chemical solvent on
the rubber to make it thicker. Several workers say they were told to stop using the
solvent in the last year.
In 1997, Bridgestone/Firestone began receiving numerous complaints of injuries and
property damage involving certain Firestone tires that were not recalled until August
2000.
Top executives of Bridgestone/Firestone came under criticism for not responding
more quickly and forcefully to consumer fears in the US.
B. Lapses of Ford (including the auto industry)
After replacing tires in Saudi Arabia, Malaysia and Venezuela, Ford held off taking
action in the US because its review of various databases assured the company that
there was not a problem in the US, which turned out to the wrong.
Makers of autos and tires around the world were overly concerned about price and
market share but not safety.
Car makers typically dont provide a test car for the tire makers to use in their design
process.
Ford exclusively equipped all 1998 model Explorers with Firestone tires despite of
frequencies of related fatal accidents. Ford did not consider other supplier, such as
Goodyear since Goodyear could not match Firestones price.
The tire maker and the carmaker gave slightly different advice to owners of Explorers
that have the tires.
Most SUVs are tall and heavy for their size. Their portly weight and a high center of
gravity are not conducive to handling around obstacles or other accident avoidance
maneuvers.
Ford threw the entire blame on Firestone, stating that the fatal accidents were caused
by tire problem and not vehicle problem.
Some members of Congress believe that Ford was not straightforward with Congress
about test data.
C. Lapses of US Regulators
The National Highway Traffic Safety Administration (NHTSA) did not immediately act
on the reports of Sam Boyden (from State Farm Insurance) in 1998 but waited until
2000 when Houstons KHOU TV station aired a segment on tread separation that
prompted several dozen people in Texas to report similar trouble to regulators.
The government did not collect necessary data on how many tire failures were there,
and the tire makers were also unwilling to share their data on their own brands.
Federal regulators in Washington were unaware of overseas recalls, even though
some US and British government-operated Ford Explorers were among those getting
free new tires in the Gulf.
Fatalities are investigated very thoroughly, but property damage crashes are hardly
investigated at all.
V. Alternative Courses of Action
In order to avoid future fatal mishaps in the future, below are the proposed alternative courses of
action:
1. Suspend operations at Decatur II, factory, which produced a high percentage of the
tires involved in the tread-separation accidents if improvements have to be made to
equipment or facilities there

Suspending operations to install improvements on equipment or facilities in Decatur II will
reduce/minimize the tread-separation accidents. Initially, Bridgestone/Firestone will incur
great amount of costs to do this which will further hurt the ailing financial condition of the
company. But by doing so, in the long run, it may eventually reduce the costs related to
product recalls and save the company from total loss of customers and closure of the entire
business. However, suspending operations will also mean temporary lay-offs of workers while
the improvements are still on-going.

2. Ford to begin offering consumers the option of choosing tires on all its vehicles,
allowing customers to gradually able to choose an alternative to Firestone tires on
many new vehicles

Allowing customers themselves to choose alternatives to Firestone tires seems that Ford
would just like to shift the burden, responsibility and risk of the company to the customers/car
owners. This is not a good practice of corporate social responsibility since the company just
wants to free itself from liabilities arising from possible accidents by disclaiming later on that
customers are the ones who choose the wrong tires. Since Ford is the seller and expert on
mechanics, it should be Fords responsibility to choose the safest supplier of tires taking into
consideration the importance of customers/car owners/passengers safety over costs. This
alternative does not also guaranty that future fatal accidents will be minimized or avoided.

3. Improvements in regulations by the US government by passing legislation that
requires auto companies to replace motor vehicle parts in a foreign country for safety
reasons to notify American regulators and would require tire manufacturers to give
regulators data on warranty claims, by updating the standards used for SUV
certification and by publishing rollover ratings

With this alternative, US regulator increases its proactiveness by increasing/expanding the
scope and timeliness of information being gathered from automakers encompassing
complaints around the globe not just in the US. With timely and expanded scope of
information, US regulator can indirectly use its authority to compel automakers to perform
prompt corrective actions before any major disasters happen. However, without full and
honest participation/compliance of automakers (such as deliberate concealment of
information), the government still cannot do much to avoid fatal accidents in the future.

4. Combination of all three alternatives above being simultaneously implemented by all
parties involved but with more firm actions

Since all stakeholders (Ford, Firestone and US regulators) have their respective lapses that
led to the fatal car accidents in the 90s, an alternative to remedy the problem is for all of them
to simultaneously improve their respective processes and internal controls. For the
manufacturers, Ford and Firestone, exhaust all production and safety techniques, including
the use of fishbone diagram and Pareto Analysis in identifying causes of production defects
and assessing the overall quality and safety of cars and tires being manufactured. Quality
control processes and stress testing programs must be thoroughly reviewed,
revised/improved and invested upon. Moreover, full cooperation and faithful compliance of
Ford, Firestone and other companies is necessary for the regulations be effectively
implemented. Firestone should help its workers, who will be temporary laid-off as a result
manufacturing improvement, by seeking part time jobs. On the other hand, Ford should be
the one to choose the right suppliers of its tires, putting on top of priority the safety of
customers over costs that will be incurred; otherwise, if it insists on allowing customers to
choose their own preferred tires, Ford must disseminate added information to customers on
the strengths and weaknesses of each tire brand/supplier, and Ford must not be totally freed
from liabilities that may arise from wrong choice of tires of customers since it is Ford, being
the car manufacturer, which is expected to be the expert on mechanics. Rather than working
independently according to their own financial/operational interests, car manufacturers and
car parts suppliers must work hand-in-hand in determining the specifications of car
components that best fit the car models being manufactured.

VI. Recommendation
The best solution in order to avoid similar fatal mishaps in the future is for all the parties involved to
simultaneously implement process and control improvements taking into consideration their
own respective lapses that contributed to loss of several lives, injuries and damaged
properties within a decade. Safety of customers must be supreme of all and must never be
compromised despite of different interests of companies and regulator. Pro-activeness must be
developed by all parties involved which is exercised through timely and accurate information being
reported to authorities, timely investigation and implementation of stricter regulations by the
authorities, and major investments in manufacturing and safety processes and control improvement
by manufacturers. Moreover, cooperation among parties involved is very important since each party
functions like a piece of puzzle in the whole picture of auto-industry.

Reference
Pinedo, M.; Seshadri, S.; Zemel, E. (2000). The Ford-Firestone Case, Department of Information,
Operations and Management Sciences, Leonard N. Stern School of Business, New York University, New
York, NY 1002

Group 3 Members (BUS560M-GTA):
1. Aubrey Famatigan
2. Carmi Magno
3. Ronnell Dy