Ford VS. Firestone

MMS Chapter 23

The Problem

• • • • 200 deaths in the US due to cars rolling over 60 deaths in Venezuela 14 deaths in Saudia Arabia Tread separation a possible cause of the cars torolling over

From the Beginning

• • • Partners dating back to 1895 First contract established in 1906 Martha Firestone, Harvey’s granddaughter, married William Clay Ford, Henry Ford’s grandson

The Blame Game - Firestone

• • • In 2001, Firestone issued a report blaming the Explores design for all of the accidents Any tread separation would have caused the accident The tread separation claims occurred ten times more frequently on Ford’s Explorer than on Ford’s Ranger, a pickup

The Blame Game - Ford

• • • • In 2001, Ford gave the NHTSA a report blaming Firestone for manufacturing flaws The Explorer had ranked among the top in terms of safety among the 12 SUVs tested for 10 years For the much of the time the Explorer ranked high in safety, Goodyear tires were used Rangers are taken on long distance trip where the tires could get too hot

Who is at Fault?

• • • Ford recommended a low inflation level for the tires, which causes greater heat build up Ford chose to use grade C Firestone tires instead of more heat resistant tires such as grade B Firestone had been linked to tire failure, most manufactured from a plant in Illinois

Drivers at Fault?

• • • Not being aware of their tires inflation levels Driving too fast over long periods of time Not knowing how to handle tire blowouts

The Consequences

• • • Ford reported it would triple its initial recall, costing over $2.8 billion In 2001, Ford Explorer sales decreased dramatically Ford reported its first loss in operations since 1992

Consequences Cont.

• • Firestone’s earnings dropped 80 percent in 2000 A net loss $510 million, largely due to $750 million in legal expenses

Rebuilding Firestone’s Image

• • • Option 1 – De-emphasize Firestone and push the Bridgestone name Option 2 – Get rid of Firestone’s name Option 3 – Salvage the brand

What Went Wrong?

• • New York Times story came out in 1996 Blaming took place instead of solving the problem immediately • Stubborn mind set of top executives