Mark Anthony Rodriguez had just become the latest victim of a rapidly widening safety crisis that has already taken the lives of 88 Americans and driven fear into the hearts of motorists who viewed the sport utility vehicle as the ultimate family car. Even as the Rodriguez family planned Mark Anthony’s funeral, top executives from Ford Motor Co. and Bridgestone/Firestone were summoned before congressional panels last week to explain their role in a crisis that has mushroomed into a legal, public-relations and regulatory nightmare that threatens to consume both companies. With the possibility of criminal charges added to the mix, the simmering tensions between the long-time partners have burst into open hostilities. The two companies are engaged in bitter finger-pointing over who is responsible for the tire problems and why they didn’t come to light sooner. Each is now mounting its own defense, a dynamic that gives joy to the personal-injury lawyers who have already hit the companies with more than 60 lawsuits. NEWSWEEK has learned that Ford chairman William Clay Ford Jr. is likely to take to the airwaves in a PR blitz designed to rebuild Ford’s tarnished image.
Crisis-management experts aren’t likely to write flattering case studies about how each company has responded so far. Before the congressional panel, Bridgestone’s chief executive, Masatoshi Ono, said he accepted “full and personal responsibility” for the recall of 6.5 million ATX and Wilderness tires, found mostly on Ford Explorers. But he added that his company could not find a design defect that was causing tread to peel away at high speeds, and Firestone executives continued to blame much of the problem on consumers for improperly maintaining their tires. In his testimony, Ford’s chief executive, Jacques Nasser, defiantly pointed a finger at Firestone, saying his company didn’t know there was a defect with the tires “until we virtually pried the claims data from Firestone’s hands and analyzed it” in July. Both companies agreed on one point, however: they said they didn’t realize the scope of the lethal tire troubles until just before they issued a recall on Aug. 9.
But questions are mounting about just how much each company knew–and when it knew it. NEWSWEEK has obtained documents that show Firestone was chronicling a pattern of tire failures for the last three years, while Ford was also getting an early warning about safety problems from its own warranty data. And an internal Ford memo shows suspicions between the business partners about the safety record of the tires.
For their part, lawmakers have rejected the companies’ claims of ignorance about the lethal problem. “That’s rubbish,” snapped New Mexico Rep. Heather Wilson. “You knew a long time ago.” By the weekend, lawmakers were proposing new legislation to hold companies criminally responsible for covering up product defects, and Attorney General Janet Reno is considering an investigation into how Ford and Firestone handled the issue. This week Sen. John McCain will call Nasser and Ono back to Capitol Hill to explain again why they didn’t act sooner to fix tires that began failing at an unusually high rate at least four years ago. Analysts say Firestone’s very future in the United States is in question. For Ford the crisis threatens its crown jewel, the Explorer, which accounts for 25 percent of its annual profits.
That’s why the Ford chairman is about to emerge from the shadows to defend his besieged company. Given his amiable and effective persona, observers have been asking, “Where’s Bill?” In an interview with NEWSWEEK, Ford would not discuss his plans to take on more public involvement in the crisis but acknowledged that Ford’s reputation has “really taken a heck of a hit. There’s nothing more important to me than our company’s reputation, because at the end of the day, that’s my name on the building,” he said. “That’s why going through this is personally so painful.” He said he remains frustrated that the cause of the tire defect has not been found and believes that uncertainty is fueling the crisis. And while he is convinced that the problem is with Firestone’s tires and not the automaker’s Explorer, Ford said his company is still examining how it handled the problem. “I can’t tell you with 100 percent certainty that we did everything right,” he said. “But I can promise this: we’ll be open and honest, and if we uncover something we’ll speak up.”
At a Ford board meeting this week, the scion will present his directors with a plan to increase his public role in the crisis. Ford, who is the great-grandson of both Henry Ford and Harvey Firestone, is likely to appear in television ads that extol the Ford family heritage and promise that his company will always stand by consumers.
Better PR, however, won’t blunt the escalating threat to the company. Congressional investigators say they are following a paper trail that shows both companies knew far earlier than they are publicly admitting that something was terribly wrong with the 15-inch tires outfitted on Explorers. Firestone’s own financial analyses of damage and injury claims against the company document a pattern of problems at least as early as 1997. NEWSWEEK has learned that congressional investigators have three Firestone reports, from 1998, 1999 and 2000, that show unusually high rates of failures and tread peeling from ATX II tires, one of the types involved in the recall. In the 1999 report, obtained by NEWSWEEK, those recalled tires represented the majority of the company’s tire claims in 1998 and 1997, even though that model accounted for less than 10 percent of Firestone’s total production. What’s more, the 1999 report indicates that more than half the “seperation [sic]” claims Firestone received came from tires produced at its Decatur, Ill., factory. The tiremaker has contended it discovered only in July that the Decatur plant was the primary source of the problem, which led to a recall of the tires days later.
But the report’s financial analysis of accident claims going back three years shows that the company had long been compiling and analyzing data on tires that shredded and where they were made. When asked at the congressional hearings last week about a similar report, dated Jan. 19, 2000, Firestone executive vice president Gary Crigger said that the data were compiled to assess only the company’s financial liability. They were not shared, he said, with the company’s safety engineers.
Congressional investigators also believe Ford ignored trends in its own warranty data indicating that it had a tire problem on its Explorer. Even though Ford doesn’t warranty tires–that’s Firestone’s responsibility–the automaker received “hundreds” of claims for defective tires between 1991 and 2000, say congressional sources who have reviewed Ford’s warranty data. Among those incidents are 148 claims for tread separation, the sources say. A Ford spokesman said any tire complaints the automaker received from consumers were “anecdotal” and turned over to Firestone for investigation. And Firestone repeatedly said there was no problem with the tires, Ford officials say.
One thing is undisputed: the blowouts, deaths and lawsuits began nearly a decade ago, shortly after the Explorer first hit the road. As sales soared for the wildly popular Explorer, reports of tire problems began to grow. But the accidents–and consumer complaints flowing into Firestone–began rapidly escalating in 1996. Plaintiffs’ attorneys contend that the accidents began mounting then because highway speed limits increased to 70 miles per hour, exposing the tires’ design flaws. “Even the junkiest tires stay together when the speed limit is low,” says Ocala, Fla., lawyer Bruce Kaster, who has been involved in hundreds of tire lawsuits. Kaster insists that Ford “started the whole chain of events” by giving improper specifications to its tire supplier. Kaster and other plaintiffs’ attorneys accuse Ford of lowering the tire pressure on the Explorer to prevent an unstable vehicle from flipping over. Ford officials call that tire-pressure allegation a “red herring” and point to accident data showing that the Explorer rolls over 26 percent less than other SUVs. They also say similar Goodyear tires on Explorers didn’t have problems.
By 1998 Ford began receiving reports of Firestone tread separations on Explorers in Saudi Arabia. Ford took the complaints to Firestone, but had little faith that its tire supplier was owning up to problems. “Is it possible that Firestone is not telling us the whole story to protect them from a recall or lawsuit?” wrote Ford executive Glenn R. Drake in a Jan. 28, 1999, e-mail obtained by NEWSWEEK. He urged Ford to launch an internal investigation “for our own peace of mind.” But Ford didn’t investigate the problem because it didn’t have enough information from Firestone, Ford officials say.
As tire-shredding problems began to spread to other hot countries, like Venezuela, Firestone insisted its consumers were to blame for improperly caring for their tires. When Firestone refused to recall the tires, Ford began to replace them in August 1999 on nearly 50,000 vehicles in 16 foreign countries. But Ford didn’t tell U.S. authorities about its overseas tire recall until federal safety regulators opened an investigation into Firestone tires in May, when consumer complaints jumped following media reports of Firestone tire failures. Facing accusations of a cover-up, Nasser pledged in the hearings last week that from now on, Ford would immediately reveal all foreign recalls to U.S. regulators. But Nasser was not contrite. He made his strongest accusations yet against Firestone. And he detailed how Ford had to ask Firestone five times this summer to turn over claims data that would finally illuminate the problem.
Firestone, wary of being openly hostile toward its biggest customer, is subtle in its criticism of Ford. In his apology, Ono talked of “families who have lost loved ones in these terrible rollover accidents.” That’s a jab at the high-riding Ford Explorer’s propensity to flip over in an accident.
The tense relations between the companies put Ford’s chairman in an unusual and uncomfortable position. Firestone has been supplying tires to Ford since 1906. Chairman Bill Ford’s mother, Martha, is a Firestone heiress whose father was chief executive of Firestone. Even as the relationship has deteriorated, Ford needs Firestone for replacement tires. Despite Firestone’s problems, the company remains confident it can work through the crisis. “We’ve been through tough times before and come back,” says Firestone vice president Christine Karbowiak. “We’ll do it this time.”
Safety advocates are calling for a much wider recall, and federal regulators did issue a warning on an additional 1.4 million Firestone tires on Sept. 1. But for now Firestone is sticking with its original recall of 15-inch ATX, ATX II and Wilderness AT tires made at the Decatur plant. While fears are spreading about all Firestone tires, even Ford acknowledges that its longtime supplier still makes “world class” tires. And for now Ford still intends to offer Firestone tires on a redesigned Explorer coming next year, although it will also offer consumers a choice of ordering Michelin tires. Both Ford and Firestone report their sales have held up well during the crisis.
But the families of the victims are not in a forgiving mood. To them, no apology or excuse will ever make up for the fact that the companies could have warned consumers earlier. “If they would have told people, maybe they wouldn’t have made as much money, but it would have saved dozens of lives,” says Sara Romero, 12, who survived an Explorer rollover in Florida last December that killed her 37-year-old mother. “My mom didn’t have to die. They could have told us.” Now Ford and Firestone can tell it to a judge. The Romero family plans to file a wrongful-death lawsuit this week.
