NEW YORK (CNNfn) - Ford Motor Co. knew of problems with Firestone tires on Explorer sport utility vehicles in Venezuela in 1998, two years before they began replacing tires for customers there, officials for the automaker said Tuesday.|
Ford officials said they asked Bridgestone/Firestone to investigate a handful of media reports out of Venezuela in 1998 alleging problems with their tires on Ford vehicles.
But Ford only began replacing tires in May after waiting for Bridgestone/Firestone to act. The automaker also denied charges that it withheld information about defective tires that may have caused at least 10 deaths in Venezuela, and also said the design of the Explorer did not contribute to tread separations and blowouts in Firestone tires.
Jason Vines, Ford's vice president of communications, said Tuesday that more than half of the Firestone tires recalled in Venezuela earlier this year were not built to Firestone's own specifications.
In addition, the Florida attorney general's office announced Tuesday that the two companies are targets of a civil racketeering investigation, and that it has issued subpoenas for an exhaustive review of corporate records.
The office is seeking records on research and design of tires, reported defects, the number of factory workers assigned to each shift and training records. Spokesmen for Bridgestone/Firestone and Ford said they would cooperate.
Citing its own analysis of the tires, Ford said it found "overwhelming evidence" that the tread separation problem in Venezuela appeared to be at least "500 times worse" than in the worst cases in the United States where Firestone is in the process of recalling 6.5 million tires, most of which are on Ford's popular Explorer model.
Ford began replacing more than 156,000 tires on 39,000 vehicles in Venezuela at its own expense in May. Although many of the replacements were other Firestone tires, a good number of Goodyear and other brands were also used.
The automaker's statement comes as both companies are facing scrutiny over the way the recall is being handled. In the United States, congressional investigators are preparing to hold hearings on the recall next week and in Venezuela, government officials are also investigating.
Despite the criticism, Ford said it has no plans to drop Firestone as a leading supplier of tires.
Ono to testify in Washington
In other developments Tuesday, Bridgestone Corp. Chairman Masatoshi Ono agreed to testify at the House subcommittee's hearings next week, a congressional staff member said. Ford Chairman Jac Nasser will not testify, but the automaker said two other Ford executives will travel to Washington to testify.
Concerns that the recall may hurt Ford's credibility Tuesday prompted Dresdner Kleinwort Benson analyst David Garrity to downgrade his rating on Ford to "add" from "buy".
"We believe that Ford's recall of over 46,000 Explorer SUVs overseas since August 1999 undermines Ford's efforts to place responsibility on Bridgestone/Firestone in connection with the U.S. tire recall," Garrity said in a research note. "As a result, Ford's credibility with U.S. consumers, legislators and regulators may suffer. We are thereby threatening the January 2001 launch of the new model."
The House Commerce Subcommittee on Telecommunications, Trade and Consumer Protection, chaired by Rep. Billy Tauzin, R-La., will hold joint hearings with the Oversight and Consumer Protection Subcommittee on the tire problems Sept. 6, congressional spokesman Jon Tripp said.
Congressional staffers said the investigators are trying to find out what the tire maker knew about the problems that caused tread separation failure that has been linked to hundreds of accidents and as many as 62 fatalities. The Aug. 9 recall involves 6.5 million Firestone ATX, ATX II and some Wilderness AT tires. Ford trucks and SUVs, especially the Explorer, are among the chief users of the tires.
Bridgestone ramping up production
Bridgestone is stepping up production in Japanese tire plants to support the recall by its beleaguered Bridgestone/Firestone unit, but a company admission that it mislabeled tires brought new criticism and signs of a rift with Ford.
The production increase will raise the number of tires produced in Japanese plants by 650,000 above typical production levels between now and December. That is an increase from the production hike of 450,000 additional tires announced by the Japanese parent company last week.
Company officials said they also are scrambling to charter Boeing 747 freighters that can carry about 4,000 to 5,000 tires each to speed the supply of tires needed to cover the recall.
Ford also aired a commercial Monday in which CEO Nasser told customers the automaker has received commitments for additional tires from Firestone competitors Goodyear Tire & Rubber Co. (GT: Research, Estimates), Michelin of France and German tire maker Continental AG.
Bridgestone/Firestone manufacturing plants in the United States have increased production by 7,000 tires daily to help fill the replacement demand created by the recall. Ford shut down three of its assembly plants for three weeks starting Monday to divert 70,000 tires originally slated for new vehicles to use as replacement tires.
Widening rift between Ford and Firestone
Despite these stepped-up efforts, a rift appeared to be developing between Firestone and Ford (F: Research, Estimates), the world's second-largest automaker and the customer most affected by the problem tires.
Firestone officials said Tuesday that it would not recall mislabeled Venezuelan tires made for Ford vehicles. The labels indicated the tires were made with three layers of reinforcing nylon, as requested by Ford, rather than just two, as they normally were made.
However, Ford is asking tire dealers there to return any unsold mislabeled tires, according to published reports.
The extra nylon layer had been requested by Ford in order to deal with the hot weather in Venezuela, Colombia and Ecuador. Hot weather is believed to play a role in the tread separation problems that have caused the recall. The company said the mislabeling was unrelated to tire problems in the United States, and should not have affected tire safety or quality in South America.
Congressional officials revealed Firestone officials admitted to "inadvertent" mislabeling of nine tire lines manufactured in Venezuela. Firestone and Ford face possible criminal charges due to accidents there.
In its most direct public criticism of its supplier since the start of the crisis, Ford officials said Firestone should recall the tires.
"Ford of Venezuela folks have suggested to Firestone people that they want to have their own recall," Ford spokesman Mike Vaughn said. "We stepped up to the plate and did it early. Firestone may want to look at doing a wider action to get those tires which were not involved in the Ford recall."
The Wall Street Journal reported Tuesday that Venezuelan officials now are looking into reports that the Ford Explorer has continued to have rollover accidents there even when equipped with Goodyear tires that did not have the tread separation failure. A Ford official told the paper it would need to see details of the accidents, but that the Explorer has a better record on rollover accidents than other sport/utility vehicle of its size, according to U.S. data.
Shares of Bridgestone, which have lost nearly 40 percent since the Aug. 9 recall, gave back another 4.5 percent Tuesday, closing off 72 yen, or 68 cents, to 1,526 yen, or $14.34, in Tokyo trading. Shares of Ford fell 50 cents to close at $25.69 Tuesday.
-- from staff and wire reports