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Firestone sets layoffs
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October 17, 2000: 6:32 p.m. ET
Oversupply pares output at plants in 3 states; 450-plus workers affected
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NEW YORK (CNNfn) - Embattled tire manufacturer Bridgestone/Firestone said Tuesday it plans to trim production at three plants and lay off more than 450 employees in order to adjust for oversupply of certain tires.
Bridgestone/Firestone Chief Executive John Lampe said he expects the company will not be profitable for the year because of the recall. However, he said he expects a return to profitability in 2001.
"With the charges we've taken for the recall I would expect the unit would not be profitable for the year," Lampe said during a Tuesday afternoon briefing with reporters. "We've taken substantial charges for the recall that will probably put us in a deficit position."
The company said the layoffs will begin Oct. 29 at plants in Decatur, Ill., Oklahoma City, and Lavergne, Tenn. -- near the company's U.S. headquarters - with 450 at the Decatur plant alone.
The layoffs at Decatur, the plant that produced many of the allegedly defective tires being recalled by Firestone, are indefinite. The production cutbacks in Oklahoma and Tennessee will last for at least 28 days, the company said.
Lampe said the layoffs at Decatur were not a sign the company is thinking about permanently shutting down the plant.
"In no way is our reduced production schedule a reflection of that plant's importance to our manufacturing," Lampe said. "The plant plays a critical role in our total manufacturing process. We stand behind our employees at the Decatur plant."
Lampe also said the layoffs and production cutbacks were needed in order to reduce inventories, which he said were about 50 percent higher than normal as a result of overproduction in anticipation of a possible strike in September.
He also cited a decrease in demand for Firestone-brand tires, as well as a shifting market trend to larger-sized tires.
The layoffs and production cutbacks include scheduled holiday closings, Lampe said, adding that affected employees would not be eligible for holiday bonuses or pay. However, those workers will receive some type of benefit package.
Lampe stressed that the cutbacks would not affect the recall or replacement programs, which he expects to be completed by November.
On Aug. 9, Bridgestone/Firestone recalled 6.5 million 15-inch models of its ATX, ATX II and Wilderness AT tires because of tread-separation problems. The tires mostly came as original equipment on Ford Explorers and are under investigation by the National Highway Traffic Safety Administration (NHTSA) for possibly causing more than 100 fatalities and more than 400 injuries.
The company is also replacing an additional 1.4 million tires included in a NHTSA advisory in September, although they are not part of the recall.
Production of replacement tires related to the safety recall will continue uninterrupted, the company said Tuesday.
Lampe said about 4.2 million tires have been replaced as part of the recall.
Bridgestone/Firestone plans to cut back production at the Lavergne plant Oct. 29-Nov. 11, during which time it will produce 7,000 tires a day, and will shutter the plant from Dec. 14-Jan. 2.
The Oklahoma City plant will be completely idled from Oct. 29-Nov.7 and from Dec. 10-Jan. 2.
The Decatur plant will be shuttered from Dec. 14-Jan. 2.
Earlier Tuesday, NHTSA raised the toll to 119 deaths -- 18 more than previously reported -- linked to the failure of Firestone tires on sport/utility vehicles and light trucks.
Since NHTSA's last report Sept. 22, reported injuries have risen by about 100 to more than 500, and complaints have risen to more than 3,500 from 2,200.
Click here for full coverage on the Firestone recall
NHTSA said ongoing investigations and publicity into the recall helped spark additional complaints.
A Firestone spokeswoman confirmed the new numbers Tuesday.
"Our deepest sympathies go out to the friends and families of those who died in these accidents reported to the National Highway Traffic Safety Administration," the company said Tuesday in a prepared statement. "We are working around the clock in our efforts to complete the recall in November and to finding the root cause of the tire problem."
In other developments Tuesday, a panel of federal judges heard arguments for and against consolidating the more than 100 lawsuits against Bridgestone/Firestone and Ford (F: Research, Estimates) alleging deaths and injuries caused by tread separation.
In addition, Bridgestone/Firestone's independent expert hired to investigate the cause of tread separation problems, issued a preliminary report in which he said all evidence currently points to a "slowly developing fatigue crack" that eventually penetrates the steel belts until the tires fail.
Sanjay Govindgee, a professor with the University of California at Berkeley's Civil and Environmental Engineering department, has been investigating the recall since Sept. 20. He expects to issue a final report in early 2001. 
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