The Ford-Firestone Blowout

The Ford-Firestone Blowout

The Ford-Firestone Blowout

Moneybox
Commentary about business and finance.
May 23 2001 11:30 PM

The Ford-Firestone Blowout

There are corporate squabbles, and then there are corporate squabbles. It's one thing for two firms competing for the same consumers to take potshots at one another. Or for rival suitors in a takeover battle to exchange public digs. But the meltdown of the relationship between longtime allies Ford and Firestone (a wholly owned subsidiary of Bridgestone) is truly astonishing.

Advertisement

"We simply do not have enough confidence in the future performance of these tires' keeping our customers safe," Ford CEO Jacques Nasser told the media yesterday. John Lampe, CEO of Firestone, countered, "The real issue here is the safety of the Explorer." Ford has announced it will replace 13 million Firestone tires on its Explorers. Firestone says the "erosion" of mutual respect and trust between the firms has pushed the company into "ending its tire supply relationship" with Ford (although it's worth noting that all hard feelings will be set aside in the European and Asian markets, where Ford will continue to buy Firestone tires).

Each man backs up his accusations with talk of internal analysis that finds blame in the other's product for last year's rash of Explorer crashes, which are reported to have resulted in more than 100 deaths in the United States. The rhetoric has now reached a point where both cannot be right. And in fact, it's on the verge of leading to a situation in which it's hard not to wonder whether somebody is lying, either directly or by way of misleading analysis.

In the breakup letter that Lampe handed over to a Ford executive on Monday, he writes: "Our analysis suggests that there are significant safety issues with a substantial segment of Ford Explorers. We have made your staff aware of our concerns. They have steadfastly refused to acknowledge those issues."

Now, there's basically no way out of this. Either it's true, and Ford is behaving with an outrageous disregard for consumer safety; or it's false, and Firestone is the one being inexcusably irresponsible. Is there a plausible explanation that can allow both of these companies to walk away from this imbroglio without a shattered reputation?

As the current round of press coverage has noted, plaintiffs' lawyers have no complaint about this turn of events, since each firm's accusations can now be added to legal ammunition unleashed on the other. This does not bode well for either company. Turning the tire disaster into a public blame game is unlikely to produce a clear winner—but there is an excellent chance of it producing two losers.