Bridgestone Tire Problem

The Crisis

In August of 2000 the tire manufacturer Bridgestone/Firestone Inc faced a major problem with there Firestone, ATX, ATXII and Wilderness At tires. The case involved more then 14.4 million tires that have been installed on sport utility vehicles. 70% of the tires are on Ford SUV and light pickup trucks. Some of the other makes are Nissan, Toyota and Subaru. The reports are that the tires are shredding involving high heat, overloading and tires being under inflated. California, Arizona, Florida and Texas are where the most reports have been reported due to the higher heat index in the summer. Due to the lack of inventory the company decided to concentrate on the states that have the hottest weather. Then they decided to do the southern states then a national recall. The faulty tires are linked to more then 1,400 complaints, 88 deaths and 250 injuries. There were no policy changes that lead to the crisis. They were defective tires.

Crisis Management

President and Chief Executive of Japan Yoichiro Kaizaki was seen as a star. He took over Firestone in 1991 and restructured operations, is responsible for globalizing by building plants in Asia and Europe and doubling the profits in the process. When the crisis happened he was no where to be found. He did not even make a public appearance since he had to announce the recall. There is a huge management gap between the U.S and Japanese. Kaizaki was unwilling to respond to the pleas of investors and the media for the explanations and reassurance that this crisis would be handled in a timely fashion. The Japanese managers do not have a clue to the value of PR. They use the sheepish system to send out the low level guys who bows profusely. In October, 2000 John T. Lampe was announced the chairman, CEO, and president of the Bridgestone Corp. in the U.S. subsidiary. He took immediate action by accelerating the recall effort, new management team, and improving product performance data. They airlifted tires from sister plants overseas so that consumers would be able to get replacement tires from competitors. He expected that the recall would be complete during the month of November. He assembled a new management team that would oversee the manufacturing, process controls, research, development, and quality assurance procedures.

How was the crisis resolved?

Bridgestone/Firestone announced that it will replace about 768,000 additional Wilderness

A/T, in sizes P35/75R15 and P255/70R16, which were manufactured before May 1998.

This was in response to an engineering analysis completed by the National Highway

Traffic Safety Administration that determined that a defect existed in those tires.

According to NHTSA, the total number of tires involved in this program is 3.5 million,

although Firestone estimates that only 768,000 of these tires are still in use.

Firestone says that its dealers will replace these tires free of charge through January 31, 2002. (1)

Bridgestone/Firestone, Nashville, TN, will pay $41.5 million in a settlement to head off lawsuits by states over defective tires the company recall more than a year ago.

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