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The Ford/Firestone Case Study

The Ford/Firestone tyre recall is perhaps the most deadly safety crisis in American

history. According to estimates, more than 250 deaths and 3,000 catastrophic injuries

were associated with defective Firestone tyres. Most of the deaths occurred in

accidents involving the Ford Explorer SUV, which tended to roll over when one of

the tyres blew out.

In March 1990, Ford launched the Explorer. Ford internal documents show that

company engineers recommended changing the product's design after it rolled over

during tests conducted before introduction. But Ford only made minor changes and

lowered the recommended air pressure to 26 psi, while the Firestone-recommended

air pressure (as moulded into the tyre) was 35 psi. Soon after product launch, the

fi rst accidents occurred; the tyre's tread peeled off and the tyre then disintegrated,

resulting in the vehicle rolling over if it was travelling at speed. The numerous

deaths and injuries resulted in a complicated discussion between Ford and

Firestone, with each party accusing the other of delivering a faulty product. This

discussion continued for ten years and accidents kept happening.

In May 2000, the National Highway Transportation Safety Administration issued

a letter to both companies requesting information about the high incidence of tyre

failure on Ford Explorer vehicles. During July, Ford collected and analysed data on

tyre failure. The data showed that 15-inch ATX and ATX II models and Wilderness

AT tyres had very high failure rates, involving the tread peeling off. Many of these

tyres were made at a Decatur, Illinois, plant. Based on these data, Ford estimated that

the defect rate was 241 tyres per million for 15-inch ATX and ATX II tyres. But Ford

also claimed that there were no defects in 16-inch tyres per million and only 2.3

incidents per million on other tyres. Nevertheless, on 9 August both companies

decided on a product recall and several million tyres were replaced. But Ford and

Firestone disagreed as to how to break the news to the public; ultimately questions

were asked, but many remained unanswered.

Firestone executives continued to deny the problems and downplayed the

signifi cance of the failure. Indeed, they maintained that their tyres were not

defective. In the words of one of their executives: 'Judging from the fact that most of

the accidents occurred in southern states, we estimate that driving in high

temperatures, at high speeds and under-tyre pressure are factors in these accidents.'

Ford openly disagreed with this suggestion and pointed out that rival company

Goodyear also supplied nearly 500,000 tyres for Ford Explorers using the same

specifi cations as Firestone was using, and there was no evidence of failure.

But Ford documents indicated that data showed that Firestone tyres installed

on Explorer SUVs had little or no margin for safety in top-speed driving at the tyre

pressures Ford recommended. Firestone emphasised the role of tyre pressure in the

accidents and stated that a tyre pressure of 30 psi was needed. Ford denied all this

and pointed out that Goodyear's recommendation of the lower pressure of 26 psi was

maintained with a spotless record.

After 10 August, many consumers hurried to replace their tyres and Explorer

sales plunged. An internal memo from Ford Venezuela said that the Ford Explorer

turned over unexpectedly when the Firestone tyres lost their tread and that this did

not happen with other SUVs in similar circumstances.

All in all, the Ford/Firestone tyre recall became a real nightmare, with a large

number of deaths and injuries, huge costs for both companies, tremendous PR problems

in the marketplace and a troubled relationship between two companies that had

cooperated since the launch of the Ford Model T at the beginning of the twentieth

century. Eventually, the relationship between Ford and Firestone was terminated.

Questions

1 The internet contains a large number of websites with detailed descriptions of the

Ford/Firestone case. Write a chronological description of the major milestones in

this complicated case.

2 Consider the case from Ford's perspective. What exactly happened? How did Ford

management react to the situation? What were the results of these actions? Do you

agree with Ford's reactions or should they have reacted differently?

3 Now consider the case from Firestone's perspective. What happened? How did

Firestone react to the situation? What were the results of these actions? Do you

agree with Firestone's reactions or should they have reacted differently?

4 Now look at the whole situation from the combined perspective of both Ford and

Firestone as partners who jointly offered a product to customers. Make a list of all

relevant parties in this situation. Describe a set of ideal reactions for each of these

parties.

5 Did Ford and Firestone make a good decision when they decided to terminate their

relationship? If yes, why? If no, what could they have done to save the relationship?

6 Would it have been an option to eliminate the Firestone brand in response to this

crisis? Justify your answer.

7 What are the key B2B marketing lessons that can be learned from this case?