Background of the case:
The Ford-Firestone Case is about
a huge business debacle between Ford Motor Company (Ford) and Firestone Tire
& Rubber Company (Firestone) that caused hundreds of lives and billions in
damages for both companies. This controversy also tore the long-time
relationship of the two giants in the automotive industry, which began in 1896
when Henry Ford—the founder of Ford-- asked Harvey Firestone—the founder of
Firestone-- to create tires for his experimental vehicles. It was also known
for the high number accidents involving Ford Explorers fitted with Firestone
tires.
In 1990, Ford launched the Ford
Explorer, a Sports Utility Vehicle (SUV) that boomed the sale of SUVs in the
United States market. Ford sold 3.6 million units of Explorer, which quickly
became the number one selling SUV in the US, booking Ford profits.
In 1998, Sam Boyden of State Farm
Insurance received a call from a claims adjuster about a case of Firestone
tread separation. Upon his investigation on the inquiry, he discovered several
cases of claims pertaining to cases of Firestone tread separation. After seeing
the Firestone tire cases filed, he sent an email to the National Highway
Traffic Safety Administration (NHTSA)—an agency under the Federal Department of
Transportation—to notify the unit.
In May 2000, after recording 90
complaints, including four deaths, NHTSA formally started an investigation. The
investigation covered the AT, ATX, and Wilderness tires, totaling 47 million,
all made by Firestone from 1990 to 2000. During the succeeding months, the
number of complaints as well as the number fatalities was rising. In August
2000, Bridgestone-Firestone, announced a recall of its 15” tires, which
included those installed in Ford Explorers (model 1991-2000).
Crux of the case:
The case suggested that both Ford
and Firestone were aware of the tread separation incident earlier than when
initial complaints were filed against the 2 companies. Even though similar
incidents were reported outside USA such as Saudi and Venezuela, Ford held back
in rectifying the situation. This is because the company is too much focused on
dollar revenue and loss. They took a chance on the possibility of not having
similar accidents, therefore avoiding a huge recall cost. Also, as the profit
margins on Ford SUVs are significantly higher than other models, they opted to
forcefully meet their target release date by implementing workarounds to
mitigate safety risks. It shows how the management culture is leaning towards
market share dominance and meeting deadlines to ultimately gain more profit.
Furthermore, before shutting down
the Firestone’s Decatur plant and laying-off a number of employees due to the
aggregate costs of tire replacements and product liability lawsuits to
Firestone, union workers at the plant were in a 10 month-old-strike in 1994.
The plant was operating with replacement workers and managers. The change in
work shift schedule from 8 to 12 hours resulted in a labor strike. Performance
and quality of work from the laborers were greatly affected due to extended
shift hours and outdated manufacturing equipment. This has led to the reason
why most of the incidents received were from tires manufactured in Decatur
plant.
Argument:
Firestone may argue that the
rollovers are the results of design flaws on the Explorer as there are
evidence that Ford rushed its design. In addition to that, Ford tested the
Firestone tires on a mule rather than an actual Explorer as there is none
available during the time of testing.
On the other hand, Ford may argue
that the main reason for the accidents involving the Explorer are due to the
defective and poor quality tires that Firestone produced. This is because when
they used other tires such as Michelin there were significantly less occurrences of
accidents or there are hardly any.
Impact of the case:
This does not only lead to the
end of a century long partnership between great American companies that are
greatly admired by others but it also opened the world's eye to other early
warnings that may lead to a catastrophic event. In this case, there were
already signs such as those reported accidents in the Middle East but they were
ignored as they were not given that much of an importance in America as it
happened in a different country.
Conclusion:
In my opinion, Firestone and Ford
should have just collaborated with each other to combine their resources and
address the needs of their customers whether it be financial for those that
were already injured or a recall and replacement for those that were
fortunately not yet involved in an accident. By doing this, they could have at
least preserved their reputation to the public that may have saved the
customer confidence that they have lost in the following years.
In conjunction to the above, it
is clearly seen that both of them have faults. Firestone produced defective and
poor quality tires while Ford should have done further testing on the Firestone
tires especially when complaints are pilling up. They know something was wrong
but because of their long relationship with the other they decided to take
their words as it is.
Most importantly, Ford can not
argue the fact that when other tires were used instead of Firestone, there were
hardly an accidents. This is because they should have taken full responsibility
as people will buy a car because of the brand of the car (in this case Ford)
and not because of the brand of the tires.
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