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Special Event

Ford CEO Testifies Before House Commerce Subcommittee

Aired September 6, 2000 - 8:28 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOIE CHEN, CNN ANCHOR: Late-breaking developments from Capitol Hill, where a very long day has turned into a very long evening of testimony before the House Commerce Committee, following testimony from the Japanese head of Bridgestone/Firestone about what his company knew about complaints received about that massive tire recall.

Now Ford Motor Company CEO Jacques Nasser at the microphone.

JACQUES NASSER, PRES. & CEO, FORD MOTOR COMPANY: I appreciate the opportunity to be here. I know this has been a very complicated and very sad situation, and we're all concerned. But before I discuss the Firestone recall, I would like to say a few words about our company.

As I think everyone knows, Ford has a distinguished heritage and a bright future, and without question, it's an American icon. And throughout history, our strength has been with our employees and loyal customers. Thirty two years ago, I joined Ford Australia as a trainee and I never dreamed that some day I would lead Ford Motor Company and represent the Ford team.

And I'm here tonight because I know that you and the public have questions about the tire recall and I'm here to answer those questions and I will remain here until you are satisfied. Now let's get to the heart of the issue. When did Ford know there was a problem with the Firestone tires? What have we done about it and what are we going to do about it in the future?

Let's start with first, when did Ford know there was a problem with the Firestone tires? Now, I've said this before, Mr. Chairman, but I think it's worth repeating. Because tires are the only component of a vehicle that are separately warranted, Ford did not know -- I'll repeat that -- Ford did not know that there was a defect with the recalled tires until we virtually pried the data from Firestone's hands and analyzed it ourselves. It was only then a few days before the recall was announced that Ford engineers discovered the conclusive evidence that the tires were defective. We then demanded, insisted that Firestone pull the tires from the road.

Looking back -- and it's easy to look back at this point -- the first signs of a problem developed in Saudi Arabia, and we've had a lot of discussion on the Middle East and Saudi Arabia during this hearing, and it first started when our dealers reported to us complaints. We immediately asked Firestone to investigate. Firestone did so, and they concluded that the tread separations were caused -- and you heard that earlier this evening -- by improper maintenance and road hazards that are unique to that environment.

I've got to say that we were still very troubled by that explanation, so we didn't stop there. We then asked Firestone to conduct all sorts of tests on those tires, and after each and every test, Firestone reported there was no evidence of a defect. This did not satisfy our Saudi customers, and for us, customers are paramount, so about a year ago, Ford replaced the Firestone tires. We replaced them with Goodyear tires because we had no choice. We did it because we put our customers first.

I should add that at the very same time that we were going through those issues in Saudi Arabia, we wanted to know if our U.S. customers were having tire problems, and this goes back to early last year when we asked Firestone to review its data and we were assured at that time that there was absolutely no problem in the U.S. Our data, as well as government safety data, didn't show anything either. So we had nothing to go on at that point. Firestone was saying, no problems. The government data suggested there weren't any problems. Our own data, which is limited because we don't warrant the tires, suggested no problems.

We still felt that we should do more. We didn't want to stop there. We kept on going and we asked Firestone for one more evaluation, a deep dive, thorough evaluation, particularly in the Texas, Nevada and Arizona area, because that's where a lot of these tires and a lot of the volume happened to be. Firestone reported back, as before, that there was absolutely no defect, and you've heard some of that earlier this evening.

My purpose isn't to finger point. That's not what this is about, but simply to tell you that at each and every step, Ford actively, proactively took the initiative to uncover the tire problem and to try and find a solution. But it was not until Firestone's confidential claims data became available to us that it became clear that something had to be done.

Looking back, particularly after listening to the testimony this evening, if I have one single regret, it's that we did not ask Firestone the right question sooner. That's my single regret, that we didn't ask them the right questions sooner.

So what have we done so far? Because we are here and we've got to try and find a solution. We started by insisting that Firestone recall the bad tires, and I can take you through a chronology of that later if you wish. I then made a commitment to our customers that Ford would dedicate all of its resources to support the Firestone recall. In just three weeks, over 1.7 million tires have been replaced.

We also worked very closely with Firestone's competitors, the global tire industry, to increase tire availability. I spoke to the heads of every one of those companies to encourage them to get good tires into the U.S. market as quickly as possible. We also suspended production at three of Ford's plants because we wanted to free up more replacement tires for the recall.

In summary, we did everything we possibly could to replace bad tires with good tires as quickly as possible. Now, looking forward, what are we going to do? Because I share the sentiment of the committee. That is the most important thing. We've got -- we can't let this go on.

Mr. Chairman, there are almost 3 million Goodyear tires on Ford Explorers that not -- have not had, as far as we know, one tread separation problem, 3 million tires on Explorers. So we know that this is a Firestone tire issue, not a vehicle issue. But we stand back from it and say, we've got to make sure it just doesn't happen again.

So today, we are announcing, and I think this has to be done jointly with NHTSA and the committee, and with the cooperation of other manufacturers in the global tire industry, that we implement two new reforms, that we feel are critical for customer safety going forward. First, we will work with the tire industry to implement an early warning system. This early warning system will be designed to detect the first sign of tire problems on vehicles already on the road. And this reporting system must use comprehensive real-world data that we now know is so critical to spotting defect patterns.

Second -- and this was mentioned earlier by the safety agency -- because everyone's products and our products are increasingly sold around the world, this is a global marketplace, we will advise U.S. safety authorities of safety actions that are taken in overseas markets and vice-versa. From now on, when we know it, so will the world.

I have to say that I've received hundreds of letters from Ford owners and I've spoken personally with many of them, and believe me, some of these conversations have been extremely difficult. And I want you and all Ford owners to know that we at Ford will not rest until every bad tire is replaced. And I will do everything in my power, as the president of the Ford Motor Company, to maintain the confidence and the trust of our customers.

Thank you, and I would be pleased to answer your questions at this time.

REP. BILLY TAUZIN (R-LA), CHAIRMAN, COMMERCE SUBCOMMITTEE: Thank you, Mr. Nasser. The chair recognizes himself.

Let's first examine, indeed, what Ford knew and when Ford knew it. You candidly admitted that you regret not asking Firestone early enough for data. Our evidence is that you in fact asked for the claims data after NHTSA began the investigation, is that right?

NASSER: It is. We -- can I take you through the chronology at this point, Mr. Chairman?

TAUZIN: Well, I won't have time for the whole chronology. Am I right on that point? NASSER: It won't take long. We requested it on June the 6th. That was the first request. Our second request was on July the 11th. Our third question was on July the 15th. Our fourth request was on July the 20th. We finally received the data on July the 28th.

TAUZIN: Well, let's look at the date, and help me with this. These are claims brought by claimants whose tires caused them to have an accident, in their opinion, and of these 1,800 claims, about 1,400 involved we are told, Ford Explorers, about that number. Was Ford Motor Company not sued in these same lawsuits?

NASSER: I'm sure we had lawsuits, but we never knew what the problem was.

TAUZIN: Was Ford a part of the lawsuits?

NASSER: I'm sure we were.

TAUZIN: In the context of Ford being sued along with Firestone, did you not also as a company keep claims data?

NASSER: We did not have claims data on tire problems.

TAUZIN: So you don't have and never kept the same kind of claims data on these lawsuits that Firestone had?

NASSER: No, we do not keep claims data on tires. We...

TAUZIN: Did you keep records of complaints by your dealers, Ford dealers, about these tires?

NASSER: I don't think we actually get a very good database on it.

TAUZIN: What's your service hotline all about?

NASSER: Service hotline is a method where customers can call in, dealers can call in.

TAUZIN: And dealers can call in, right?

NASSER: Yes.

TAUZIN: I want you to take you to one, document 71, page 3. Would you follow it with me, please?

NASSER: Let me look at that.

TAUZIN: Yes. It's dated 8/19/96, pretty early in this process. And it's a report summary to the tech service hotline from apparently a dealer. I can't tell which dealer it was, but here's what it says -- quote -- "Tires make a knocking, thumping noise. You can see the tire belt distort if you spin them up. Dealer has 16 Explorers like this. What can be done? Balancing has no effect. You have to replace the tires." It's a clear indication from a dealer to your service hotline that there's a tire problem out there, dated 8/19/96. Did a report like this to a hotline not raise a red flag at Ford? There was a tire problem on its Explorers?

NASSER: If you go back to our history of the defects, at every turn, whether it was in the U.S. or anywhere else, we tried to get to the bottom of the defects. When you're selling 7 million vehicles a year, of course, we will have calls that relate to service issues.

TAUZIN: But you get my drift. There's a lot of stuff going on out there, a lot of tires are failing, your being sued, Firestone is being sued, and dealers are issuing calls to your hotline, 16 Explorers at one dealer.

NASSER: Mr. Chairman?

TAUZIN: Yes, please.

NASSER: Let me just add a comment here, 16 Explorers -- we don't one Explorer that has any problem.

TAUZIN: I understand that.

NASSER: But if you look at the safety record of Explorer, if you look at the quality level of Explorer...

TAUZIN: Mr. Nasser, I'm an Explorer owner. You don't have to sell me. I've bought already. What I'm trying...

NASSER: Let me tell you -- I just want to keep going.

TAUZIN: What I'm trying to ask you is that when your dealer calls a hotline and says, we have 16 Explorers where the tires can't be balanced because the tire belt distorts when you spin them, you've got to replace these tires, that seems to tell me as a motor company that Firestone is selling me some defective tires. Wouldn't that tell you that, in 1996?

NASSER: Well, looking back on it now, it certainly seems like that was the case.

TAUZIN: Yes.

NASSER: And we went into a rigorous review and analysis of every one of those cases.

TAUZIN: The -- I want to point you to document 54 as well. It's Ford document dated 9/14/99, which is your customer complaint system, and it indicates that you found 32 possible tread separation claims on Firestone and Goodyear, so that you're at least getting information from customers that these tires supplied by Firestone are giving you problems as -- and Goodyear, by the way, 10 of 32 possible claims were from Goodyear, and this is dated 9/14/99. So the point I'm making is Ford is during this period receiving information from its customers and from its dealers that somebody's giving you bad tires. NASSER: And that's why throughout this period we kept requesting more data, trying to understand. As you said there, these were possible tire issues.

TAUZIN: Let's talk about what Ford could have known had some things happen, and I want to find out if they happen. You heard me ask about testing. Did Ford in the early stages of producing the Explorers and equipping them with Firestone ATX tires and Wilderness tires, in those early stages, '89-'90, did Ford request Firestone to do a test at high speed at the 26 pounds per square inch recommended pressure?

NASSER: We did. We asked Firestone to conduct high-speed tests on those tires at 26 PSI.

TAUZIN: At high speed?

NASSER: At all types of conditions.

TAUZIN: Did you, in fact, receive evidence that they did so?

NASSER: Let me go through the analysis that we went through and then I will answer your question directly.

TAUZIN: All right.

NASSER: We did tell Firestone to conduct high-speed tests on these tires using the 26 PSI. The air pressure was in the specifications that we gave to Firestone, and that's the specification and the certification that Firestone signed off on. And as you heard, Firestone has said publicly that 26 PSI is OK. In addition...

TAUZIN: So you interpret your specs to require them to do testing at 26?

NASSER: Exactly. But we still weren't quite sure. So in addition to that, we ran our own tests, tougher tests, and we ran those vehicle tests at 26 PSI on those Firestone tires.

TAUZIN: Do you have records of those tests?

NASSER: We will give you the records, and they go back to '89 and also to '94, and the tests are 200 miles an hour at a minimum of a hundred miles per hour. We can...

TAUZIN: You meant a hundred miles per hour, not 200, I hope?

NASSER: Two-hundred miles at a hundred miles an hour.

TAUZIN: All right, more like it. I've got an Explorer, it will not do 200, I promise you.

NASSER: We'll put a super charger on it for you, Mr. Chairman.

In addition to that, we also did even tougher tests that include J-turn tests, and durability tests, and at that point, we were still very sure that these tires would meet every durability that we had.

TAUZIN: Now, Firestone certified the tires to you after you sent the specs to them. Did they specifically send you any test data they may have run on the tires for speed testing at 26 PSI?

NASSER: I'm not aware of that, and I don't think we have that.

TAUZIN: What about in-process testing? Did you request Firestone to continually test and process these tires through the use of manufacturer and sale to Ford Motor Company?

NASSER: In the spring of '99, when there were allegations of tire pressure issues, we asked Firestone to do tough tests, high-speed tests, durability tests, and they did that at 20 PSI.

TAUZIN: I understand those special tests. I'm asking for regular routine in-process testing.

NASSER: We did not.

TAUZIN: Did not.

Let me make the same request upon your company that I did upon Firestone and ask you if you will cooperate, will you supply this committee with all the documentation of whatever tests were run...

CHEN: We're watching here testimony from Capitol Hill. On the witness stand now, the Ford Motor Company CEO Jacques Nasser speaking with the chairman of the Commerce Committee, Representative Billy Tauzin of Louisiana, being questioned thoroughly by him in this very late hour -- a session that has gone on throughout the day, previously a hearing from the Firestone/Bridgestone Japanese leader of that company, and in this evening's session now, hearing from Jacques Nasser, testimony that began just about 10 minutes ago; in this session, emphasizing what his company did to respond to consumer complaints and saying that the evidence supports the problem is with Firestone tires, not with his company's vehicles. That testimony goes on.

CNN will continue its coverage. We'll be back after a break.

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