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Ford Chairman Jacques Nasser Addresses the Senate Commerce Committee on Firestone Tire Recall

Aired September 12, 2000 - 12:22 p.m. ET


JEANNE MESERVE, CNN ANCHOR: We are going to take you up to Capitol Hill, where Ford Chairman Jacques Nasser is now addressing the Senate Commerce Committee.

Let's listen to his testimony.


JACQUES NASSER, PRESIDENT AND CEO, FORD: Until we virtually pried the claims data from Firestone's hands in late July, early August, and analyzed it ourselves, it was only then, and that was only a few days before the recall was announced, that Ford engineers found conclusive evidence at that point that the tires were defective.

We then demanded that Firestone pull the tires from the road. I must say that, as we look back, the first signs of this problem developed in Saudi Arabia when our dealers reported complaints about certain Firestone tires.

At that time, we immediately asked Firestone to investigate, Firestone did so, and they told us that the tread separations were caused by improper maintenance and road hazards, and I think you heard some of that earlier in the discussions with the committee.

And they said that those particular complaints were unique to that environment. At that point, we weren't convinced by those explanations. So we asked Firestone to conduct additional tests on the tires.

And I must say that after each and every test, Firestone reported that there was no defect in the tires. This didn't satisfy our Saudi customers so we replaced the Firestone tires about a year ago.

I should add that at about the same time we wanted to know if our U.S. customers were having similar tire problems. And early last year we asked Firestone to review its U.S. data, in general, and we were assured by Firestone that there was no problem in this country regarding Firestone tires.

We went back, our data, the government's safety data, and you heard from Mr. Slater and Ms. Bailey this morning, didn't show anything either. Despite this, we asked Firestone for one more test, and Firestone examined tires in a special study in Texas, Nevada and Arizona, and they reported back, as before, that there was no defect to be found.

As you note, contrary to those repeated assurances, we later learned a very different story from Firestone's confidential claims data. When we did, at that point, in August of this year, we insisted that Firestone recall the defective tires.

Although I take no personal or professional pleasure in saying it, Firestone failed to share critical claims data with Ford that might have prompted the recall of these bad tires sooner.

And I should say that last week, I listened in disbelief as senior Firestone executives not only acknowledged that Firestone had analyzed its claims data, but also identified significant pattern of tread separations as early as 1998. Yet Firestone said nothing to anyone, including the Ford Motor Company.

This is not the candid and frank dialogue that Ford expects in its business relationships. And after Firestone's testimony last week, we expressed Ford's profound disappointment to the head of Bridgestone/Firestone in Japan.

It's been said before this morning, my purpose is not to finger point, but simply to tell you that at each step, Ford took the initiative to uncover this problem and find a solution. We agree that we, everyone, needs to do a better job in this area. And looking back, if I have one regret, looking back on all of this, it's that we did not ask Firestone the right questions sooner.

What have we done so far? As I said earlier, we started by insisting that Firestone recall the bad tires. And to encourage and even prod Firestone to take immediate action, Ford offered to share the cost of the recall. And we also requested the use of competitors' tires.

I then made a public commitment to our customers that Ford would dedicate its resources to support the Firestone recall. And in just four weeks, this is probably one of the fastest recalls in history, in just four weeks, over 2 million tires have been replaced.

And we have worked very closely together with the rest of the global tire industry to increase tire availability. As mentioned earlier, we shutdown production at three Ford plants to free up replacement tires that can be sent to dealers for our customers.

And just days ago, I extended the shutdown to freeup even more replacement tires. This is all encouraging, but it is not good enough, because we need to look forward. And what do we need to do as we go forward?

Mr. Chairman, there are almost three million Goodyear tires on Ford Explorers that have not had a tread separation problem here in the U.S. market. And data compiled by the Department of Transportation shows that the Explorer has a safety record that is second to none, particularly when you compare it to the average passenger car and competitive sports utility vehicle.

So based on these facts, and that's what we need to be driven by here, based on these facts, we know that this is a Firestone tire issue, not a vehicle issue. But regardless, we've got to all prevent this from happening again.

Last week, I announced that Ford would develop an early warning reporting system with tire companies that provides information on real world performance of tires. Since last week, we've actively pursued this particular idea with our tire suppliers and we're being very encouraged by their reaction.

I also announced that Ford would provide the federal safety agency and its counterparts in other countries information on our safety actions around the world. And we will do this in advance of legislation that is pending. And from this point forward, when we know something, so will the world in terms of safety defects.

In addition, this was mentioned, also, earlier I've requested that Ford's product development experts look into the feasibility of a dash board indicator for future models, which would alert customers to a potential tire problem.

I can also announce to you today that later this year, beginning with our new Explorer, we will offer our customers a choice of tires.

Mr. Chairman, I want you and our customers to know that we at Ford will not rest until every bad tire is replaced. And I will do everything in my power, as president of the Ford Motor Company, to maintain the confidence and trust of our customers.

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


According to a "New York Times" article yesterday, Ford was informed of this problem as early as September of 1998 by one of its own executives in a memo detailing problems of tread separation in Saudi Arabia, Oman, Venezuela. Then there was another memo, there was two memos, written by an executive in Venezuela, January 12th, 1999, suggests Ford officials in that country were aware of the problem, Firestone tires shedding their treads and causing accidents.

There are now these existence of these memos raises questions about when Ford Motor Company knew of this problem. I'd like you to respond to that Mr. Nasser.

NASSER: Mr. Chairman, let me take the Middle East market and Venezuela because they are very different, they have different tires and different markets and different vehicles.

In Venezuela, a very confused situation; 75 percent of the tires in Venezuela are locally manufactured. A different tire as Firestone had indicated. There was mislabeling of tires. Tires that did not meet the proper specification. And in Venezuela, the accident data is very, very poor.

Despite all of that, we found that there were problems in terms of the Firestone tires. We wanted Firestone to come along with us, in terms of a recall. And they refused to do so.

We went ahead, because we knew there was a particular problem around the Venezuelan situation and the defects of those tires made in Venezuela. That had nothing to do with what was going on in the U.S. market.

In Saudi Arabia, these were 16-inch tires. And they were on a variety of vehicles. Test after test we did together with Firestone and independently, in every case when we went through and asked the question what was going on in the Saudi market, at the same time went back and asked Firestone to check the U.S. data. Every time, including the...

MCCAIN: You are saying you knew about it and you did something about it.

NASSER: Not only did we do something about it, but we actually examined all of the data. And perhaps now is a good time to look at -- if you could look at the chart that's on Firestone tires in the U.S., that's the one that shows the -- the cross hatches in terms of a bar.

What this chart shows is the number of reports of tread separations on a variety of Firestone tires. And it's based on the claims data that we received from Firestone on July the 28th of this year. And if you look at the cross hatch, which is the longest bar, the worst tires are the ATX tires produced at Decatur. These show defects per million tires. And their failure rate, the Decatur tires, is 10 times more than any other tire shown on this chart.

In Venezuela, they were local tires. In Saudi Arabia, they were the tires that were actually on the right-hand side of that chart.

So we had no reason to believe at that point that we had a problem. IN all the Firestone data that we were shown would indicate very similar trends.

MCCAIN: There is an internal document, which I will give you a copy. Algara (ph) vehicles. It's to John Thompson, who is the director of director of operations and marketing at Ford Motor Company, saying, "As you know, this concern goes back to mid 1997, when we first notified you of this concern. I have to state I believe the situation to be of key concern, which could endanger both the vehicle and more importantly the user of the vehicle. So I am asking what is going on? Do we have a fatality before any action is taken on this subject?" Are you aware of this?

NASSER: I am aware of it, and I am proud of employees like that. Because in the Ford Motor Company we actually encourage people to come out and talk about issues as they come out. What we did, there, is in Saudi Arabia, we went ahead and replaced the tires because, as Firestone mentioned earlier, conditions are different. By the way, when we went to the Goodyear tires in Saudi Arabia, we have not had any problems.

MCCAIN: Again, I'm glad you're proud of this individual. But he says, I have to state again, "I am very disappointed that no one has had the decency to send me a letter explaining what is happening." Was he responded to?

NASSER: I'm not aware of the response. But the fact that he felt it was an environment where he could speak about it and talk about it I think is something that we should encourage.

We went back in Saudi Arabia and we replaced those tires.

MCCAIN: Should you also encourage that he be responded to?

NASSER: Senator, we replaced all the tires in Saudi Arabia.

MCCAIN: All right. I thank you. I have two more brief questions. One is there is going to be a witness, and I see you have a chart there that I can't quite see, it says "Explorer safer than passenger cars." A witness on the next panel is going to make the case that the combination of these tires on an SUV like the Explorer can lead to a fatal rollover.

Obviously, you don't agree with that.

NASSER: We don't, but you can accuse us of being biased, and you're probably right. But let's deal with the facts, and this is government data, based on Department of Transportation.

The data clearly shows that over a 10-year period and there have been almost 4 million Explorers sold over that period, the Explorer has a better record in serious accidents than the average passenger vehicle and also the average compact sports utility vehicle.

In addition to that, the government data shows that not only is the Explorer safer than the average sports utility vehicle in serious accidents, it's also safer in rollover accidents by a substantial number. Both those percentages, Explorer is safer by almost 30 percent. And this has been true since 1991 when Explorer was introduced.

MESERVE: You have been listening to the Senate Commerce Committee, where Senator John McCain is producing internal Ford Motor Company documents, trying to establish when the company knew about problems with Firestone tires.

Chairman and -- president and CEO Jacques Nasser on the stand right now saying his purpose wasn't to finger point, but he said we know this is a Firestone problem, not a Ford problem. At every step he says Ford took the initiative and tried to find out, but he said Firestone failed to share critical claims data that might have prompted a recall of the tires sooner.

He said that Firestone had not been candid and frank in its dialogue with Ford, something it expects in its business relations. I regret, he said, that I did not ask Firestone the right questions sooner. We will not rest until every bad tire is replaced.



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