FORD-FIRESTONE TIRE CASE STUDY

FORD
The Ford Motor Company, based in Dearborn, Michigan, manufactures automobiles
and it was founded by Henry Ford in 1903. Fords code of ethics or values, as stated
in its 2004 annual report, states Were proud to be a company with family-based
values. We believe that strengthens our competitive advantage. During the 2000
tire blowout case, Ford failed to practice their code of ethics or values. Including law
suits, class action suits filed by the state, recall costs, and regulation compliance
costs, the recall ended up costing Ford $2.5 billion dollars.
Product Design and Quality Control
In order to cut production and design cost, Fords engineers designed the
Ford Explorer to use the same suspension truck frame as the Ford Ranger pickup
truck and Ford Bronco II that resulted in over 800 lawsuits and 43 fatalities. Ford
made the Explorer more than 600 pounds heavier than the Ranger; however, it did
not upgrade the suspension and tires to carry the bigger load.16 As a result, the
Ford Explorer had its first documented design flaw.
The second design flaw came when Fords engineers redesigned the Twin
Traction I-Beam suspension in 1995 with a light weight and more carlike
independent front suspension in order to improve stability but failed to lower the
position of the engine. Fords management decided not to exploit the opportunity to
lower the center of gravity by repositioning the engine on the Ford Explorer in order
to minimize redesign costs and preserve high profit margins as stated in a 1990
Ford memo. 7 As a result, the vehicles center of gravity would slightly increase due
to its light weight design without lowering the position of the engine; thus,
decreasing the vehicles stability.
The third design flaw was when Ford failed to capitalize on improving the Ford
Explorers stability by not selecting a more suitable tire for the Ford Explorer. In
September of 1989, Fords engineers determined that the P235/75R15 Firestone
tires were not the best designed tires for the Ford Explorer on the basis of rollover
tests; however, the tires were chosen to be used on account of cost reasons. The
test results concluded that the P235/75R15 Firestone tires had a significant chance
of failing while the P225/75R15 Firestone tires were stable during the rollover test.9
Although the tires were designed specifically for the Ford Explorer, they were in
essence passenger rated vehicle tires to have an off-road look. The P235/75R15
Firestone tires were rated for an inflation pressure of 25-35psi per tire. However,
Firestone normally recommended 30-35psi.
The fourth design flaw came about when Fords engineers changed the tire
inflation specifications prior to the releasing the Ford Explorers for production in
March of 1990. 7 In an effort to help the Ford Explorers stability problems, the
engineers at Ford changed the tire pressure specification from a targeted value of
32 psi (30-35 psi) to 26 psi. An inflation pressure of 26 psi was at the low end of the

safety margin of 25-35psi for the P235/75R15 radial ATX tires. The change in tire
pressure specification was approved by Firestone.
Fords Ethical Issues
Ford knew that it had design flaws within the Ford Explorer associated with
the 2000 tire tread separation crisis. Although this paper addresses several design
flaws that Ford was responsible for, Ford would take its stance in the 2000 tireseparation case as its a tire problem and not a vehicle problem.6 The problem
with this stance is it is analogous to saying its an engine problem and not a
vehicle problem when in fact an engine problem is a vehicle problem. One must
keep in mind that Ford not only used, assembled, and sold the Firestone AT tires but
they revised and dictated many of the specifications that Firestone used in
designing the tires on account of the stability issues associated with the Ford
Explorer. After all, its a known fact that tires are an integral part of a vehicles
design and operation. Therefore, Ford evidently knew it had a design issue with the
Ford Explorer and its tires years 8 before the crisis unfolded in 2000. Although Ford
does not provide warranty against tires, Ford received hundreds of credible claims,
148 claims for tread separation, for defective tires between 1991 and 2000. 13 In a
memo written on January 28, 1999, a Ford official in Dubai, United Arab Emirates,
warned Ford executives of a growing problem with the tires and urged an
investigation to find out why consumers were losing their treads and causing
rollover accidents.12 When Firestone declined to replace the pre- 2000 tires, Ford
began replacing them in August of 1999 on nearly 50,000 vehicles in 16 foreign
countries. However, this recall was never reported to U.S. authorities until the
NHTSA opened an investigation into the Firestone tires in May of 2000. Facing a
possible cover-up, Ford pledged to NHTSA authorities that Ford would immediately
reveal all foreign recalls to U.S. regulators.13 Ford also failed to report to the NHTSA
of the lawsuits and notices of intent to file involving at least 35 fatalities and 130
injuries. The Ford documentation revealed in this case only proves that Ford failed
to conduct superior business ethics by not upholding its corporate, engineering,
public, and legal obligations to its stakeholders.

FIRESTONE
Firestone has been in the business of manufacturing tires since 1900 when
Harvey Firestone founded the Firestone Tire & Rubber Company in Akron, Ohio.3 In
1990, Firestone was acquired by Bridgestone USA, Inc., a subsidiary of Tokyo-based
Bridgestone Corporation for $2.6 billion.4 In August of 2000, Firestone voluntarily
recalls 6.5 million Firestone 15" ATX, ATX II, and Wilderness AT tires that were
manufactured at the Firestone Decatur plant. Firestones code of ethics or values, as
stated in its 2001 annual report, states The core concepts are trust and pride: the
trust that we earn from customers and from everyone in the community. And the
pride that we feel in earning that trust.
Product Design and Quality Control

The first tire design flaw came about when Firestone agreed to redesign, by
reducing the tire weight, the ATX tires in an effort to gain 1.6 mpg for the newly
released Ford Explorer. 7 One of the major key components that had to be
redesigned in order to meet the tire weight reduction specified by Ford was the belt
wedge. Therefore, Firestone narrowed the tires belt wedge to reduce its weight.
This narrow wedge did not adequately resist the initiation and propagation of beltedge cracks between the steel belts.
The second notable tire design flaw was when Firestone allowed Ford to
change the inflation pressure specification from 30 psi to 26 psi. Firestone should
have mandated that Ford stay within its engineering design specifications. Although
Firestone approved the change in inflation specifications for the Ford Explorer, they
noted it as one of the contributing factors within their root cause analysis Low
inflation pressure in the recalled ATX, ATXII and Wilderness AT tires increased the
running temperature of tires and would contribute to a decreased belt adhesion
level.16 It is evident from the data presented that Firestone did not perform due
diligence in conducting the proper engineering analysis and/or testing during its
design evaluation process. In addition to the tire design issues, Firestone would
manufacture the tires using a faulty process.
Manufacturing of Faulty Tires
For the second time in Firestones history, the plant located in Decatur, Illinois
was once again responsible for manufacturing faulty tires. By August 9, 2000, the
Firestones Decatur plant had manufactured 14.4 million Firestone 15" ATX, ATX II,
and Wilderness AT tires with only 45% (6.5 million) of the tires recalled, voluntarily
by Firestone, due to the tread-separation crisis.7 It would later be learned that
Firestone hired unskilled and untrained workers during a 1994-1996 strike. During
this timeframe, most of the faulty tires were manufactured at the Firestones
Decatur plant. Firestones root cause analysis revealed that the manufacturing
processes at its Decatur plant reduced the cohesion level of the rubber within the
belt wedge area; therefore, permitting cracks to propagate between the steel 11
belts. The faulty process exposed many ethical issues for Firestone during the 2000
tire tread separation/blowout case.
Firestones Ethical Issues
Firestone also knew it had both design and manufacturing flaws associated
with the 2000 tire tread-separation crisis. Although this paper addresses several
design and manufacturing flaws that Firestone was responsible for, Firestone would
take its stance in the 2000 tire-separation case as Its a vehicle problem and not a
tire problem and insisted that consumers were to blame for driving the Ford
Explorers on underinflated tires. The problem with this stance is that Firestone
knew years before the crisis occurred that it had an issue with the AT tires. In a
2000 memo, Firestone revealed in its 1999 vs. 1998 Adjustment Data that the
Wilderness tire tread-separations increased by 194%. There were three reports
released from 1998, 1999, and 2000 to congressional investigators that show
unusually high rates of tire failures from the ATX II tires. As shown in the 1999
report, most of the tires that were recalled represented the majority of the

companys claims in 1997 and 1998. The 1999 report also indicated that the
Decatur plant had an issue due to fact that more than half of the claims were
related to that plant. The tire manufacturer insisted that it had only known since July
of 2000 that the Decatur plant was the primary source of the problem. However,
financial records going back three years indicated that the company had been
compiling and analyzing data regarding the tread-separation issue. Firestones
stance on compiling the data was that it was only for assessing the companys
financial liability and the data was not shared with the companys safety
engineers.13 According to the Venezuelan government, Firestone and Ford failed to
add, after promising to do so for the Venezuelan market, what is called a nylon cap
ply, a fifth layer of added protection in new tires, to prevent tread separation and
other hazards. Firestone tires for the Venezuelan market are manufactured at a
Venezuelan plant. Firestone not only failed to add the nylon cap but it went as far as
stamping a label on the tires indicating that a 12 safety precaution had been
taken.17 The paper trail that Firestone left behind only proves that they failed to
conduct superior business ethics by not upholding its corporate, engineering, public,
and legal obligations to its stakeholders.