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Transcript of Management Project
Firestone model ATX, ATX II, and Wilderness AT Tires placed on Ford Explorers in 2000 began catastrophically failing by losing their tread at high speeds and causing the SUV to roll over or flip.
Normal failure rates for tires average around 2.3 per million, whereas the average failure rate for the ATX, ATX II, and Wilderness models was 241 per million.
The nature of the accidents usually resulted in the tire blowing out, the Explorer flipping, and the driver being crushed.
By October 2000, the death toll had risen to 119, and the total deaths worldwide stood at over 250 by the end of the crisis.
The defective tires caused over 3000 accidents throughout the span of its life.
Due to a defect in the manufacturing process in one plant in Decatur, Illinois, the tires would strip their tread at high speed, causing a blowout and usually resulted in a catastrophic crash.
consumer reports in Argentina had been reporting the tire failures in Ford Explorers as early as 1997, but the lack of press gave the Firestone company no reason to change the way they made the tires in the US.
A secret memo from Ford to Firestone stated that the Firestone problem could be resolved by adding a small adjustment to the tires being produced currently, but it was ignored by the Firestone.
The news leaked about the tires, and Firestone was eventually forced to do a complete recall of all of the affected models. Firestone's Solution Firestone commited to replacing all of the defective tires with brand new tires regardless age, wear, or other limiting factors.
Vice President Gary Crigger made a statment that "At Bridgestone/Firestone, nothing is more important to us than the safety of our customers."
Advised customers to make sure that the tire pressure is correct in order to minimize the risk- especially in areas with high temperatures.
Our Opinions... We belive that the best way to prevent this situation would have been to test a certain number of tires for each batch.
This will lead to fewer imperfection within the tires and greater reliability.
Also, testing will minimize the amount of problems that could occur, and in the long run, greatly reduce costs (due to recalls). Produced by... Before we get started... Does anyone remember this recall, and if so were you personally affected by it? How many people own firestone tires here? Now that your memeory has been refreshed, does this information affect your next tire decision? KNowing the way that Firestone responded to the situation, would you handle anything differently? ...If not, what did you like specifically about the way Firestone handled the recall? Firestone was founded in 1900 by Harvey Firestone in Akron, Ohio.
Firestone got its start through making solid rubber tires for carriages, and has progressed to making tires ranging from sizes for small cars all the way to heavy machinery for dump trucks.
Also, Bridgestone Firestone has diversified by entering the building materials market as well as competing in industrial products, synthetic and natural rubber, and fibers and textiles.
Today, Bridgestone Firestone's revenue is upwards of $2 billion
1900-1910 1918-1928 1931-1945 1948-1957 1960-1972 1973-1992 1993-2002 1900- Mr. Firestone Incorporated Firestone Tires in Akron, Ohio
1902- bank loan for $4500 was taken out to start manufacturing in an old foundry
1906- Largesat sale of the time was made- 2000 sets of detachable tires to Ford
1910- Firestone Tires exceeds $1million in profit for the first time 1918- FIrestone began the "ship by truck movement" to encourage people to ship their products via truck
1922- First baloon tire was created which offered motorists great mileage
1926- Firestone created one stop service store 1931- Bridgestone was founded by Shojiro Ishibashi
1936- Industrial plant was created
1939- Firestone began producing materials for the war effort 1951- Firestone began producing the first ballistic artillery weapon for the US governement- The corporal guided missile 1967- Birdgestone Inc. entered the US market through a California Subsidiary 1983- Bridgestone created the first US manufaturing plant through the purchase of a firestone manufacturing plant
1988- Bridgestone purchased Firestone and moved their headquarters to the US
2000- Firestone recalls 6.5 million tires
- allows customers to replace all affected tires http://www.bridgestone-firestone.com/history_index.asp
•Firestone was accused of misrepresenting the extent of the recall to its stockholders, causing many to file a class-action lawsuit against them for withholding information pertinent to stockholder prices.
•The stockholders accused Firestone of withholding important information in order to artificially inflate Firestone stock prices.
•The value of Firestone stock dropped from over $26 to $12 per share over a three year time frame.
•The recall, which was estimated at over 13 million tires, was not shared with the stockholders until the time a public announcement was made; thereby allowing the stockholders’ money to sink with the company without any prior notice.
•Firestone eventually had to pay stockholders through a class action lawsuit for the punitive damages done by not informing the stockholders of the impending recall and the extent to which it would hurt their stocks.