- The Washington Times - Tuesday, September 12, 2000

The Bridgestone/Firestone Inc. brands have suffered serious damage after the company's recent recall of 6.5 million tires, but the company has survived past recalls and probably will again this time, automotive industry experts said yesterday.
The Tokyo-based company, a division of Bridgestone Corp., issued the largest tire recall in history in 1978, for the Firestone 500, a tire that fell apart while a vehicle was in motion, often causing rollovers. That's the same reason for its Aug. 9 recall of the Firestone 15-inch ATX, ATX II and Wilderness AT.
"Between the two tire recalls, and the way Firestone managed to drag this one out, quite frankly, if the brand survives it will be a miracle," said Clarence Ditlow, director of the Center for Auto Safety, a District of Columbia nonprofit group. "But the company will survive."
According to the National Highway Traffic Safety Administration, 88 deaths and 250 injuries have been caused by the defective tires, which were first produced in 1990.
Bridgestone/Firestone began replacing those tires on cars in the Middle East and Venezuela last year. But it wasn't until last Wednesday, when Congress held two hearings on the recall, that company executives took responsibility for withholding that information from the American public.
"So far, Firestone hasn't done the right thing to protect its brand. They basically initially blamed consumers for the problem as opposed to taking responsibility for themselves," said Rod Loche, an industry analyst with Deutsche Bank in New York. "And that was the wrong move."
Seventy percent of the defective tire models were mounted on Ford Explorer sport utility vehicles, the best-selling SUV in the United States; The rest were used as replacements on other SUVs, certain pickup trucks and some models of Mazda and Chevrolet.
"I personally believe that the Firestone brand is very badly damaged," said Mr. Loche. "It may even be irreparably damaged."
Ford, which has been doing business with Bridgestone/Firestone since 1906, last week ended an exclusive agreement with the company to mount tires on Explorer models.
Ford chose Michelin & Cie SCA, a French tire maker, to supply some tires for its 2002 Explorer. The automaker is now also in talks with Akron, Ohio-based Goodyear Tire & Rubber for a similar contract.
With this large client gone, concerns about Bridgestone/ Firestone's survival have arisen. Sales of truck tires accounted for 60 percent of the company's North America profits last year. The Firestone brand holds 16 percent of that market, while Bridgestone commands 6.5 percent.
"It's going to be very difficult for Firestone to rebound from this bad publicity even if it's found later that the tires are not fully to blame for this recall," said David Champion, director of the Consumer Reports' auto testing facility. The East Haddam, Conn.-based group is nonprofit and publishes consumer reports on various products.
One thing that the Japanese company can do is drop the Firestone brand and market all its tires under the Bridgestone name, said Mr. Ditlow. But either way, the company will remain in business.
Firestone/Bridgestone survived its first recall of Firestone tires. The public also remained faithful to Johnson & Johnson, even after its 1982 recall on bottles of Tylenol that were tampered with. Gerber Products Co. also remains popular although it often has recalls, the last one being in July 1999 for 300,000 children's bottles with a valve that posed a choking hazard.
"And Audi had problems during the '80s the perception of the market was bad they had shown Audi 500s accelerating out of control and injuring people," said Mr. Loche. "But it turned out that was completely false and the product was good. But the brand basically disappeared from the North American market and it's just now coming back, a decade later."
The extent of the damage done to the Firestone brand is still difficult to gauge because the recall is still in process, added Mr. Loche.
Meanwhile investors have joined consumers in their distrust of the company, and that has reflected in its stock price. Shares of Bridgestone/Firestone are trading at 60 percent less than their price from a year ago. The stock closed at $10.43 yesterday on Japan's Nikkei stock average.
Some financial institutions have also began begun dumping the stock. Steven Norwitz, spokesman for the T. Rowe Price International Stock Fund, which is a part of T. Rowe Price Associates Inc., said the fund sold its shares when the recall news broke.
"We figured it was going to be a long, drawn-out controversy, and the company would be under a constant cloud of uncertainty it wasn't worth the investment under those circumstances," he said. "We've had companies before that have had accounting problems and things like that, but this is such a major consumer disaster that it's hard to project if they'll ever recover from it."
Although consumers are rushing to dealerships to have their recalled tires replaced, not all drivers of vehicles with Firestone tires are worried.
As news of the recall spread and more drivers looked at their tires, Saturn owners were in for a surprise.
"All Saturns have Firestone tires mounted on them," said Susan Holmgren, a spokeswoman for Saturn Corp., based in Spring Hill, Tenn. "We have received a minimal number of calls from customers who want to make sure none of our tires are part of the recall, and none of our tires are part of it. And it's been a very slight number of callers."

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