Hard Decisions Come
BFS Lays Off 450, Cuts Production to Relieve Inventory Problems
In an effort to lower its inventories, Bridgestone/Firestone Inc. (BFS) will cut production at three of its plants, and layoff some 450 workers at its troubled Decatur, Ill., plant. The replacement market production cutbacks, ranging from 14 to 28 days, will occur before the end of the year, and BFS emphasized that none of its oversupply actions will impact production of replacements for recalled Firestone tires.
BFS officials said the production cutback was necessary because of decreased demand for Firestone brand tires, and its need to work off inventories stockpiled in anticipation of a strike by the United Steelworkers of America (USWA) against seven of its tire plants. Though a new labor agreement signed Sept. 21, BFS had been importing thousands of tires to help tide it over in the event union negotiations failed.
BFS will shut down its Oklahoma City, Okla., plant for a 28-day period. Production will be reduced to about 7,000 tires per day at its LaVergne, Tenn., plant through the first of two 14-day periods; during the second two-week period the plant will be completely shut down.
Following the indefinite layoffs at Decatur, scheduled to take effect Oct. 29, production will be cut to 10,000 to 15,000 tires per day. The plant will also be idled for a 14-day period.
The Oklahoma City plant has the capacity to produce some 50,000 passenger tires per day, while the LaVergne plant is setup to produce nearly 14,000 passenger units and approximately 6,000 medium truck tires per day. Decatur, by contrast, has the capacity to produce 12,000 passenger tires and over 13,500 light truck/SUV tires each day.
“I made a commitment to our employees and our customers to rebuild this organization and the Firestone brand,” said new BFS Chairman, President and CEO John Lampe. ®In order to keep that promise, this company must be financially strong and viable. These are the necessary, but painful, first steps to ensure that financial health and viability.®
Pirelli threatens to close last remaining NA plant
Pirelli Tire North America officials and representatives of the United Steelworkers of America (USWA) are discussing how closure of the tire maker’s lone remaining North American tire plant can be averted. Pirelli announced Oct. 6 that it had tentatively decided to close its Hanford, Calif., tire plant due to financial considerations.
“We have made the tentative decision because it is not economically feasible to sustain operations in Hanford if we are to meet our competitive demands and continue to operate as a strong, viable business in the North American market,” Pirelli said in a prepared statement. ®We presently feel that we must utilize other options for meeting the needs of customers and partners in North America.®
Pirelli said it planned to meet with national and local USWA officials to explore “any possible means of averting a closure, keeping in mind the interests of our customers and all other parties involved.” The company said it would make a final decision on the status of the plant after the meetings.
Shortly after Pirelli’s announcement, a USWA spokesman said the union had scheduled a meeting with Pirelli officials to “get an accurate assessment of the company’s intent.”
“This decision is a tentative one and has no impact on our commitment to meeting the needs of our customers and partners or to ensuring the joint success in North America of our strategic alliance with Cooper Tire & Rubber Co.,” said Pirelli in its announcement.
The Hanford plant is the last of three Pirelli acquired when it bought Armstrong Tire Co. in 1988. Pirelli sold the former Armstrong farm tire plant in Des Moines, Iowa, to Titan International in 1994, and shuttered a plant in Madison, Tenn., in 1996.
Lampe appointment begins a new chapter for BFS
“We know that many people, not just in the U.S., but around the world are now questioning our integrity and the safety of our tires. And we know that we can’t blame anyone else for people losing trust in Firestone products – not our customers, not our business partners, not the media or Congress. The responsibility is ours.”
With those words, and a few pointed comments for Ford, John Lampe, 53, took over as chairman, president and CEO of embattled Bridgestone/Firestone Inc. on Oct. 10.
Isao Togashi, 58, Bridgestone Corp. senior vice president of tire production and production technology, was named vice chairman of BFS and will report to Lampe. Togashi, who will retain his corporate post, will oversee BFS manufacturing and tire development, and immediately began a review of BFS’s manufacturing and process controls, research and development and quality assurance procedures.
Masatoshi Ono, 64, who served as BFS chairman and CEO for seven years and saw the company through consolidation, growth and a difficult two-year strike, returned to Japan with plans to retire due to health concerns.
Lampe said his three immediate concerns were to complete the recall, assemble a new management team, and develop new methods to collect and analyze tire performance data. The recall, Lampe said, should be completed by the end of November. And while he declined to elaborate, Lampe said he would be announcing management changes shortly.
As for data collection and analysis, a major bone of contention between BFS and Ford and Congressional subcommittees, Lampe said, “Tire manufacturers and vehicle manufacturers must learn about each other’s businesses in order to produce the safest and most reliable products possible. Gaining a complete understanding of exactly how the vehicle and tires interact is extremely important.”
The recall has taken its toll on BFS and its employees, but Lampe feels the company will come back stronger than ever. “There have been accidents and rollovers with Ford Explorers equipped with Firestone tires. We can debate over cause and responsibility, about who knew what and when. But that does not change the fact that these accidents happened,” he said.
“We will not rest until we have determined the root cause or causes of the accidents, and we will continue to work with government agencies and outside experts to ensure that a situation like this never happens again.”
For its part, Ford treated Lampe’s promotion as it has the company he now leads. “Ford’s number one priority is getting good tires to our customers. We expect Mr. Lampe and his team to support those efforts,” said Carlos Mazzorin, group vice president of global purchasing.
During the conference, Lampe was asked if he was tired of Ford pointing the finger of blame at BFS. “Sure, I’m tired of hearing that the whole blame rests on the tire. I think that anybody who has reviewed the government data understands that only a very small percentage of Ford Explorer rollovers have been attributed to the tire – whether it was our tire or others’. To say that our tires are the only reason for Explorer rollovers is very unfair.”
Heafner combines CPW & California Tire operations
Heafner Tire Group is combining its West Coast operations, consolidating its Competition Parts Warehouse (CPW) and California Tire units into the new Heafner Tire Group – Western Division. The company named Ray Barney, president of CPW, as president of the combined division.
The combined Heafner-West unit will service six western states through its 12 distribution centers, including two new warehouses in Carson and San Diego, Calif., opened earlier this year.
Heafner will phase out the CPW and California Tire names all together. The consolidation will be completed by the end of March 2001, Heafner said.
World ITRA Expo goes to biannual schedule
After its planned 2001 conference, the International Tire & Rubber Association (ITRA) will hold its World ITRA Expo on an every-other-year basis, adding a series of regional conferences on the off years. The 2001 World ITRA Expo, scheduled for Apr. 19-21 in Nashville, will be the last in a string of 43 annual retreading shows, with the next event slated for 2003 at a location to be determined.
The ITRA said a survey of members and attendees showed an increasing need for education and training. “In response to those findings, ITRA is expanding its programs nationally and, perhaps, internationally, to ensure that education and proper training becomes the standard” in the tire and retreading industry, the association said.
While the ITRA did not specifically cite falling show attendance, difficulty in securing exhibitors, and attendee concerns over when the conference was scheduled, there’s no doubt those issues contributed to the association’s decision to make the World ITRA Expo a biannual event.
Slipping attendance has been a major concern since the show was moved from its long-time Louisville home to Nashville in 1999. The 2000 conference attracted 2,731 attendees, down some 19% from 1999, which was, in turn, down from the 1998 event, the last year it was held in Louisville.
The 2001 World ITRA Expo will again be held at Opryland Hotel Convention Center in Nashville, the last of what was scheduled as a three-year commitment to holding the show in Nashville.
The alternating year regional conferences will start in 2002, and will be held in “major cities throughout North America,” according to the ITRA. The conferences will include workshops and seminars on new technology, business services and process methods ®designed to ensure the continued success of companies involved in the manufacturing, sales and service of new and retreaded tires, in addition to recycled rubber products.®
Dana Brake and Chassis puts focus on brake safety
Today’s tightly tuned, complex vehicle systems are designed to deliver maximum safety and performance. But when it comes time for these systems to be repaired, often times the available aftermarket components can compromise the level of performance designed into the system.
To demonstrate this, Dana Brake and Chassis held a brake safety clinic for specific members of the media. For this event, technical experts and executives gathered at Dana’s Technical Resource Park in Ottawa Lake, Mich., to tangibly demonstrate the importance of using “like for like” brake parts when technicians perform a complete brake job.
Larry Pavey, president of Dana Brake and Chassis, said, “Today, we’re seeing a variety of quality grades in the market that deviate in design, materials and performance from the original equipment.” Pavey noted that differences in product design can create performance shortcomings that could compromise safety in certain situations.
Currently, there are no quality or safety requirements for aftermarket brake parts, according to Dana. Technicians may use whatever replacement parts they prefer – even if those parts are not of the same quality or design as OE. Alan Morrissey, Dana Brake and Chassis vice president of engineering, said that even small differences in replacement brake parts, such as the materials used, can impact brake performance.
“By taking the brake system away from specifications, you can also impact any number of other characteristics like steering, suspension, alignment, handling and tire wear,” said Morrissey. Even minor changes in the parts used can impact the braking geometry, altering things like braking balance and possibly affecting safety.
The solution to this problem, said Kevin Judge, vice president of marketing, is for brake manufacturers to offer “like for like” replacement parts – a challenge that requires commitment and investment.
And, in the face of current government and public interest in vehicle safety, Pavey said that the government will be pressured to adopt aftermarket performance standards, and that OE performance and specifications should be required for all replacement brake system components.
Alcoa recalling aluminum LT/SUV wheel
Alcoa Wheel Products has recalled forged aluminum light truck wheels, size 16x7J, LTS style, 8 on 6.5-inch bolt pattern (Alcoa part number 167011). Alcoa said cracking can develop between hand holes which may result in failure, including separation of the wheel from the vehicle. The part number appears on the outside of the rim near the hand hole and in line with the valve location. Alcoa will replace the wheels with an alternate style wheel, offering a quick exchange at no cost to consumers. Before working on the wheel, dealers must call the Alcoa Wheel Service Center at 888-279-3055 for instructions and an authorization number.®′
Were Tires Fatigued?
Investigator Eyeing Inter-Belt Fatigue as Failure Cause
®′ Fatigue cracking in the inter-belt material may be the cause of problems with recalled Firestone tires, according to a preliminary report issued by Bridgestone/Firestone Inc. (BFS)-appointed independent investigator Dr. Sanjay Govindjee, an associate professor of civil engineering at the University of California at Berkley. “All evidence to date points to a slowly developing fatigue crack that propagates through the belt wedge material and then subsequently into the belt skim between the steel belts. At some stage, the cracks reach a critical size and the tires subsequently fail,” he wrote in his report. Dr. Govindjee indicated that additional data needs to be reviewed before he can make a final determination of the root cause, but he did not rule out any vehicle-instigated contribution to the alleged failure of Firestone ATX, ATX II and Wilderness AT tires.
®′ President Clinton was expected to sign into law the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act, passed by both the Senate and House in mid-October. The TREAD Act orders the National Highway Traffic Safety Administration (NHTSA) to revise federal tire safety standards, requires vehicle and tire makers to inform NHTSA of “an unusual number” of product complaints, increases the maximum penalty for safety violations to $15 million, and establishes a 15-year maximum prison sentence for manufacturer executives who withhold information about product defects that result in injury or death. Both the Rubber Manufacturers Association and the Tire Association of North America (TANA) supported the TREAD Act, and TANA worked behind the scenes to eliminate language that would have included tire retailers among those subject to jail sentences and federal fines.
®′ An Oct. 17 Associated Press report said Ford knowingly shipped thousands of Ford Explorers and Mercury Mountaineers to Persian Gulf countries with tires BFS said were unsuited for that region. An internal Ford document shows that BFS strongly objected to Ford using S-rated Wilderness AT tires in size P255/70R16, which were intended for North American use, not for the “hot climate, fast drivers and heavy off-road use” prevalent in the Gulf region, according to the report. An October 1999 internal Ford memo said: ®Firestone’s position is that the tire meets all quoted functional specifications, and that it was not meant for the Persian Gulf market application, is confirmed by our research. It appears that Ford chose to use the North American-specified tire in that market, and Firestone was not part of that decision.®
®′ After months of battles over the subject, Ford finally agree to revise its Explorer tire air pressure recommendation from an announced range of 26-30 psi to 30 psi. Ford is mailing revised tire inflation labels to millions of vehicle owners, claiming its reversal was made to end consumer confusion over the proper inflation pressure. However, Ford apparently didn’t inform its dealers about the reversal, infuriating hundreds of Ford dealers who were deluged with calls from concerned consumers who heard about the change via the media.
®′ In mid-October, small cracks were found in the sidewalls of P265/70R16 Bridgestone Dueler HT 689 tires made for Toyota Tundra pick-up trucks and the 2001 Sequoia SUV. The tires were cleared by both BFS and Toyota after extensive testing showed the cracks were merely cosmetic defects.
®′ BFS officials said that the 15-inch Firestone ATX tires installed as spares on Ford Ranger pick-up trucks were indeed clearly marked as being spare tires, contrary to numerous news reports claiming BFS was dumping recalled tires on the public.
®′ According to BlueOvalNews, a Web site dedicated to Ford vehicle news – good and bad ®“ the cost of the tire recall to Ford could reach $1.25 billion, factoring in settlements, plant down times, and lost sales due to low consumer confidence.
®′ The 168 vehicle owner questionnaires compiled by NHTSA in its initial investigation into Firestone Steeltex R4S and Steeltex AT tires do not help determine whether a problem exists,” according to BFS. Many of the reports covered vehicles on which the tires wouldn’t fit.
®′ Both Ford and BFS feel the tire recall may be completed by the end of November, far earlier than originally estimated.
®′ In the company’s first public comment on the subject, new BFS Chairman, President and CEO John Lampe said the company is committed to keeping the Firestone brand name in North America. There had been speculation that the badly damaged brand might be shelved in North America, but might survive in other countries where consumers weren’t inundated by negative news and comment connected to the brand.®′