05/22/2001 – Ford Motor Company To Replace All 13 Million Firestone Wilderness AT Tires On Its Vehicles


Source: Ford Motor Company.

Ford Motor Company To Replace All 13 Million Firestone Wilderness AT Tires On Its Vehicles

Ford’s Action is Precautionary Measure Based On
Lack of Confidence in Future Durability of Wilderness AT Tires

Action is Based on Consistent Field Data, Information from
NHTSA and Lab and Vehicle Testing

Ford Motor Company today said that it will replace all 13 million
Firestone Wilderness AT tires on its vehicles. Ford’s action, which
the company described as precautionary, is based on analysis of data
on the actual road performance of these tires, comparisons with the
performance of comparable tires by other tire makers, a review of
information developed by and received from the National Highway
Traffic Safety Administration (NHTSA), and extensive laboratory and
vehicle testing.

The company said that many of the non-recalled Wilderness AT
tires on the road today appear to perform substantially better than
the tires recalled last year. However, analysis of real world
performance data, information from NHTSA and lab and vehicle testing
indicate that some of the non-recalled Wilderness AT tires will
probably experience elevated failure rates at some time in the
future.

Specifically, the company’s decision to replace all Wilderness AT
tires on its vehicles is based on several factors, including:

  • Field data, which is real world tire performance data, recently
    received from Firestone showed that failure rates had increased for
    some of the Wilderness AT tires. Projections indicate that the
    failure rates, while still relatively low compared with tires
    recalled last year, could reach unusually high levels in the
    future.
  • Information shared by NHTSA showed that failure rates in actual
    road performance for many of the non-recalled Wilderness AT tires
    were measurably worse than comparable tires from other
    manufacturers.
  • Laboratory and vehicle testing by Ford shows that tire design
    and variations in physical characteristics of the non-recalled
    Wilderness AT tires make them less durable than comparable tires
    from other manufacturers. The comparable tires include Goodyear
    tires on more than 500,000 Explorers. These test results are
    consistent with the NHTSA information and the real world data
    described above.

Given the consistency among results from Firestone, NHTSA and
Ford’s own data, the company concluded that it does not have
sufficient confidence in the future performance of some of the
Wilderness AT tires and that it will take the precautionary measure
of replacing all Wilderness AT tires on its customers’ vehicles.

William Clay Ford, Jr., chairman of Ford Motor Company, said,
“Today’s announcement to replace Wilderness AT tires reflects our
deep-seated conviction that customer safety always comes first. The
actions of Ford’s people and its partners, including our dealers,
employees, tire suppliers and independent tire retailers, are true
to what’s at the core of our value system at Ford Motor Company –
nothing is more important than the safety of our customers. The
decisions announced today have my full support and that of the
entire Board.”

Jacques Nasser, president and chief executive officer of Ford
Motor Company, said, “Our unequivocal commitment to our customers is
the core value of Ford Motor Company. Since last year, we have
closely monitored field data from Firestone, worked closely with
NHTSA, and conducted extensive laboratory and road testing. Taken
together, all the data and analysis do not give us sufficient
confidence in the future durability and performance of the
non-recalled Wilderness AT tires on our vehicles. While some of the
tires we are replacing do not have a substantial failure risk, we
are offering to replace all Wilderness AT tires to avoid any
confusion among our customers and eliminate any doubt about the
quality of their tires. There are early warning signs about these
tires, and we will not ignore them.”

Tire Replacement Program

Ford will be replacing twice as many tires as last year, and the
company is working with other major tire manufacturers to expand the
supply of replacement tires as rapidly as possible.

Initial details of the program:

  • The company is replacing all 15, 16, and 17 inch Wilderness AT
    tires on Ford Motor Company products.
  • Most Wilderness AT tires are found on the following Ford
    vehicles: Explorer, Expedition, Ranger and some F-150 pick up
    trucks. More than 80% of the tires in question are on
    Explorer.
  • Tires can be obtained from the more than 3,500 authorized Ford
    and Lincoln Mercury dealers that carry tires or from other
    authorized tire retailers.
  • Tires will be replaced at Ford and Lincoln Mercury dealers free
    of charge to customers. Ford will reimburse customers who purchase
    tires from other authorized retailers, with proof of purchase, up to
    a maximum amount. The maximum amount for 15- and 16-inch tires is
    $110 per tire; for 17-inch tires, $130 per tire.
  • A list of recommended replacement tires will be available at
    authorized dealers and will be posted on Ford’s website, www.ford.com under the Breaking News
    header. Firestone tires will not be used as replacements in this
    program.
  • Because real world tire performance data, information from NHTSA
    and technical analysis shows that newer tires, those under three
    years old, have much lower failure rates, Ford will be prioritizing
    replacement of tires based on the age of the tire. Ford will
    replace all tires, but will be working with its customers to
    prioritize the replacement of older tires.
  • Ford will contact customers by mail shortly regarding the
    replacement process. Customers can contact Ford at any time for
    information through the company’s toll free customer service center
    at 866-300-1226, or by email at tireinquiry@ford.com
  • Other Firestone tires on Ford Motor Company vehicles are not
    part of this program.

Ford’s Actions to Speed Replacement of Tires

Ford also announced that it was suspending production of certain
vehicle lines in order to make more tires available for the
Wilderness AT replacement project. Specifically, Ford will take
two down weeks at the Twin Cities, MN and Edison, NJ Ranger assembly
plants. The company will also take one down week of Explorer Sport,
Explorer Sport Trac and 2002 Explorer production at the Louisville,
KY assembly plant.

Ford Tire Safety Initiatives

Ford previously has announced several initiatives to safeguard
its customers and to work closely with the tire industry and
government safety authorities to ensure tire safety. These
initiatives include extending the warranty on Ford vehicles to
include tires and offering built-in tire pressure monitoring systems
on some Ford vehicles. Ford also has worked with the tire industry
to develop and implement an “early warning system” to detect the
first signs of tire defects on vehicles already on the road.

Data Demonstrates Explorer Safety, Tire Role in Tread
Separation

U.S. Department of Transportation data demonstrates that for
more than ten years, Explorer consistently has ranked at or near the
top in safety among the SUVs in its class. In addition, 2.9 million
Goodyear tires on Explorers have performed with industry leading
safety for more than 500,000 customers and their families, traveling
an estimated 25 billion miles.

Financial Impact

Ford Motor Company will take a charge of $2.1 billion (equivalent
to $1.10 per share) in the second quarter to cover the costs of
replacing the tires. Effective immediately, the company’s share
re-purchase program will be suspended. This will further reduce
full year earnings by about $0.10 per share.

For the second quarter, we now expect a loss of about $0.35 per
share. For the full year, earnings per share is estimated at $1.25
- $1.35 per share.


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