An analysis of the Ford- Firestone Case

COMM351 Essay Danial Munsoor 3259882

Executive Summary

Ford-Firestone case is a unique and an appropriate example of violation of
business ethics by two renowned corporations, Ford Motor Company and
Firestone Tire Company, each of which was the manufacturer of a “different”
product. This essay talks about as to how the leading car manufacturer Ford, can
be held morally accountable for the various accidents and deaths which occurred
in US due to vehicle rollovers of its popular SUV known as the “Ford Explorer”.
However, Ford executives some how managed to put most of the blame on
Firestone by saying that the accidents and deaths occurred mainly due to tire
blowouts, and therefore “it is a Firestone tire problem and not a vehicle problem”.
On the other hand Firestone claimed that many of the accidents were mainly due
to the vehicle’s lack of stability and were not due to its tires. Indeed much of the
essay is about opposing statements made by the executives of Ford and
Firestone. Therefore, in order to have a better understanding of the case, it is
important to understand the difference between when an item is a “product in its
own right” and when it is a “component of another product”. When thousands of
parts came into a Ford assembly plant, Firestone tires were also like those other
components that were acquired by Ford. Therefore it can be presumed that the
tires were manufactured in a manner to suit the Ford specifications, and they did
become a part of the assembly process. At the time of assembly Ford should
have checked that whether the tires had the same high quality as other
components. Even according to the Utilitarian Approach, the manufacturer of the
product should be held responsible for the defects rather than the retailer, and it
is the duty of every producer to ensure that it produces the safest products
possible. Therefore based on the Utilitarian Approach, it can be concluded that
Ford was “unethical” because it was controlling the process through which
Explorer was produced, and therefore it is to be held morally as well as legally
responsible for the defects which were present in the vehicle.

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Corporate Responsibility, Ethical Blunders and Rollovers:
An analysis of the Ford- Firestone Case

INTRODUCTION:
Ethics is a term that describes a whole set of values around how to behave
morally, and treat people in ways that show respect for them. On the other hand
Business Ethics can be defined as moral principles and values that govern
decision and actions of a company. In the most basic terms, the definition of
business ethics comes down to one thing, i.e. distinguishing between right and
wrong and opting to do what is right (White, 2008). Ford-Firestone case is a
“unique” and an “appropriate example” of violation of business ethics by two
famous corporations, Ford Motor Company and Firestone, each of which was the
manufacturer of a “different” product.

ABOUT FORD:
Henry Ford founded The Ford Motor Company in 1903 in Dearborn, Michigan.
When the company began it used to produce few cars a day, with only two or
three men working on each car. Ford revolutionized the car making industry and
manufacturing by becoming the first one to use an assembly line technique to
produce cars (Frontenac Motor Company, 2009). It is one of the largest family-
controlled organizations in the world and has been under family control for more
than hundred years. It is the best truck maker in the world and comes second
after General Motors in car manufacturing. Ford manufactures various forms of
cars and light trucks. With a staff of 360,000 employees, Ford had revenues of
more than $160 billion in 1999 (Rourke, 2001).

ABOUT FIRESTONE:
The Firestone Tire & Rubber Company was established by Harvey S. Firestone
in 1900 in Akron, Ohio. The company began with only 12 employees, and it used
to supply rubber tires for wagons and buggies. It was a leader in the mass
production of tires. As years passed, Firestone realized that it had also had the

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capability for manufacturing tires for automobiles. Therefore in 1990, it merged
with Bridgestone Corporation of Japan to become Bridgestone/Firestone Inc.
After the merger, the company went on to become a pioneer in tire technology. It
developed more than 8,000 different types of tires for vehicles ranging from
passengers to agricultural equipment to race cars. In 1999 the company had
revenues of more than $20 billion (Rourke, 2001).

THE COMPANIES INVOLVED:
Ford Motor Company and Firestone was a partnership between the two industry
giants, Henry Ford and Harvey Firestone. This partnership began in 1908 when
Harvey Firestone supplied Henry ford with tires for his new Model T. Due to
friendships among the members of the two families, the business relationship
grew stronger (Noggle and Palmer, 2005). However, both the companies were
unaware that their century-long relationship would end in such a tragic way. And
it was in the year 2001 when both the companies announced that they will not
enter into new contracts with each other anymore (Noggle and Palmer, 2005).

WHO IS TO BE BLAMED?
In this essay, we will observe how the pioneer car manufacturer Ford, can be
held “morally accountable” for the various accidents and deaths which
occurred in US due to vehicle rollovers of its popular SUV known as the “Ford
Explorer”. According to a report, there were 700 injuries and 203 deaths due to
the Ford-Firestone product failures (Hoyer, 2001). Studies show that Explorer’s
lack of stability was mainly due to lower recommended psi and also due to the
modifications which were made to the Firestone ATX and Wilderness tires
(Rowell, 2008). However, Ford executives some how managed to put most of
the blame on Firestone by saying that the accidents and deaths occurred mainly
due to tire blowouts, and therefore “it is not a vehicle problem and is a Firestone
problem”. On the other hand Firestone argued that many of the accidents were
mainly due to the vehicle’s “lack of stability” and were not due to its tires. Indeed
much of the essay is about opposing statements made by the executives of

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Firestone and Ford. In other words, it was uncertain as to which product caused
the accidents and therefore which company should be held accountable.
Therefore, in order to have a better understanding of the case, we need to
understand the difference between when an item is “a separate product” and
when it is a “part of another product” (Noggle and Palmer, 2005).

AN ANALYSIS OF TIRE CRISIS:
Back in the mid 80s, Ford started working on one of its most popular SUVs
known as “Ford Explorer”, which was a replacement for the smaller SUV known
as the “Bronco II”. In May 1987, when a test (code named UN46) was done on
the Explorer prototype, it indicated that the stability of the prototype was worse
than Bronco II. According to a Ford internal memo, the optimal way to overcome
the stability issue was by lowering the center of gravity, widening the Explorer’s
wheel base, and using a smaller P215 tire. However, when further analysis was
done, Ford realized that expanding the wheel base and lowering the center of
gravity would have delayed the production, and hence it decided to act
“unethically” (Rowell, 2008). Therefore a month later in June 1987, another
memo was passed by Ford which approved the use of Firestone P235 ATX (not
a smaller tire) tires on the vehicle. In 1988, when a computerized test was done
on the ATX tires, it indicated “stability issues” at 35psi, but favorable results were
expected at 26 psi. Hence in order to “partially” resolve the stability issue, Ford
engineers offered a ‘back up plan’ and that was to set an inflation pressure to 26
psi (Noggle and Palmer, 2005). Moreover, an internal Ford test report published
on 25th November 1988 showed that Explorer was also lifting two wheels at a
speed of 55 mph due to a high center of gravity and front suspension system
(Rowell, 2008).

The P235 ATX tires were designed by Firestone specifically for this vehicle.
Despite of knowing the safety margin of 25-35 psi for the P235 ATX tires, in
January, 1989 Ford Motor Company went on to set the inflation pressure to 26
psi. Basically inflation pressure decides how inflexible the tire is: the lower the

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pressure, the more the flexing around the sidewalls (Noggle and Palmer, 2005).
The more the flexing, the greater the friction which results in greater heat being
produced and excessive heat deteriorates a tire’s performance, and this can
result in a “tire blowout”. As far as the ability of the tires to withstand heat is
concerned, it depends on the whether the tire is A rated, B rated or C rated. If the
tire is A rated, it means that it can withstand the excessive heat the most.
However if the tire is C rated then it can not withstand the heat at all. As far as B
rated tires are concerned, they fall in between the A and C rating category. Firstly
by setting a low inflation pressure and secondly by selecting C-rated tires, Ford
selected tires which were not heat resistant and could be expected to generate
excessive amount of heat (Noggle and Palmer, 2005). Another factor, apart from
the inflation pressure, that contributed to the tire damage was the excessive load
of the vehicle. Due to the large size of the explorer, the recommended pay load
was 750 – 1310 lbs. The pay load was such that it would have increased with
several passengers and cargo load, and this would have put even more burden
on the tires (Noggle and Palmer, 2005).

On 11th January, 1989 a meeting was held with Firestone regarding “jacking” (i.e.
lifting) the front suspension. As far as jacking the suspension was concerned, it
was not relevant from the stability point of view (Rowell, 2008). As mentioned
before, lowering the center of gravity could have resolved the stability issue to a
great extent, but Ford was unwilling to do so because then the production would
have been “delayed”. Therefore on 26th January 1989 Ford engineers stated that
P235 ATX tires were not of a higher quality and they have not met its stability
goal (Noggle and Palmer, 2005). Thus Ford decided to use a new set of
Firestone tires known as the P245 ATX tires.

The use of P245 ATX tires proved to be even worse. On 9th February, 1989 Ford
hired Arvin/Calspan Company to test the P245 tires. According to the test report,
there was a severe tread package separation from the tire carcass at 29 psi of
pressure. However, in an internal memo to Ford, Firestone did agree to the test

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report and admitted that the tire showed a sever tread separation. But Firestone
assured Ford that the tread separation won’t be much of a real problem (Rowell,
2008).

Firestone’s guarantee was good enough for Ford to continue with its decision to
use Firestone tires and to set the pressure to 26 psi. In addition to setting up the
inflation pressure, Ford officials also rejected some alternatives which could have
improved the stability of Explorer because they wanted to meet the production
deadline. It was in March 1990, that the first Ford Explorer was launched in the
American market. And on 12th February 1991, the “first” tread separation case
was filed against Ford and Firestone. However, both companies were unaware of
the worse problems which were to come. Soon after the first Explorers were
introduced in the market, tests showed that Explorer had a poor fuel economy.
This was however due to the “lower inflation pressure” which was adopted to
deal with the vehicle’s stability problems (Noggle and Palmer, 2005). Therefore,
in order to improve the fuel economy of the 1995 model, Ford went against its
engineers and decided to reduce the “rolling resistance” by making the tires
lighter. As directed by Ford, in the year 1994 Firestone decreased the weight of
the tires by 10%. However, the weight was reduced by making various
modifications to the tire, such as removing material etc (Rowell, 2008).

After the weight of the Firestone tires was reduced, the number of accidents with
the Firestone-Explorer grew “rapidly”. The accidents mainly occurred when the
tire’s tread literally separated from the tire’s body, which caused the explorer to
become incontrollable and rollover-frequently which led to deadly accidents
(Noggle and Palmer, 2005). In the process, both Ford and Firestone were sued
by the victims. For sometime, many of the Explorer-Firestone ATX problems did
not come to public attention. And it was in 1998, that the State Farm Insurance
Company reported 21 Firestone tire failures to National Highway Traffic Safety
Administration (NHTSA). This issue gave NHSTA a reason to investigate into the
matter. According to NHTSA, there were 14 Ford-Firestone cases already

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reported between1991 and 1995. However, NHTSA did not formally commence
its investigation until May 2000 (Noggle and Palmer, 2005). While NHTSA was
planning to investigate into the matter, Ford started to replace tires in Saudi
Arabia and in Venezuela, after it came across the similar patterns of accidents.
Ford was lucky that NHTSA was not authorized to request recall information from
overseas countries (Noggle and Palmer, 2005).

THE FIRESTONE TIRE RECALL:
On 9th August, 2000 Firestone executives voluntarily “recalled” approximately 6.5
million tires. The recall was the second largest tire recall in the History of U.S.
The recall campaign included several Firestone tires like P235, ATX, ATX II and
Wilderness AT, many of which were installed on the Ford Explorer (Noggle and
Palmer, 2005). According to a research the estimated tire replacement costs
were around $350 million. And if the fines and compensation charges were
included in the total costs to be shared by Ford and Firestone, the amount would
add up to approximately $1 billion. Moreover, when Ford was committed to the
recall, it was “very slow” in approaching the public and the media (Verschoor,
2000).

A COUNTRYWIDE SCANDAL UNCOVERED:
At that time, the complete proof of what caused the accidents was yet to be
discovered. However, studies suggest that there were numerous factors that
caused the deadly accidents. According to tire experts there were possible
design flaws which were due to poor materials and processes used in their
production. Moreover there were possible manufacturing irregularities at the
Illinois Firestone plant which produced most of the defected tires. Regardless of
whatever the weaknesses or flaws were there, it was almost clear that the
stability problems in the Ford Explorer were the “main” reason for the deadly
accidents (Noggle and Palmer, 2005). Further discoveries reveal that, despite of
recognizing the risks to the consumers, Ford deliberately decided not to stick to
its own design goals (i.e. expanding the wheel base and/or lowering the center of

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gravity) so as to save money (Rowell, 2008). According to NHTSA’s database
there were 3500 reports on tire failures, 13% were of Ford Explorers rollover due
to tire failure compared to 3% for all other SUV’s and light trucks (Noggle and
Palmer, 2005).

FORD AND FIRESTONE REACT:
As the number of accidents grew and the public got to know of the problems
associated with Firestone equipped Explorers, Ford and Firestone responded by
blaming each other. Masatoshi Ono, the CEO of Firestone completely denied
that the tires were defective or that the company was responsible for the
accidents. However, Firestone tried to put the blame on Ford for recommending
a very low inflation pressure, and it also stressed on the poor tire maintenance by
customers. On the other hand, Ford’s CEO at that time, Jacques Nasser,
portrayed from the starting that the problem was mainly due to Firestone’s tires.
He forcefully declared that the accidents were not due to the auto-maker by
stating that “this is a Firestone tire issue, not a vehicle issue” (Noggle and
Palmer, 2005). However, this statement of Nasser’s proved to be the turning
point and thus requires closer examination.

FORD’S CEO MAKES THE WRONG STATEMENT:
Nasser’s statement that “it’s a tire problem and not a vehicle problem” portrayed
that the Firestone ATX tires were a distinct product and not a component of the
Ford Explorers. It’s like saying that “brake problem is not a vehicle problem”
since a brake problem is very much a vehicle problem. It is important to consider
the fact that Ford went ahead than just simply selling Firestone ATX tires. It
forcefully modified the specifications that Firestone originally used in designing
the tires. Moreover it also determined the air pressure which was at the lower
end of the safety margin (Noggle and Palmer, 2005).

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MANUFACTURER OR SELLER: THE MORAL DIMENSION
By nature, we are likely to place greater “moral responsibility” for the faults in
a product on its manufacturer (often called assembler) rather than on its seller.
However this perception is the key to understanding moral responsibility (Noggle
and Palmer, 2005).

A Utilitarian approach to moral responsibility requires placing moral
responsibility where it will do the greatest good. Generally it means locating
responsibility at that point from where the significant effects of harmful behavior
can be reduced without harming the society. According to the utilitarian
approach, the manufacturer of the product should be held responsible for the
defects rather than the retailer. Therefore it is the duty of every producer to
ensure that it delivers the safest products (Noggle and Palmer, 2005). Based on
the Utilitarian approach, it can be said that Ford was “unethical” because it was
controlling the process through which Explorer was produced, and therefore it is
to be held morally as well as legally responsible for the defects which were
present in the vehicle

The “legal issue” in this Firestone-Ford controversy is so tightly linked that it is
impossible to discuss one without discussing the other. Without doubt it is the
legal liability of the manufacturer of the product that comprises of various
components manufactured by other companies. Even if the component made by
the part maker contains a defect, the manufacturer of the product can be held
partially responsible if the accidents occur due to that defected part because the
component is a part of the product. As far as the legal liability is concerned, Ford
was legally responsible for the tragic accidents which took place due to tire
blowouts (Noggle and Palmer, 2005).

MORAL AND LEGAL RESPONSIBILITY FOR COMPONENT PARTS:
Perhaps the determination of Ford’s moral and legal responsibility depends partly
on whether the tires were seen a separate product “bundled” with Explorer or as

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a part of the vehicle. If the former is considered then Ford only transferred the
hazard from one buyer to another. However if the latter is considered then Ford,
as a manufacturer of the Explorer which includes the tires, not only transferred
but also helped in producing the hazard (Noggle and Palmer, 2005).

FORD IS RESPONSIBLE AND NOT FIRESTONE: A DEEPER ANALYSIS
When thousands of parts came into a Ford assembly plant, Firestone tires were
also like those other components that were acquired by Ford. Therefore it can be
presumed that the tires were manufactured in a manner to suit the Ford
specifications, and they did become a part of the assembly process. Actually tires
are the same as gas tank, air bags, brakes, steering and windshield. At the time
of assembly Ford should have checked that whether the tires were of the same
high quality as other components. However, the only difference between the tires
and other components was that the tires were covered up under a warranty
which was provided by Firestone and not Ford (Hoyer, 2001).

BMW REACTS IMMIDIATELY AS COMPARED TO FORD:
Comparing Ford with the German automaker BMW AG, BMW “immediately”
recalled 200,000 of its cars, after getting to know that there was a problem with
the front passenger seat airbags. According to NHTSA, the recall campaign
covers 2004-2006 5 Series, 2004-2006 X3 and 2006 3 series (Tutor, 2008).
Apparently the problem was that small cracks used to develop in the seat
detection mat which used to deactivate the front passenger air bags. However, if
the seat detection mat fails to sense a person, it deactivates the airbags. A BMW
spokesperson Tom Plucinsky further mentioned that due to small cracks the air
bag light used to indicate a deactivated air bag even if the passenger was sitting.
BMW responded to the problem by firstly extending the warranty to 10 years for
the above mentioned vehicles without any mileage limit. And secondly it replaced
the detection mats for the customer free of charge (Raia, 2008). By performing
this ethical act, BMW prevented disastrous accidents from taking place.

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CONCLUSION:
In conclusion, Ford is the one to be blamed for the accidents because it did not
adopt proper measures to address the stability problems which were associated
to the Ford Explorer. Instead of taking the moral and legal responsibility to fix the
problem, it just pointed out fingers.

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REFERENCES:

Frontenac. (2009), ‘The Model T Ford’, Frontenac, Available:
http://www.modelt.ca/background.html [Accessed 28 October, 2009].

Hoyer, R. (2001), ‘Why quality gets an F’ , Proquest, Available:
http://proquest.umi.com.ezproxy.uow.edu.au/pqdweb?index=3&did=83789090&S
rchMode=2&sid=35&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=PQ
D&TS=1257632310&clientId=20901 [Accessed 17 October, 2009].

Raia, J. (2008), ‘BMW Recalls 200,000 Cars With Potential Air Bag Problems’,
The weekly driver’, Available:
http://www.theweeklydriver.com/articles/1280/1/BMW-Recalls-200000-Cars-With-
Potential-Air-Bag-Problems/Page1.html [Accessed 20 October, 2009]

Robert Noggle, & Daniel E. Palmer. (2005), ‘Radials, Rollovers and
Responsibility: An Examination of the Ford-Firestone Case’, Journal of Business
Ethics, [online], Volume 2, No. 56. Available:
http://proquest.umi.com.ezproxy.uow.edu.au/pqdweb?index=0&did=796936741&
SrchMode=2&sid=35&Fmt=6&VInst=PROD&VType=PQD&RQT=309&VName=P
QD&TS=1257632310&clientId=20901, [Accessed 25 October, 2009].

Rowell, J. (n.d), ‘The ford explorer: History repeats itself’, Cdrb, Available:
http://www.cdrb-law.com/legal-articles/ford-explorer-history-repeats-itself-john-d-
rowell.pdf [Accessed 24 October, 2009].

Tutor, C. (2008), ‘BMW recalls 200,000 vehicles over issue with front passenger
air bag’, Autoblog, Available: http://www.autoblog.com/2008/08/13/bmw-recalls-
200-000-vehicles-over-issue-with-front-passenger-air/ [Accessed 28 October,
2009].

Verschoor, C. (2000), ‘Legal compliance and ethical blunders at Ford/Firestone’,
Proquest, Vol.82, pp22, Available:

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http://proquest.umi.com.ezproxy.uow.edu.au/pqdweb?index=5&did=62518256&S
rchMode=2&sid=35&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQ
D&TS=1257632310&clientId=20901 [Accessed 3 November, 2009]

White, M. (2008), ‘A definition for business ethics’, Business, Available:
http://business.lovetoknow.com/wiki/A_Definition_for_Business_Ethics
[Accessed 1 November, 2009].

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