Ford and Firestone have finally made the break. On 21st May Firestone and its
parent Bridgestone announced that they would no longer supply Ford with original
equipment tyres in North or South America. They were prepared to maintain supplies
in Europe and Asia, but this only accounts for a quarter of their turnover with
the world’s second biggest automaker, and in view of the very public nature
of the bust up it would seem most unlikely that Ford will keep Firestone at
the top of its favourite suppliers’ list. Neil Mullineux re-traces the steps
in the break-up and assesses its consequences.
Why has this come about quite so dramatically? The big OEMs change their suppliers
all the time, but they usually try to keep on talking terms with everyone. Vehicle
manufacturing might be one of the truly global industries, but it is a small
world within the industry and there are not that many credible suppliers for
any one component. There are no more than half a dozen tyre manufacturers in
the world with the research and development capability to work with the car
manufacturers to design a tyre for a specific model with its unique suspension
and performance requirements.
Similarly, the component manufacturers (and tyres are just as much a component
as an alternator or an exhaust system) have only a limited number of potential
customers. 90% of vehicles are made by just 12 manufacturing groups, and Ford
alone is responsible for 15% of the world total. They would certainly not want
to forego voluntarily a sizeable chunk of their market on a whim or in a fit
of pique. It could be argued that tyre companies are less dependent than most
component manufacturers on the OEMs. Whereas a company making seatbelts or steering
systems depends upon the automakers for 90% of its sales, the tyre manufacturers
rely on the aftermarket for 75% of their products and even more of their revenue.
Of the 1,000m light vehicle tyres produced each year, three-quarters of them
are destined for the aftermarket.
and Firestone have been associated for a long time – right back to the
origins of both companies
Even so, the loss of a customer such as Ford, particularly in such an acrimonious
exchange, is not to be considered lightly. Quite apart from the prestige involved
in supplying the major automakers, a significant number of customers always
specify the original equipment brand as the replacement, so the loss of an OE
contract will have repercussions in aftermarket sales. So why did Firestone
(or rather Bridgestone, because a decision such as this would be taken at the
highest level) do it?
“the loss of a customer such as
Ford, particularly in such an acrimonious exchange, is not to be considered
Firestone and Ford go back a long way – right back to the origins of both companies.
Harvey Firestone first supplied tyres to Henry Ford for the Model T in 1908,
and the two men were personal friends. They had their disagreements, but from
the start the Ford Motor Company used more Firestone tyres than any other brand.
The relationship survived long after the founders’ deaths and even the acquisition
of Firestone by the Japanese company Bridgestone in 1988 did not change the
close working relationship between the two companies. Over the last ten years
Ford has purchased about 40% of its tyres from Firestone, far more than from
any other manufacturer.
What has changed the relationship was the series of accidents that led to the
dramatic recall of 6.5m Firestone tyres in August 2000. Normally the vehicle
manufacturers have excellent records of every fault on every vehicle, because
they guarantee the performance of the car. Warranty records give a complete
and undisguised history of the failure rate of every component within the vehicle,
except for tyres. Manufacturers such as Ford or GM take full responsibility
for every component in the first instance, although they can and do charge this
back to the actual supplier. In the case of tyres, however, because of the variations
in driving styles and vehicle use, the guarantee has not applied. Any claims
for defects or excessive wear have had to be taken up directly with the tyre
Complaints about certain Firestone tyres first surfaced in 1996 and 1997, but
at first this did not ring any alarm bells. During 1999 Ford received complaints
in Thailand and Saudi Arabia and ordered a recall of vehicles in the Middle
East. At the same time it asked Firestone to investigate these complaints. It
took Firestone six months to carry out the investigation, and it came to the
conclusion that there was no problem with Firestone tyres. However, the company
was overtaken by events. Following a series of accidents in the southern US,
a TV station in Houston carried out an exposé of the problem, and the
National Highway Traffic Safety Administration (NHTSA) opened an official enquiry.
Both Ford and Firestone submitted evidence, but Firestone refused to supply
any data on defective tyres to Ford. Eventually, after a lot of pressure, it
did so. Ford immediately subjected the data to intensive analysis, reported
its findings to NHTSA, and NHTSA issued a mandatory recall notice. The whole
process took only four days from Firestone first revealing the data.
This was not the end of Firestone’s recalcitrance. It resisted Ford’s suggestion
to publish all the data, and it refused a request from NHTSA to extend the recall
to cover other tyres. The company believed it was being persecuted unfairly.
Although the tyres were possibly faulty to some extent, it believed that the
main cause of the accidents was the design and specification of the Ford Explorer.
In order to give a more comfortable ride, Ford had ignored Firestone’s recommendation
of tyre pressures in the 30-36 psi range and had recommended pressures at the
bottom end of that range. Any neglect by owners had resulted in under-inflated
tyres which ran hotter than they should, especially in desert conditions, and
if the treads did strip off, the vehicles were more inclined to roll over because
they have a higher centre of gravity.
intensive data analysis, the NHTSA issued a mandatory recall notice
In the months since the initial recall this argument about SUVs has gained
more credence, to the extent that a wide-ranging official investigation is imminent.
There is nothing that Ford or the other OEMs can do to avoid this, but they
are all working furiously to improve the safety of both new and existing models
within current design limitations. The safety component suppliers have received
rush orders and development contracts for yaw sensors and side curtain airbags
– the most effective protection in a rollover accident.
“In a way this break with Ford
could be justified as part of Bridgestone’s longer term branding strategy.“
The squabble between Ford and Firestone, as each tried to shift the blame,
has not been pretty, but both companies were playing for very large stakes.
At first Firestone had the worst of the argument, but gradually the Ford position
has appeared more and more vulnerable. Finally, when Ford proposed a joint investigation
into the tyre problems, Firestone snapped. It was prepared to participate in
a wider investigation into the cause of the rollover accidents, but it was not
prepared to take part in a narrow investigation, where the tyres had already
been prejudged as the sole cause. Hence the break announced on 21st May.
In a way this break with Ford could be justified as part of Bridgestone’s longer
term branding strategy. Ever since the takeover of Firestone it has been wrestling
with the problem of positioning its two main brands – the better-known Firestone,
and the parent company’s Bridgestone. In Japan and Asia there was no problem
– Bridgestone was the dominant brand and Firestone was introduced as a good
quality alternative, perhaps with a slightly more exotic image because of its
American origins. In Europe the problem was more difficult, as neither brand
had a sizeable market share, but Firestone was better known because it had been
on the market for much longer. This was resolved by Bridgestone being promoted
as being at the forefront of technical developments, whilst Firestone was targeted
at specific niche markets such as SUVs and 4x4s again.
The real problem was North and South America, where Firestone had been battling
with Goodyear for market leadership for the best part of a century. Here Bridgestone
was virtually unknown, and it could not be projected as a technical leader for
the market as a whole. Whilst Firestone was still strong, the decision was made
to build up Bridgestone’s reputation slowly and gradually by introducing innovations
first to this brand and only later to Firestone. In addition, Bridgestone tried
to build up its business with the OE manufacturers, particularly the Japanese
When the Firestone recall was announced, Bridgestone decided to make the best
of a bad situation, and since last autumn it has been working with all the OE
manufacturers using Firestone tyres in order to change their specification to
Bridgestone. It was more important for the company as a whole to retain the
business than to build up the Firestone brand again. Seen in this light, refusing
to supply Firestone tyres to Ford merely accelerates the conversion process.
It is true that neither Ford nor any other OEMs are unaware of the relationship
between Firestone and Bridgestone, but such a move does help the transition
between the two brands. Relations between Ford and Bridgestone are far too strained
at present for Ford to substitute Bridgestone brand tyres for all the Firestone
it has been purchasing, but it will almost certainly keep contact going by specifying
some Bridgestone, even though this might be rather indigestible at first.
the Firestone recall, Bridgestone has been trying to make the best of
a bad situation
“In the long term it might be Ford
that has most to lose.“
Neither side has emerged from this very public spat with much credit, and Firestone
in particular has taken a financial beating. Moreover, the American lawyers
have not yet got their teeth into the civil liability cases that are following
the nearly 200 fatalities. However, Bridgestone is a huge company, and it will
weather the storm. It is even taking some advantage out of the situation by
positioning its Bridgestone brand more securely.
In the long term it might be Ford that has most to lose. The Explorer is the
biggest selling SUV in the most profitable sector of the North American vehicle
market. If further investigations cast a cloud over the safety of all SUVs,
and the Explorer in particular, this could hurt the company badly.
The two companies will gradually begin to work together once more – the industry
is too small for them not to need each other eventually. However, the very public
nature of their fall out has left a residue of bitterness, and there will have
to be a change of management at the top of both companies before there will
be any signs of reconciliation.
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