The following is the prepared written statement of Ford Motor Co. chief executive
officer Jacques Nasser before the Congressional Hearing on the company’s
Firestone tyre replacement action:

Good morning Mr. Chairman, Congressman Dingell and members of the committee.
I am Jacques Nasser, President and CEO of Ford Motor Company. I am here today
to explain the reasons behind our decision to replace 13 million Firestone tyres
on Ford vehicles. I am also here to answer any questions the committee may have
on the steps we have taken to protect the safety of our customers.

For nearly 100 years, our Company has thrived because we have been responsive
to our customers and our communities around the world. In all the actions we
have taken, we have been guided first and foremost by our commitment to safety.
We have also been driven by facts — real world performance data, as well as
laboratory analyses. We have shared all the data and analyses openly, and have
worked with NHTSA and with Firestone to better understand the causes of the
tread separation problem with Firestone ATX and Wilderness AT tyres.

Why We Are Replacing the Tyres

On May 22nd of this year, Ford announced that we would replace all Wilderness
AT tyres used on Ford vehicles because of concerns about the performance of
the tyres as they age, creating unnecessary risks for our customers. While some
of the tyres being replaced do not show a substantial failure risk, we are replacing
all Wilderness AT tyres to avoid any confusion for our customers and eliminate
any doubt about the quality of their tyres.

Last summer, while the data indicated elevated rates of tread separation on
the 6.5 Million ATX and Decatur-built Wilderness AT tyres, which resulted in
the Firestone recall, we did not have enough information to understand why the
tyres were failing.

Immediately after the recall, we assembled a team of technical experts to find
the causes of the tread separation problem. The purpose of the investigation
was simple: we had to be certain that the tyres on our vehicles were as safe
as possible for our customers. The "Tyre Team", as it became known,
spent more than 100,000 person-hours analysing real-world data, investigating
accidents, testing tyres and vehicles, running computer simulations and studying
tyre designs. Our Tyre Team worked closely with NHTSA every step of the way.
We also shared our data and analysis with Firestone and Dr. Sanjay Govindjee,
who conducted an independent investigation at Firestone’s request.

As part of that intensive work we developed a laboratory test to duplicate
the failure mode experienced in the field. We developed better statistical analysis
of claims data that allowed prediction of trends in failure rates. We worked
with NHTSA to understand failure rates in competitive tyres. And we did detailed
engineering analyses of failed tyres to give us an understanding of real-world
failure mechanisms. Our findings proved consistent with the findings of Dr.
Sanjay Govindjee.

We reached the following conclusions based on our data and analyses:

Firestone’s Wilderness AT tyres experience higher rates of tread separations
than other tyres, including the Goodyear tyres used on the Explorer.

Firestone’s ATX and Wilderness AT tyres fitted to Ford vehicles have temperature
characteristics, wedge design characteristics and rubber properties, including
peel strength, that demonstrate they are more sensitive than other tyres to
the stresses caused by ordinary use. This correlates with their significantly
higher failure rates in the field.

Firestone’s ATX and Wilderness AT tyres have different designs, constructions
and performance characteristics depending upon when and where they were manufactured.
The Goodyear tyres used on Explorers do not exhibit this degree of variability.

Firestone’s Wilderness AT 16" tyres with a recommended inflation pressure
of 30 psi perform about the same on the Explorer as the 15" tyres with
a recommended inflation pressure of 26 psi from the same Firestone plant.

Based on our laboratory testing and results, we were able to make predictions
that could be confirmed by real-world data. Then, on May 11th of this year we
received the latest claims data from Firestone which showed a rising trend in
failure rates for Wilderness AT tyres, further validating our analyses and predictive
model. With these pieces of the puzzle coming together, we felt we had sufficient
information to take action in the best interest of our customers.

Last summer the elevated levels of tyre failures on the recalled tyres sent
a very strong signal. What we learned since then allowed us to analyse failure
trends more precisely. So, while claims alone today do not present as strong
a signal as last August, our model suggests that the rate of failures is increasing
significantly as the tyres age, a risk that we cannot ask our customers to accept.

We really had only two choices — wait until more failures proved conclusively
there is a growing problem, or act now on the basis of our analyses and the
data available. With hot weather driving conditions approaching, we knew the
risk of tread separations would increase. As a result, in the interest of the
safety of our customers, we could not wait.

Progress to Date

In the first week of June, after reviewing our proposed customer letter with
NHTSA, we notified millions of customers of our analysis and the details of
our replacement programme. At the same time, we were qualifying tyres as fit
for replacement through our testing processes. We have, so far, identified approximately
60 types of replacement tyres. We also reviewed the list with NHTSA to ascertain
that there were no pending concerns with the qualified tyres.

To build the pipeline of replacement tyres, we entered into discussion with
tyre manufacturers. So far, an additional 2 million tyres have been made available,
and we have taken 2-3 down weeks at several of our plants to help fill the supply
pipeline and give the tyre manufacturers time to ramp up production. The desire
to quickly increase replacement tyre production was another reason we felt we
had to announce the replacement programme as soon as possible.

We are qualifying tyres based on the new testing procedures developed by the
Tyre Team. In addition, the tyre manufacturers are providing claims data from
the early warning system developed as a result of the TREAD Act. These data,
together with our predictive models, give us confidence that the replacement
tyres will meet the needs of our customers.

The Explorer is a Safe Vehicle

The data tell us that the problem is with the tyres and not the vehicle. There
are about 3 million Goodyear tyres that were built to the exact same Ford specifications
and were put on Explorers during 1995-1997 (and as replacements for these vehicles
in subsequent years). These tyres are performing almost flawlessly, having generated
only 2 tread separation claims. At the same time, a similar number of Explorers
built at the same assembly plants but equipped with Firestone tyres have experienced
1183 tread separations, with the same type of customer and the same geographical/climatic
distribution of vehicles. The difference in tyre failure rates therefore cannot
be attributed to the Explorer.

It has been alleged that the reason Goodyear tyres had few tread separations
is that they are a "B" graded tyre according to the Uniform Tyre Quality
Grading Standards (UTQGS), while the Wilderness AT has a "C" rating.
In fact, millions of tyres on GM and Toyota vehicles, for example, are "C"
rated, but have not had tread separation problems.

Another charge is that the Explorer had insufficient load reserve – or
margin of safety – for the tyres. The field data show, however, that there
is no correlation between load reserve and tread separation claims on these
vehicles. Goodyear tyres had the same load reserve at 26 psi yet had no tread
separation problem. Furthermore, the Firestone 16" Wilderness AT tyres,
which are specified at 30 psi, had elevated claims even with 300 pounds more
load reserve. Lastly, the Explorer’s load reserve is similar to other SUVs.

There have also been allegations that Explorer is causing the tyre "problem"
since Ford Ranger is fitted with the same tyre, yet experienced fewer tread
separations. The only time the same size tyre was used on the Ranger and Explorer
was as an option on the four-wheel drive model of the Ranger. The vast majority
of these vehicles were sold in northern climates where four-wheel drive is in
high demand. When Decatur-built Wilderness AT tyres (these were recalled by
Firestone last August) were placed on 4×4 Ranger pickup trucks in the hot states,
they failed at statistically similar rates as the tyres on the Explorer.

The Wilderness AT tyres used as original equipment on the Explorer are also
installed as aftermarket tyres on a wide variety of non-Ford vehicles and these
vehicles have experienced a significant number of tread separations, some resulting
in accidents. There are a total of 167 non-Ford claims of tread separation and
66 of these are on competitive SUVs. These claims include claims for tread separations
on tyres not included in last year’s recall. The total number of Wilderness
tyres used as aftermarket replacements on competitive vehicles is not known,
but is believed to be relatively small, suggesting an elevated failure rate,
comparable to that experienced by original equipment Firestone tyres on the
Explorer. In addition, there are 236 claims on Ford vehicles that are not Explorers
on these same tyres, again suggesting that the problem is with the tyres.

In spite of this strong statistical evidence that this is a Firestone tyre
problem, we were not satisfied to stop at an investigation of the tyres alone.
As a designer and manufacturer of vehicles for almost 100 years, Ford used its
knowledge of vehicle engineering to do an unblinking review of tyre-vehicle
interaction. All through this process we shared our findings with NHTSA and
Firestone.

We conducted 4 major analyses in our safety investigation that focused specifically
on the vehicle. We looked at whether the Explorer design could cause an elevated
rate of tread separation claims, and we found that this was not the case: we
were able to reproduce the tyre failure mode in the laboratory, independent
of the Explorer, confirming the field data on Firestone and Goodyear tyres.

We looked at whether the Explorer behaved differently, compared to peer vehicles,
during a tread separation. In all, we tested 24 different vehicles in 60 tread
separation tests and more than 1000 vehicle dynamics tests and hundreds of computer
simulations; the data we generated confirmed that the Explorer behaves similarly
to other SUVs. We looked at whether Explorer behaved differently after a tread
separation, and the data show that its performance falls within the range of
other vehicles in its class. And we looked at the crashworthiness of the Explorer,
and again found that it was comparable or better than peer vehicles. Overall,
the Explorer performed similarly to other SUVs before, during and after a tread
separation.

Importantly, the results obtained in thousands of hours in the laboratory and
on the test track are confirmed by 10 years of real world performance.

The analysis of government data show that the Explorer is among the safest
of the comparable SUVs:

The Explorer is 17% safer than the typical comparable SUV in all types of fatal
crashes.

The Explorer is 19% safer than the typical comparable SUV in fatal rollover
accidents.

The Explorer is safer than the typical comparable SUV in all crash types –
front, side, rear and rollover crashes.

The Explorer is involved in 19% fewer accidents of all types (fatal and non-fatal)
than the typical comparable SUV.

Explorers have successfully travelled enormous distances in the last 11 years.
More than 4 million Explorers have been sold, and over 3.5 million of these
are still in service. Explorer drivers have collectively driven the equivalent
of more than 13 million years. Explorers have been driven more than 150 billion
miles.

Insurance data also show the Explorer has a strong safety record. Data published
by the Highway Loss Data Institute (HLDI) show that the Explorer in all its
derivatives (such as model type – 2 door versus 4 door and 2 wheel drive
versus 4 wheel drive) has an injury loss claims record better than the average
car, ranging up to 32 percent better.

Explorer has a fine record in government and consumer testing:

Explorer has scored 4 or 5 stars (the highest rating) in government NCAP frontal
and side crash tests.

Explorer is similar to competitive SUVs in the government’s experimental rollover
resistance rating, based on the static stability factor (SSF).

Explorer received the second-highest rating from the Insurance Institute for
Highway Safety (IIHS) in its frontal offset crash tests. Just one SUV got a
better rating, while four received lower ratings.

All in all, no other SUV has such a strong combination of field and testing
performance.

Analysis of Firestone tyre claims data also confirms that the accident and
the rollover risk for the Explorer when a tread separation occurs is comparable
to other SUVs. Since tread separation accidents are still relatively rare events,
the sample size of the data is quite small and the confidence interval is wide.
We will continue to share our analysis with NHTSA and Congress to confirm our
understanding. However, nothing in the data that we have analysed supports recent
accusations that the Explorer is behaving atypically among SUVs. The Explorer
is as safe as other SUVs before, during and after a tread separation.

A recent analysis conducted by Dennis Guenther at the request of Firestone
purports to show deficiency in the safety of the Explorer on the basis that
it does not have enough "understeer margin" to prevent oversteer in
the linear range when it suffers a tread separation at the rear. We strongly
disagree with the statements made by Firestone regarding this study. The Firestone
test is unreliable because it did not test enough vehicles or conditions to
support their conclusions.

It used too few models (only 2 compared to Ford’s 15 SUV tests).

It has test repeatability and data reduction issues.

It tested only on one road surface.

It did not test the actual event of tread separation.

It did not test under the demanding circumstances in which tread separations
occur in the real world.

Its results are inconsistent with real-world accident data.

Firestone’s allegations would imply that not only Explorer, but 12 other vehicles
we tested made by the world’s leading motor vehicle manufacturers also do not
meet Guenther’s understeer criteria (see table below). This illustrates the
absurdity of Firestone’s position.

Vehicles That Show Linear Range Oversteer with a Rear Tread Removed (All vehicles
tested fully loaded)

2001 BMW X5 4×4 2001 Honda Odyssey
1996 Chevrolet Blazer 4×2 1995 Isuzu Rodeo 4×2
2001 Chevrolet TrailBlazer 4×2
2001 Jeep Liberty 4×4
2001 Dodge Durango 4×4
1995 Nissan Pathfinder 4×2
2001 Honda Accord
2000 Toyota 4-Runner 4×4
2001 Honda CRV 4×4
1994 Toyota 4-Runner 4×2

The Explorer, like all its peers and every vehicle made, has handling characteristics
which are optimised for safety with four treaded tyres. According to our test
results, its handling and steering characteristics are remarkably close to those
chosen by BMW and Mercedes Benz, as well as the most recent entries from Jeep,
Dodge, and even the new TrailBlazer has less understeer than the Explorer. These
characteristics help the driver to achieve safe operation in all foreseeable
circumstances.

Even the two vehicles that meet Firestone’s understeer criteria have experienced
rollover accidents after a tread separation on Firestone tyres in the real world.

Finally, we will not accept that a tread separation is a "normal foreseeable
event" that manufacturers must accommodate through vehicle design as asserted
by Firestone. No vehicle we have tested can deal with a tread separation well
enough to avoid a small but significant risk of loss of control with a treadless
rear tyre. As indicated in Exhibits 10 and 11, other tyre manufacturers such
as Continental and Goodyear do not accept that tread separation is a normal
or common occurrence that should be part of the vehicle design requirements.

NHTSA’s data show that other tyre manufacturers have demonstrated that it is
possible with current technology to design tyres that do not separate. We know
the best way to prevent accidents caused by tread separations is to prevent
tread separations and that is why we are replacing the Firestone Wilderness
AT tyres on our vehicles.

Conclusion

In summary, we have been guided throughout by our number one priority, the
safety of our customers.

Ironically, last summer we were criticised by some for acting too slowly. Now,
we are being criticised for acting too swiftly. In both cases, we have been
driven by the facts and analyses available. We have shared data continuously
with NHTSA, Congress, and Firestone. I assure the committee that the decision
that we took to replace these Firestone Wilderness AT tyres was not taken lightly.
The cost of the replacement programme is about 3 billion dollars. We feel this
expenditure is necessary to protect the safety of those who have put their trust
in us. And, we will make that decision any time that the safety of our customers
is at risk.