Ford to Replace All 13M 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
DEARBORN, Mich., May 22 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, http://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.
