Declining Sales Drive Firestone to Cut Production
Acknowledging that sales of Firestone tires are declining, Bridgestone/Firestone Inc. said Tuesday it will shut down three of its U.S. tire factories temporarily and lay off 450 workers at one plant to cut back on an oversupply of tires that are not part of the massive recall launched two months ago.
The tire maker’s announcement came the same day that federal regulators said they have received reports of 18 additional deaths linked to accidents involving the recalled Firestone tires. That brings the number of deaths involving the recalled tires and being investigated by the National Highway Traffic Safety Administration to 119.
“Our deepest sympathies go out to the friends and families of those who died in these accidents,” Bridgestone/Firestone said in a statement Monday. It pledged to work with NHTSA to analyze the data, but noted that NHTSA also said, “Some of the complaints and injuries may be duplicate reports.”
The company said it will halt tire production at its LaVergne, Tenn., and Oklahoma City plants for 28 days between November and January, and at its Decatur, Ill., plant for 14 days in December, because inventory levels are as much as 50% higher than normal, Bridgestone/Firestone Chief Executive John Lampe said.
All 450 layoffs, effective Oct. 29 for an indefinite period, will be at the Firestone factory in Decatur, the plant that has been singled out for producing a high number of tires that failed or were replaced due to customer complaints. The layoffs affect about 25% of the Decatur work force.
“In no way is our reduced production schedule and indefinite layoff in Decatur a reflection of that plant’s importance to our manufacturing base,” said John Lampe, who took over as Bridgestone/Firestone’s chief executive last week. “We stand behind the Decatur plant, its employees and its management. It plays a critical role in our total manufacturing process.”
The company recalled some 6.5 million Firestone ATX, ATX II and Decatur-made Wilderness AT tires in August, most of which were sold as original equipment on Ford Explorer sport-utility vehicles.
Inventory levels for non-recalled tires are high at Firestone plants, the company said, because tires were stockpiled earlier this year in anticipation of a possible strike, which was averted last month, consumers are shifting toward larger tires popular on SUVs and pickup trucks, and demand for Firestone brand tires has dropped off in the wake of the recall.
Lampe declined to give details of Firestone’s loss in market share. “As one would expect, the brand has been impacted by the recall,” he said. “We’re working very very hard to regain the trust and confidence of the public in the brand and we fully expect to rebuild that brand up to the great position it’s had in the marketplace in the last years.”
He said the Firestone unit was unlikely to be profitable this year given the $450-million special charge the company is taking because of the recall.
So far about 4.2 million recalled tires have been replaced, and the entire recall should be completed by the end of next month, he said.
Bridgestone/Firestone’s plants in Wilson, N.C., Aiken, S.C., and Joliette, Canada, are unaffected by the closings and layoffs Those three plants are making the bulk of the replacement tires to handle the recall, and maximum production of those tires continues, said Christine Karbowiak, vice president for communications.
“Completing the recall continues to be our highest priority, and we are continuing to produce replacement tires relating to our safety recall uninterrupted,” Lampe said. “I want to make it clear, we are continuing to maximize production of replacement tires unabated.”
Idled workers will receive benefits under collective bargaining agreements with the United Steel Workers of America, generally 80% of their usual wages, while those being laid off would receive unemployment benefits for up to one year depending on length of service, said Jim Stirrett, director of labor relations.
Lampe said he hoped to give laid off workers their jobs back as soon as possible but he would not say how soon or likely that might be.
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