Ford to Cover Some Costs of Firestone Tire Recall

Ford Motor Co. disclosed Friday in a government filing that it has agreed to cover some costs of the Firestone tire recall, which has resulted in close to 100 lawsuits against the No. 2 auto maker.

In a U.S. Securities and Exchange Commission filing, Ford reiterated that the recall of 6.5 million Firestone tires will reduce revenues and increase costs, but that it is too early to calculate the overall impact in the second half of 2000.

“We have preliminarily agreed to bear a portion of the costs of Firestone’s recall,” the company said.

Consumer advocates and safety experts said Ford’s action was unusual but at least partially acknowledged that it had some responsibility in the safety problem.

“It certainly strikes me as an admission of at least partial culpability,” said Sean Kane, president of Strategic Safety in Arlington, Va.

“If they’re paying, to me that’s an admission of guilt,” Kane added. “Ford clearly had a role in designing the specifics of the defective tires.”

But Dresdner Kleinwort Benson analyst David Garrity sees the offer to help pay for the recall as a business decision to assist in solving the larger crisis.

“Is it any kind of tacit admission of guilt? No, I think it’s a certain recognition on their part to ensure that the customers are cared for,” he said.

Firestone, part of Japan’s Bridgestone Corp., launched the recall Aug. 9 after mounting reports that certain 15-inch tires can shred and cause deadly accidents. Most of the tires are on Ford Explorer sport-utility vehicles.

Ford spokeswoman Karen Hampton said details about how much the auto maker will pay its largest tire supplier are not available. Relations between the two companies have grown more strained as the recall has dragged on, with Ford maintaining that the problem is with the tires, not the Explorers.

The crisis has sparked an investigation by U.S. safety regulators, who have received reports of 69 U.S. traffic deaths linked to the Firestone tires. As of the Friday filing, Ford said it had been hit by 63 personal injury lawsuits and 35 class-action suits stemming from the Firestone tire issue. New lawsuits come in “almost daily,” Ford said.

Meanwhile, Ford and Firestone won moral support from U.S. Transportation Secretary Rodney Slater, who said there is no indication “at this point” that the No. 2 auto maker and Firestone knowingly deceived regulators about Firestone tire failures.