Firestone to Shut Decatur Tire Plant

Bridgestone/Firestone Inc. said Wednesday that it will close its tire factory in Decatur, Ill., which was the main source of defective tires involved in last year’s extensive recall.

Executives said the decision was not due to quality concerns but because the tire maker needs to reduce capacity. The Decatur plant, the oldest and least productive of Bridgestone/Firestone’s seven factories in North America, was the logical choice.

“It has absolutely nothing to do with the quality, professionalism or dedication of our employees,” said John McQuade, vice president for manufacturing operations. “It’s a supply-and-demand issue.”

Production needs to be reduced and redistributed among the tire manufacturer’s other North American plants, McQuade said. “We feel the most feasible way to reach production cuts is to close Decatur,” he said.

The company also said it will take a $210-million second-quarter charge for closing the plant and record an additional $60-million expense for the tire recall and $300 million for litigation.

Bridgestone/Firestone recalled 6.5 million tires last August after treads flying off Firestone tires were linked to fatal accidents, whose death toll has now risen to 203. Most of the tires were on Ford Explorer sport-utility vehicles.

An analysis by Ford Motor Co. last year showed that an inordinate number of bad tires came from the Decatur factory, which used a different production system from other Firestone plants, involving a higher percentage of lubricant.

Ford and Firestone have been feuding since then, accusing each other of defective design. The tire maker broke off relations with Ford last month, a day before Ford issued its own $3-billion recall of 13 million Firestone tires on its vehicles.

Wednesday’s decision to close the Decatur plant, which takes effect at the end of the year, will affect 1,480 employees, including 100 contract workers. Another 440 workers have already been laid off. McQuade and corporate Controller Mike Gorey declined to give details on compensation or possible relocation, saying details need to be negotiated with the United Steelworkers of America.

“It’s something we must do to ensure the viability and long-term health of [Bridgestone/Firestone],” Gorey said. “Since last year, we’ve been evaluating our demand. We believe we’ve taken the steps necessary to attain profitability by the second half of 2002.”

In Tokyo on Wednesday, parent company Bridgestone Corp. said it expects its Nashville, Tenn.-based Bridgestone/Firestone subsidiary to lose $530 million this year.

The major factors in the decision were the age and size of the plant, which was built as a tank factory in 1942 and was purchased by the then Firestone Tire and Rubber Co. and converted to making tires in 1963. Lately, the factory, which can produce about 30,000 tires a day, has been operating at an unprofitable 50% capacity, Gorey said, and has accounted for only about 10% of the company’s tire production, according to McQuade.

Keeping Decatur open would require substantial capital expenditure, they said. Closing the plant will save the tire maker more than $100 million a year.

McQuade met with workers Wednesday and answered their questions, but he wouldn’t characterize their meeting. Roger Gates, president of United Steelworkers Local 713 at the plant, did not return phone calls. Counselors were on site Wednesday to talk with workers and help them prepare for the plant’s closure.

Neither executive would comment on the company’s share of the tire market, but Gorey said the consumer market for light truck and passenger car tires is down 5%, and that overall, business is down 8% for commercial replacement tires and down 20% for tires sold on commercial vehicles.

Bridgestone/Firestone produces and sells tires under Bridgestone, Firestone, Dayton and other brands. Sales of Firestone-brand replacement tires were down 50% in the first half of this year compared with the same period last year but are projected to be down only 7% in the second half of 2001 compared with a year earlier, spokeswoman Jill Bratina said.