Will Bridgestone & Ford recover from the tire scandal?
Last Updated: Wednesday, September 6, 2000 | 5:40 PM ET
CBC News
It was just about one month ago (August 9) that Japanese tire maker Bridgestone announced a recall of defective tires linked to at least 88 deaths in the United States.
Most of the recalled tires are on Ford vehicles, especially its popular Explorer sport utility vehicles.
Since the recall, shares of Bridgestone have been severely punished, plummeting to almost half of their value reached earlier this year on the Tokyo Stock Exchange.
Bridgestone said it will record a one-time $350 million US accounting charge on its earnings to cover the costs of the recall, and that earnings will be reduced by about 26 per cent for the year.
Some analysts warn that the tragedy might eventually lead to the disappearance of the Firestone brand altogether.
The costs could also mount as U.S. safety regulators continue their investigation into the accidents.
Also, Venezuela's consumer protection agency is pushing for Bridgestone and Ford to be criminally prosecuted over tires linked to 46 deaths in Venezuela.
Bridgestone has kept quiet about the tragedy. It has held only one company news conference about the recall on August 10.
On Wednesday, U.S. lawmakers grilled the chief executive of Bridgestone, Masatoshi Ono. He said he still did not know what caused his company's tires to fail in accidents, but that the company would continue to investigate the cause.
Many of the accidents involve Ford's Explorer rolling over, and Ford believes that the problems are linked to faulty tires rather than problems with the vehicle itself.
Analysts seem to agree that the financial brunt of the recall rests on the shoulders of Bridgestone, and not Ford. Consequently, shares of the auto maker have started to claw their way back from 52-week lows, with analysts believing that most of the bad news is behind.
In the meantime, hundreds of thousands of Canadians are schlepping to their Ford dealerships to have their SUV's tires replaced.
Whether its Firestone or Ford that pays, the bill is escalating, with replacement tires costing about $150 each, with four tires plus a spare per vehicle. The cost for Ford vehicles could easily surpass $212 million in Canada alone.
Share Tools
Top News Headlines
- Canadian Pacific strikers face back-to-work legislation
- Labour Minister Lisa Raitt is prepared to end the Canadian Pacific Railway strike if necessary, after both CP and the union rejected a proposal for voluntary arbitration by the government-appointed negotiator on Sunday. Raitt says she is "extremely disappointed." more »
- Syrian regime denies role in Houla massacre
- The UN Security Council condemned the Syrian regime at an emergency meeting Sunday, holding president Bashar al-Assad's military responsible for the massacre of more than 100 people, dozens of whom were children younger than 10 years old. more »
- Ryder Hesjedal wins prestigious Giro d'Italia
- Victoria native Ryder Hesjedal has become the first Canadian to win one of the cycling world's three Grand Tour events, wrapping up the 2012 Giro d'Italia with an excellent performance in the final stage in Milan. more »
- Neighbour may have helped find missing kids in Mexico
- Two Winnipeg children who had been missing for nearly four years were found in Mexico after a man raised concerns about his neighbour, according to a private investigator. more »
Latest Business Headlines
- Bankia asks Spain for €19B
- The board of directors of Spain's troubled bank, Bankia, has asked the Spanish government for €19 billion ($24.5 billion Cdn) in financial support. more »
- EI reforms aim to boost employment, Flaherty says
- Finance Minister Jim Flaherty defended his government's proposals to change employment insurance, saying the aim is to remove "disincentives to employment." more »
- Employment Insurance review boards to be scrapped
- The federal government is scrapping two review boards used by people appealing decisions made about their employment insurance. more »
- Ottawa moves to limit foreign investment reviews
- The federal government is raising to $1 billion the amount of foreign money that can go into a Canadian company before the investment is reviewed. The review has been used in the past to block foreign takeovers of MDA and Potash Corp. more »
Lang & O'Leary Exchange
Markets
| Index | Last Trade | Change |
|---|---|---|
| TSX COMPOSITE | 11576.47 | 10.4 |
| DOW | 12454.83 | -74.92 |
| NASDAQ | 2837.53 | -1.85 |
| SP 500 | 1317.82 | -2.86 |
| NYSE COMPOSITE | 7534.32 | -18.01 |
| AMEX | 2227.37 | 1.45 |
| TSX-VENTURE | 1309.27 | 26.8 |
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
Business Features
- Accused in blast that killed Alberta mom handled her funds
- Seniors float above Montreal's Quartier Latin
- Remains found in bag on Cape Breton river ID'd
- Neighbour may have helped find missing kids in Mexico
- Quebec students and province to resume talks
- Lip-dub marriage proposal an internet hit
- Syrian regime denies role in Houla massacre
- B.C. NDP calls for unity in fighting coast guard closure
- Canadian Pacific strikers face back-to-work legislation

