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
- Adele wins best album, best record Grammys
- Adele capped off a "life-changing" year by winning six Grammys Sunday night, including record of the year and album of the year for 21 more »
- Hit and run victim's family fears accused will walk
- The family of a young mother killed in a hit and run is outraged that the case against the alleged driver is among thousands in B.C. at risk of being thrown out because of a huge court backlog. more »
- CBC launches digital music service
- CBC is diving into the world of online music with the goal of providing listeners access to their favourite tunes and a way to discover new artists and connect with fellow music fans. more »
- Whitney Houston death shows no signs of trauma
- Whitney Houston's life of glorious song and unnerving self-destruction apparently ended on Grammy weekend, but it could be weeks before investigators know exactly why she died. more »
Latest Business Headlines
- North American markets gain after Greece austerity plan approved
- World stock markets rise after Greece's parliament approves a new set of austerity measures that were required by international lenders in exchange for an emergency bailout. more »
- Greece cleans up after anti-austerity riots
- Firefighters douse smouldering buildings and cleanup crews sweep rubble from the streets of central Athens after a night of rioting during which lawmakers approved harsh new austerity measures. more »
- Japan's economy shrinks 2.3%
- Japan's economy shrank in the fourth quarter as manufacturers were battered by the strong yen, weak export demand amid the European debt crisis and flooding in Thailand. more »
- Air Canada reaches tentative deal with dispatchers
- Air Canada has reached a tentative collective agreement with the Canadian Airline Dispatchers Association, representing the airline's 74 flight dispatchers. more »
Lang & O'Leary Exchange
Markets
| Index | Last Trade | Change |
|---|---|---|
| TSX COMPOSITE | 12389.42 | 0 |
| DOW | 12799.11 | -2.12 |
| NASDAQ | 2925.37 | 21.49 |
| SP 500 | 1351.01 | 8.37 |
| NYSE COMPOSITE | 7992.05 | 0 |
| AMEX | 2417.98 | 0 |
| TSX-VENTURE | 1653.55 | 0 |
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
- Adele wins best album, best record Grammys
- Whitney Houston autopsy results withheld
- Hit and run victim's family fears accused will walk
- Quebec town 'heartbroken' after killing of woman, sisters
- Pop queen Whitney Houston dies at 48
- Manitoba man dies after falling off moving SUV
- 2 vehicles sink on river highway
- Doors blocked in fatal Manitoba trailer blaze
- Greece passes new austerity deal amid rioting

