Ford Motor tyre scandal testing ground for CEO

By SELWYN PARKER

The Firestone tyres that shredded under extreme circumstances on Ford sports utilities have landed Australian Jacques Nasser, the car-maker's 52-year-old chief executive, in a predicament that will define his career for better or worse.

"This is a test of character for Jac," a Ford insider has observed.

"He's been saying we're a consumer-focused company, and the way he handles this will determine his credibility going forward both internally and externally."

As a result of the faulty tyres, Mr Nasser faces congressional hearings, Federal Government investigations, lawsuits, threatened legal action by at least one Government, media scrutiny, a falling stock price and loss of profits.

But, as he sees it, all these pale into insignificance compared with long-term damage to the Ford brand.

It is certainly the car-maker's biggest scare since the case of the exploding gas tanks in Ford Pintos.

Meanwhile, it is a classic exercise in crisis management that illustrates the risks a manufacturer like Ford faces through its many suppliers.

Ford did not make the Firestone tyres but, because they are part of the total package sold, it is responsible.

First, the facts as they stand.

A small percentage of Firestone-made tyres on Ford Explorer and Ranger pickup trucks have effectively come apart at sustained high speed in unusually hot conditions.

The failures are connected to more than 1400 accidents and mishaps in the United States alone, and have been linked to at least 88 deaths. About 6.5 million tyres have been recalled.

Ford New Zealand says it is not a problem here and the company has referred "concerned consumers" to Firestone/Bridgestone. Ford New Zealand says headquarters in Dearborn, Michigan, are keeping it informed.

Firestone/Bridgestone in New Zealand says it has left its Japanese parent to manage the crisis. In Detroit, Ford has clearly been irritated by what insiders see as Japan's slowness to act.

By general agreement, Mr Nasser also got off to a slow start but he has certainly made up time since. Initially briefed in early July, he made the mistake of not fronting up to the public early enough.

He attracted widespread criticism for not accepting invitations to testify before congressional committees and he was reluctant to put his face to a television campaign until he knew more about the problem.

Tyres are the only item not warranted by the car manufacturer and, as a result, the one about which Ford knew the least.

But Mr Nasser, who typically sleeps just four hours a night, certainly moved with speed as soon as he understood the full extent of the crisis.

Within hours, a war room was set up a few minutes' walk from his office, staffed with the brightest minds in the company - research engineers, statisticians, product liability experts, IT specialists, financial officers.

Working 24 hours a day, seven days a week, they harvested as much raw data as they could and analysed it for clues. The war room was set up in the executive building so Mr Nasser could drop in at regular intervals.

Meetings with senior executives were held daily.

"We wanted to identify where the problem tyres were and to get a supply out there as quickly as possible," Mr Nasser told Fortune magazine. Also, the faster Ford moved, the less likely that it would be forced to act by legislation, which would look bad.

When Ford felt it had something to say, which was within a few days of the war room being established, it began to get the message out.

Almost overnight, call centre staff numbers tripled. The latest information went out on Ford's websites and was constantly updated.

At this stage, it was all about answering the questions of perturbed owners. The issue of product liability came a long way down the list.

Explorer's technical experts were told to share every helpful piece of information with all relevant parties - Government, Firestone and customers. Never mind if it all made the job of product liability lawyers easier.

"If you are mesmerised by [product liability] issues, you will not ultimately do what's right for the customer," Mr Nasser said.

Profits had to take a back seat, too. Mr Nasser closed three Explorer assembly plants to free the supply of replacement tyres for models already sold.

Analysts estimate the shutdown will cost Ford at least $US100 million from Explorer orders it could not meet.

Ford did not try to do everything alone. Top managers prodded Firestone to speed the production of replacement tyres. And Ford was not afraid to ask other tyre companies for help - especially in supplying alternative tyres - and got it.

Though the crisis is far from over, there is the longer-term issue for Ford of exposure to one supplier over such a crucial item.

Almost since the birth of the industry, car manufacturers have left tyre manufacturers to get on with the job and trusted the results. For many years it has also been typical for one model to be sold with the same brand and specification of tyre.

At Ford, this may now change. "With the value of hindsight," says Mr Nasser, "you'd want to perhaps hedge your bets by broadening the mix of tyres available on selected models."

That does not sound very good for Firestone/Bridgestone.