Ford Makes Money from Tire Recalls

Tough times at Ford aren't quite as tough as you may think, and factory recalls don't always cost as much as they say either.

Bridgestone-Firestone has agreed to pay $240,000,000 (that's right, nearly a quarter of a Billion dollars) to Ford in order to settle liability claims by Ford over the recall of defective tires in year 2000 and 2001 that were linked to deadly highway accidents.

'The Bridgestone group benefits from the certainty that a settlement brings,' said Shoshi Arakawa, executive vice president, international operations of Bridgestone Corp. 'It is clear that the best option for the future of the North American tire business was to explore whether an acceptable settlement could be reached which would allow Firestone to put this matter behind it and focus on its future business opportunities. This settlement achieves that goal.' That's some pretty nicely worded spin language.

Ford replaced about 30 million Firestone tires in 2000 and 2001 after US federal safety regulators documented hundreds of accidents involving tire tread seperation in accidents involving Ford's SUV Explorer sport utility vehicle. An official investigation linked 271 fatalities and 800 accidents to events in which Explorers tipped over after parts of their Firestone tires peeled off at high speeds. Ford and Bridgestone blamed each other for the accidents, but US investigators concluded the accidents were mainly the result of flaws in the tires.

Ford paid money out when it did the recall, sure, but let's not forget that they got money back, too.

Recalls don't really cost as much as some manufacturers claim because they often can recover that money from the supplier who sold them the bad parts in the first place. That's only fair. It's also only fair that Ford live up to its first and primary responsibility to the consumer in the first place, without denying a claim by trying to blame someone else for the cars that it builds.