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Recall may leave Firestone bankrupt

By ANITA KUMAR

© St. Petersburg Times,
published July 21, 2001


The federal government's forced recall of faulty Firestone tires could leave the tiremaker bankrupt and hundreds of accident victims without the millions of dollars in settlements they expected.

That's why leading lawyers are attempting to broker an agreement between Firestone and the government, a day after talks between the two ended when Firestone refused to take about 4-million or more Wilderness AT tires off the road.

"It doesn't do anyone any good for Firestone to be in bankruptcy," said Mike Eidson, a Coral Gables lawyer heading a class-action lawsuit against Ford and Firestone in federal court in Indiana.

But the agency that regulates the auto industry is going ahead with plans to force a recall in court, a move that has occurred only nine times.

"Firestone appears to be on a self-destructive path," said Ocala lawyer Bruce Kaster, an expert in tire litigation who is suing Ford and Firestone. "They take every opportunity to shoot themselves in the foot."

If the government succeeds, Firestone may have to pick up the $3-billion tab for Ford's informal recall of 13-million tires in May. It also may have to replace millions of other Wilderness AT tires on sport utility vehicles not made by Ford.

Analysts estimate an expanded recall would cost the company $1-billion. That could be devastating for Firestone, which had revenues last year of $7.5-billion, but spent more than $900-million on the recall.

"It's going to get worse and worse,' said Joan Claybrook, head of consumer advocacy group Public Citizen. "(Firestone) should change their minds and get this over with."

Rae Tyson, highway agency spokesman, said that the investigation that began in May 2000 is complete but that a report would take another couple of weeks to finish.

Firestone would then have 30 days to respond and present its case during public hearings. The agency could then issue a final order and if Firestone still refused a recall, ask the Justice Department to bring a lawsuit to force the company to comply. It has lost only two of these cases since 1966.

Firestone CEO John Lampe continues to protest the agency's findings.

The highway agency estimates 203 people died and 700 more were injured in the United States in rollover accidents. A St. Petersburg Times analysis shows that at least 43 people have been killed in Florida since 1997 in SUVs equipped with Firestone tires.

The agency won't reveal, even to Firestone, which tires its investigators say are faulty. But Lampe and Eidson say they believe they are Wilderness ATs made in Wilson, N.C., and Joliet, Quebec.

Many of those are already being replaced by Ford. The second-largest automaker is replacing tires on Ford, Mercury and Mazda sport utility vehicles and light trucks.

Though Firestone was the one taking the hits this week, Ford did not get away unscathed.

The automaker reached an out-of-court settlement worth $22-million with the families of two teenage girls who were killed when their Explorer rolled over nine years ago in Chicago. Ford also announced that it lost $551-million in the second quarter of this year.

- Information from Times wires was used in this report.

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