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Last Friday the federal government renewed its anti-Firestone crusade
by announcing an investigation of 167 complaints surrounding Firestone’s
Steeltex R4S and A/T light truck tires. No defects have been found in
either line of tire, and GM, which installs the tires as original
equipment on its Suburbans and GM vans seemed skeptical of the
complaints. GM spokesman Greg Martin said, “We monitor the performance
of our tires, and we haven’t seen any indication of a problem.”

The announcement of the investigation was yet another blow to
Firestone which had already been reeling since its Aug. 9 recall of 6.5
million of its ATX, ATX II, and Wilderness AT tires. Two months of
investigation have yielded few decisive answers as to the causes of the
tire fiasco. “Consumer advocates,” trial lawyers, the news media and
even Ford Motor Company have all been on a steady crusade against
Firestone tires.

Ford’s campaign against Firestone has, at least superficially, been
based on facts. The New York Times reported on Sept. 19 that 52
fatalities were recorded in 40 Explorer accidents in 1999. Tire
problems were listed as a contributing factor to these accidents. This
was more than double the amount of fatal accidents involving tire
problems in 1998. In reference to the Times data, which also showed an
increasing percentage of fatal Explorer accidents involving tire
problems since 1995, Ford’s manager of safety data Ernie Grushz said,
“The increase simply shows that those Explorers were equipped with bad
tires.” Ford alleges that the poor tire quality, in turn, was caused by
Firestone’s use of replacement workers in its Decatur, Ill.,
manufacturing plant during a 1994-1995 strike.

Of course Ford can’t have it both ways; that is, agree with the
Times’ analysis and then offer a theory that is inconsistent with that
analysis. If the increase in fatal, tire-related Explorer accidents
started in 1995, then strike-induced problems at the Decatur plant
couldn’t be the source. Tires causing problems in 1995 had to have been
manufactured in 1994 (not a full strike year) or earlier. Furthermore,
the Times analysis is hardly insightful since “tire problems” can
include everything from flats to blowouts to tread separations. The
analysis doesn’t include a breakdown of what the particular tire
problems were.

Firestone has been discreet about its own culpability. It has not
wanted to irrevocably damage its 100-year relationship with Ford, but it
has pointed out that there is more to the recent wave of accidents than
just tire defects. Ford recommends that tires on its Explorer be
inflated to a level of 26 pounds per square inch. This level of air
pressure gives the Explorer a smooth ride. Beginning at Firestone’s
recommended 30 psi and above, the Explorer’s ride becomes hard and more
truck-like. Although the lower psi produces a softer ride, it can
(combined with additional stresses) wreak havoc on tires.

Bridgestone president Yoichiro Kaizaki on Sept. 11 pointed out that
the accident rate of other vehicles with ATX/AT tires was significantly
lower. These other vehicles include Mercury Mountaineers, Mazda
Navajos, Mazda B Series Light Trucks, Ford Ranger trucks, and Ford F-150
trucks.

Also unexplained are overseas incidents. Only 3,000 Firestone tires
had been imported into Venezuela in 1995 from the U.S. The other 59,000
tires involved in the Sept. 5 Venezuelan recall were produced by a
Bridgestone/Firestone plant in Valencia, Venezuela. None of these tires
could possibly be linked to U.S. manufacturing problems, but almost all
of a recent surge of Venezuelan accidents involved Ford Explorers.

Further implicating Ford was its quiet replacement of tires on its
Explorers in Saudi Arabia in 1999. By process of elimination, this
rules out everything except possible flaws in the tire design itself.
However, inherent flaws in design would have showed up at least five
years ago. Instead, the incident pattern more closely mirrors the
Explorer’s rise in popularity, both in the U.S. and abroad.

But none of this necessarily points to Ford as the real villain. The
Explorer is a sport-utility vehicle. SUVs are part of a larger category
of vehicles glaringly misnamed “light trucks”; the category is not
wholly comprised of trucks (e.g., mini- and full-size vans as well as
SUVs are included) and the vehicles in question can be anything but
light: they typically weigh 1,000-2,000 pounds more than small to
mid-size cars.

The modern SUV, like the minivan, was born after 1980 when the
federal government imposed Corporate Average Fuel Economy standards on
light trucks of 16 miles per gallon. The standard for cars, established
two years earlier, was 18 mpg. The problem is that in the last two
decades, the CAFE standard for cars has increased 52.8 percent (to 27.5
mpg) while that for light trucks has risen 29.4 percent (to 20.7 mpg).

Auto manufacturers met the CAFE standard on cars by making car bodies
smaller and lighter. (This, by the way, spelled the virtual end of the
large station wagon.) The catch is that smaller and lighter cars were
more dangerous. Research in 1989 by economists Robert Crandall and John
Graham linked CAFE-inspired declines in auto weight and size to an
approximate 20 percent increase in auto deaths. A July 8, 1999,
analysis by James Healey in USA Today suggested that 46,000 road deaths
since the late 1970s could be traced to CAFE-shrunken cars.

Consumers took notice of the new threat to their safety and flocked
to larger vehicles. Researcher Paul Godek in 1997 found that between
1975 and 1995, light trucks as a fraction of all passenger vehicles on
the road almost doubled from 20.9 to 41.5 percent. Godek projects that
in the absence of CAFE, the rise would have been only by about 8
percentage points. This means that about 60 percent of the spread of
light trucks can be ascribed to CAFE.

The upshot is that the Ford Explorer and its high, tipsy-heavy frame
is yet another perverse consequence of federal intervention in auto
markets. This intervention has inundated our roads with not only
gargantuan land-tank SUVs such as the Ford Excursion, but also huge
pickups such as the Dodge Ram. Completing the CAFE dichotomy are light
cars such as the Dodge Neon, a tin can in any high-speed accident with
the average SUV.

The light truck problem doesn’t end with concerns over
disproportionate vehicle weight. At intersections and parking lots the
tall, bulky vehicles inhibit sight distance. Pulling into a clear lane
with an SUV or mini-van next to you blocking your vision becomes little
more than a game of Russian roulette. Light trucks also block signs and
traffic lights in turning lanes. In the past two years, the liberal
press has taken note of these concerns yet, because it is largely in bed
with the Washington elite, it steadfastly refuses to acknowledge the
true source of the problem. Conservatives, usually opposed to and
well-versed in the consequences of federal meddling have, from Rush
Limbaugh to the Coalition for Vehicle Choice, ironically leapt to the
defense of the SUV.

Once the true CAFE culprit is revealed, the “Firestone/Ford” debacle
becomes fairly easy to untangle. CAFE regulations created small (and
hence dangerous) cars consumers didn’t want. They fled to light trucks
but wanted a soft, car-like ride. Ford met their demand by lowering the
recommended pressure on its supplier’s tires. Because Ford met this
demand so well, its Explorer became tremendously popular.

Last summer’s accident wave should have been no surprise. Tens of
thousands of Explorers filled to capacity with vacation loads of people
and luggage were traveling American roads at high speeds in atypically
hot temperatures for hours at a time. In these multi-stress conditions,
under-inflated tires can easily reach their temperature limit of 200
degrees, defective or not.

Although Ford’s recommended pressure of 26 psi hardly spells
disaster, it is the bottom threshold of pressure-level safety. The
problem is that 99 percent of car drivers fail to check tire pressure
regularly. Many Explorers which left showrooms at 26 psi were
undoubtedly traveling around with pressures of less than 20. Typical
consumer neglect could have been, at the margin, the most
significant factor behind last summer’s Explorer accidents.

All of these combined heat/stress factors explain why
Firestone/Explorer accidents have occurred in hotter climates such as
Saudi Arabia, Venezuela, Florida, and Texas while none have occurred in
New England where average temperatures are cooler and average distances
traveled are shorter and speeds driven are lower.

The tarnishing of Firestone’s reputation will be costly and long
term, regardless of the ultimate facts of the case. The worst outcome
of the whole fiasco is even greater power delegated to the federal
government. The Justice Department is considering legal action and the
Department of Transportation wants new powers. This will undoubtedly
lead to more market distortions which in turn will be blamed on
companies such as Ford which react to the perverse incentives of federal
regulation.




Dale Steinreich, Ph.D.,
taught economics at Auburn University and is an economic and financial consultant in Huntsville, Ala. He regularly writes for the investment advisory service,

AgainstTheCrowd.com.

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