Regulators Tell Importer to Recall 450,000 Defective Chinese Tires

Federal regulators yesterday warned a New Jersey tire importer that it could face up to $16 million in fines if it did not immediately recall 450,000 defective Chinese-made tires.

The National Highway Transportation Safety Administration told Foreign Tire Sales, a small importer in Union, N.J., to recall the tires after the company notified regulators last week that the tires were missing gum strips, a safety feature.

Foreign Tire Sales said it would have to file for bankruptcy protection if it issues the recall, which would cost $60 million to $80 million. The company sued the manufacturer of the tires, Hangzhou Zhongce Rubber, in a New Jersey court, hoping that it would pay for the recall.

"If there's liability, it's squarely with Hangzhou Zhongce. They should be paying for the recall," said Lawrence Lavigne, an attorney for Foreign Tire Sales.

Nicole Nason, administrator for NHTSA, called Foreign Tire Sales' position "unacceptable."

"They should be aware of their obligations," Nason said. "If you're importing, then you are the manufacturer. We have no exceptions."

The recall order came after weeks of incidents in which some Chinese imports, such children's toys with lead paint and ingredients in toothpaste and pet food, were found to violate U.S. safety standards. The faulty tires allegedly led to a car accident in Pennsylvania last August that killed two people.

"Another week, another recall of Chinese imports threatens the safety of American consumers," Sen. Charles E. Schumer (D-N.Y.) said yesterday as he called for a full investigation into the importation of the defective tires. "China has been asleep at the switch when it comes to safety inspections."

The tires made by Hangzhou Zhongce, a former state-owned enterprise in southeast China, were distributed by Foreign Tire Sales under the brand names Westlake, Telluride, Compass and YKS.

The two companies jointly designed the tires in 2001, and Foreign Tire Sales marketed them as replacement radial tires for pickup trucks, sport-utility vehicles and vans.

On June 11, Foreign Tire Sales notified NHTSA that the tires it was receiving from the Chinese company lacked gum strips. According to statements the company filed with NHTSA, the strips were either omitted from the tires or installed in insufficient quantities.

"The tires that the Chinese sold where not the ones that FTS" contracted to buy, Lavigne said. "There was a unilateral change in construction that degraded the performance."

Gum strips prevent layers of tire tread from separating because of wear and tear. Tread separation was also the problem when Firestone recalled tires in 2000.

FTS may have been importing the defective tires since 2002, Lavigne said. But Hangzhou Zhongce has not said how long it has been exporting the defective tires.

In a statement late last night, Hangzhou Zhongce, one of the biggest Chinese tire manufacturers, said the importer reported it to NHTSA as leverage in a commercial dispute between the two companies. Hangzhou Zhongce said that it has not found the defect in any of its tires and that all tires exported to the United States meet federal standards.

Hangzhou Zhongce admitted to Foreign Tire Sales that it had stopped making tires with gum strips but said it resumed use of the strips in January 2006, the importer said in a statement. The removal of the gum strip saved 30 to 40 cents a tire, Lavigne said.

The importer stopped buying tires from Hangzhou Zhongce in June 2006.

Although the tires initially passed federal standards and could be driven for 40,000 miles without problems, the importer said in the statement, in March 2007 they came apart after 25,000 miles in tests Foreign Tire Sales conducted. After the victims' families and a survivor of the car crash in Pennsylvania sued Foreign Tire Sales in May, the company notified the federal regulators of the tire defects, the statement said.

NHTSA is also investigating the delay between when the company found out about possible safety issues and when it notified authorities. "We want to know exactly what were they doing for the last year," Nason said, "and why they didn't notify us sooner."

Lavigne said the company needed to be sure of the damage. "We bristle at the suggestion that we waited," he said. "You won't recall 450,000 tires on a suspicion, especially knowing that it'll put you out of business."

The problem is an "offshore manufacturer using distributors in the U.S. who are unable to afford the remedy," said Daniel Zielinski, a spokesman for the Rubber Manufacturers Association, a group that represents the tire industry. "We don't need more regulation," he said, "but that is something that should be carefully scrutinized."

China is the top importer of tires to the United States, with slightly less than 32 million units in 2006. About 40 percent of the tires in the United States were imported in 2006, up from 21 percent in 1996, according to the association.

Staff researcher Richard Drezen contributed to this report.