The federal government is planning to fine the Firestone Tire & Rubber CO. up to $800,000 for selling millions of its "500" model steel-belted radial tires that failed to meet federal safety standards, it was learned yesterday.
National Highway Traffic Safety Administrator Joan Claybrook revealed the action moments after the formal signing of a voluntary recall agreement with Firestone, under which the company agreed to replace an estimated 13 million tires. It is the largest product recall in history.
In addition, Claybrook said her agency would investigate what she called Firestone's failure to comply with federal record-keeping requirements.
After the signing, Claybrook attacked Firestone for showing "virtually no regard for the agreement, which was tentatively reached six weeks earlier.
"Firestone's actions in this case give American industry a black eye," Claybrook said. "This is example of a company that was knowledgeable of the problem for a long time and attempted to divert the agency from an investigation."
last July - after months of hearings and investigation - NHTSA determined that the Firestone "500" steel-belted radial had a "safety-related defect" that led to thousands of tire failures and subsequent deaths and injuries.
But it was not until Oct. 20 that Firestone agreed to a voluntary recall on an estimated 10 million "500" model tires and similar versions sold under other brand names.
But even after the tentative agreement was reached - under pressure of a government suit ordering a mandatory recall - the recall process proved chaotic as thousands of motorists were told by the company that their tires did not qualify, while the government said they did.
Government to investigate Firestone, Borg-Warner merger. Details, Page C1.
Yesterday's agreement marks the final settlement of several disputes between the company and the government over which tires would be included in the action.
Firestone agreed to accept virtually bald tires that fall under the period covered by the recall, provided that the tires are still on the motorist's vehicle. If they are not and there is less than 2/32 of an inch of tread left, they will not be replaced free.
Another snag in reaching final agreement was the type of advertising campaign Fireston would be required to conduct as part of the recall.
After the start of negotiations, NHTSA discovered a little-known provision in the Motor Vehicle Safety Act that barred the agency from orering Firestone to use television advertising.
Consequently, Firestone has agreed only to advertise the details of the recall in 247 newspapers on Sunday, Dec. 17, and in two 30-second TV ads a few days earlier.
The possible $800,000 fine stems from new allegations that Firestone violated tire safety standards in 1976. At that time, the "500" failed government safety tests. Firestone responded by telling the government it had received a "bad batch" of tires. The company convinced the government that a limited recall of 400,000 tires would take care of the problem tires.
But now, NHTSA officials say, it has been learned that Firestone knew all along that the problems extended to all 500s. which the company had continued to sell.
Claybrook said Firestone delayed for two reasons: "To save as much money as possible and because of a very serious concern about being defrauded by junk dealers bringing in old tires, and various other schemes."
She said the company acted "schizophrenic" during the recall negotiations. "It is clear," she said, "that once the corporate decision was made to face the unhappy facts, and they did begin to negotiate this agreement, people who were responsible for the earlier policy [engaged in] a pattern of delay when it came to getting information needed for the recall."
Firestone Chairman Richard Riley said the recall will take at least a year to complete, and "we are turning out 400,000 tires a month toward meeting the needs of the recall."
He said "we will do our utmost to handle those who come in for the recall as quickly, fairly and conveniently as possible."
It has been estimated that the recall will cost Firestone up to $100 million. Erlier this week the company announced plans to merge with Borg-Warner, a large industrial equipment company.