Monday, May 16, 2011

Ford vs. Firestone

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The two companies I chose for this assignment were Ford Motor Company and Bridgestone/Firestone Americas Holding, Inc. Despite the fact that the two companies operate in different industries, they complement each other very well. The reason why I chose Ford Motor Company was because they are thought of as leaders in their industry for total quality management. The minute I decided to use Ford Motor Company as one of my companies, the Firestone tire recall of August 000 was the first thing that popped into my head. Because the recall made such a huge impact on Ford Motor Company and individual consumers, I felt that it would be a perfect company to use to demonstrate the aspects of poor total quality management versus superb total quality management and how that affects not only individual consumers but also business consumers.

Ford Motor Company began a manufacturing revolution with its mass production assembly lines in the early 100s. Now the company is firmly entrenched in the status quo as the worlds largest pickup truck maker and the # producer of cars and trucks, behind General Motors. It makes vehicles with such brands as Aston Martin, Ford, Jaguar, Lincoln, Mercury, and Volvo. Among its biggest successes are the Ford Taurus and F-Series pickup. Ford owns a controlling % stake in Mazda and has purchased BMWs Land Rover SUV operations. The finance subsidiary, Ford Motor Credit, is the U.S.s #1 auto finance company. It also owns Hertz, the worlds #1 car-rental firm.

Bridgestone/Firestone Americas Holding, Inc., the North American subsidiary of Bridgestone Corporation, makes Bridgestone, Firestone, Dayton, and private-brand tires for cars, trucks, motorcycles, tractors, and earthmoving machinery. They also make air springs, roofing materials, synthetic rubber, and industrial fibers and textiles. The company is trying to regain traction after recalling 6.5 million of Firestone ATX, ATX II, and ATX Wilderness tires, primarily the ones on Ford Motor Company’s Ford Explorer, due to the allegations that the tires fell apart at highway speeds. This recall ended Bridgestone/Firestone Americas Holding, Inc.’s 5-year relationship with Ford Motor Company.

There are several differences between the manufacturing processes, corporate culture, and the performance results of Ford Motor Company and Bridgestone/Firestone Americas Holding, Inc. that distinguishes one as a quality company and the other as one of the opposite. Ford concentrates more on the elimination of waste, prevention, and continuous improvement versus Bridgestone/Firestone’s attitude of tolerance of waste, inspection, and fire fighting. Ford’s rebuilding strategy has an explicit focus on improving quality and building on work in progress to improve quality in their design, sourcing, and production processes. They are using 6-Sigma processes to identify and resolve quality issues in their manufacturing and business processes. This is an extensive quality improvement initiative designed to reduce variability and improve efficiency. One way of enhancing their current manufacturing processes and reducing variability in their systems is through the new Ford “Quality is Job1” 00 standard. Since its inception, Ford Q1 certification recognizes supplier facilities and organizations whose quality systems meet stringent prerequisites. It builds on existing requirements and stresses continual improvement, consistent metrics, manufacturing discipline, variability reduction and customer satisfaction. These Joint supplier/Ford 6-Sigma projects are producing improvements in both customer satisfaction and waste elimination.

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Bridgestone/Firestone Americas Holding, Inc., however, is doing the complete opposite of Ford. Instead of using its efforts to eliminate waste and strive for continuous improvement, Bridgestone/Firestone is tolerating waste and confronting problems only as they occur. According to USA TODAY, there is evidence that the tire company did, in fact, recognize a problem well before the recall. The Bridgestone/Firestone documents showed that it tracked ATX tread-peeling problems since 14. The ATX tires accounted for 4% of property-damage and personal-injury claims among light-truck tires in 14, up from just 1% in 1 (Healey, 000). Eventually, the ATX tires accounted for more than half of the companys light-truck-tire claims. In spite of all that, the company decided to increase the production of the ATX tires so that its prominence in the claims didnt raise a flag. Even though the executives and managers across the company knew about the consumer claims for reimbursement for damage caused by peeling treads, it didnt trigger alarm bells because the industry uses warranty claims to measure tire performance. On top of that, eight former employees of Bridgestone/Firestone confessed that they used out-of-date rubber stock for their tires; that radial coils were exposed to high humidity from a lack of air conditioning, making it more likely that corrosion would occur on the brass-coated steel in the steel-belted radial tires; and that final inspections were done too quickly. According to the Washington Post, some Decatur employees would engage in practices, such as puncturing bubbles on tires, to cover up flaws on products that should have been scrapped (Grimaldi, 000). As a result, Bridgestone/Firestone didn’t confront the tire problems until it was too late. It wasn’t until people’s lives were lost did they recall 6.5 million tires.

In addition to the manufacturing process differences, there is also a difference in corporate culture between the two companies. Ford Motor Company presents itself as an extremely customer-driven company whereas Bridgestone/Firestone is more company-driven. Ford focuses on measuring customer satisfaction in many ways, including surveying customers about the appeal of their products, their satisfaction with the sales and service experience and the quality of the product throughout the customer’s ownership. Studies are done as early as 0 days and as long as four to five years after purchase. These studies enable Ford to build future vehicles to the customers’ specifications. Ford also tracks the percentage of first-time and repeat customers each year. Ford Brand sales and service satisfaction continues to improve every month and, so far, both measures are indicating an all-time high.

Bridgestone/Firestone, on the other hand, focuses more on productivity and financial results rather than the customers. The Firestone plant in Decatur, Illinois that manufactured many of the 6.5 million tires recalled was rife with quality control problems, with workers using questionable tactics to speed production and managers giving short shrift to inspections. In order to meet stringent quotas, inspections of finished tires were for 0-0 seconds or often virtually nonexistent. A retired Bridgestone/Firestone employee, Joe Roundtree, stated, “If you got behind on the lines, some of the tires would pass without being inspected” (Grimaldi, 000). Employees also had powerful financial incentives to release botched tires to the motoring public. Quality was definitely being sacrificed for quantity.

On top of that, there is also a distinct difference in the value placed on employees between the two companies. Ford, who operates in a leadership style, realized that in order to be successful in any business, their core assets, their employees, must be taken care of and valued as an important part of the company. So to show part of their appreciation to their employees, Ford has established some programs and strategies that help better the lives of their employees. They have created a program that enhances worklife integration through the Family Service and Learning Centers. More than 00,000 active employees, retirees and their families will benefit from childcare, before- and after-school programs, teen programs and adult and family education classes. A volunteer support network also will allow families to contribute to their communities. With regards to stress, Ford formed a program that made significant efforts to address job-related stress and workload issues. Ford remained committed to the process of feedback, action planning, communication, and management initiatives to reduce levels of stress throughout the year. In addition to employee stress reduction, Ford has also established accountability for health and safety performance. They measure health and safety performance according to several standard indicators including lost time injuries and severity rates. They use indicators of their capacity to manage health and safety effectively to prevent accidents and improve continuously. Through the Ford Production System, they conduct periodic safety and health audits of the management systems and procedures globally.

Besides taking care of the employees, Ford has also empowered its employees by letting them be a part of the company through communication and decision-making. They communicate with their employees through email, intranet and television broadcasts. The managers use a cascading process to share and discuss key decisions and initiatives with all of their employees. They work closely with union leaders to identify and address issues of concern to their hourly workers. They also recognize the need to go beyond communication to true engagement by providing means and opportunities for employees to contribute their views before important choices are made. A process of this type already is in place in Europe where Ford has well-established arrangements for consulting with employee representatives on a wide variety of matters including restructuring.

Bridgestone/Firestone, however, doesn’t seem to place significant value on their employees. They operate in a more management style in which they treat their employees as mere workers and not valuable assets. The workers at a Bridgestone/Firestone plant in Decatur, Illinois were on strike during the time many of the 6.5 million tires recalled were made. Labor discord flared at Decatur after Bridgestone/Firestone demanded concessions from the union in 14, including a move from 8-hour work shifts to rotating, 1-hour, day-and-night shifts. When the union struck, the company hired lower-wage replacement workers. The union eventually capitulated in 15, and union members began returning at reduced pay to work 1-hour shifts alongside replacement workers. Besides the long work shifts and low pay, Bridgestone/Firestone employees also worked in poor working conditions where there were high humidity and no air conditioning. Employee empowerment was also unheard of at Bridgestone/Firestone. Employees felt intimidated by management. The intimidation was so overwhelming that the employees felt that they had to do whatever to meet production quotas, even if it meant producing poor quality tires. Rather than encouraging input from their employees, Bridgestone/Firestone management told the employees what to do and how to do it. There is evidence that suggests that the 10’s labor dispute and poor working conditions at the Decatur, IL plant contributed to the production of the many defective tires

As a result, because of Ford’s superb total quality management, the ,500 6-Sigma projects that they undertook in 001 resulted in customer satisfaction improvements in many vehicle lines and $5 million in cost savings. A recent study done by the National Highway Traffic and Safety Administration showed that not only did Ford have fewer safety recalls than its major competitors, but significantly fewer vehicles were affected. In addition, employee satisfaction is slowly improving. Compared to global blue-chip companies that employ at least 10,000 employees, Ford’s favorable ratings continue to exceed similar manufacturing companies, including many of their competitors, by an average of nearly seven percentage points.

Bridgestone/Firestone, on the other hand, suffered tremendously from their poor total quality management. Because of the poor quality of the tires, 148 lives were lost and 55 people have been injured. In addition, they had to spend $750 million in direct costs for the recall and on legal settlements. They also ended up sabotaging a 5-year supplier relationship with Ford, one of their biggest consumers, and they lost confidence from their individual consumers as well. Things had gotten so bad that the company’s own public relations agency, Fleishman-Hillard, had to dropped them. A recent poll asked, “Would you ever buy a Firestone product again?” More than 6% answered “No” (CNNMONEY, 000). According to Rod Lache, automobile industry analyst at Deutsche Banc Alex, the Firestone brand is damaged beyond repair.

In conclusion, it is obvious here on how important it is to have total quality management in every aspect of your business. Even though implementing a total quality management system is expensive and seeing results is a slow process, in the long run, it is extremely profitable. Ford is an example of how patience is rewarded in the long run with quality products and high customer satisfaction. It was too bad, however, that Bridgestone/Firestone had to learn this the hard way. They had to learn that in order to satisfy external customers, they had to satisfy their internal customers, their employees, and their internal processes. However, by the time they found this out, it was too late. Because of their neglect and out-dated management style, the Firestone brand is forever damaged in they eyes of their consumers.

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