Tire Recall Will Cost Bridgestone $350 Million

T O K Y O, Aug. 10 -- With its shares having fallen to levels not seen since 1996, the Bridgestone said today it would post a $350 million special loss this year after its U.S. unit, Firestone, announced a recall of 6.5 million tires.

The recall comes as the U.S. National Highway TrafficSafety Administration (NHTSA) investigates three brands ofFirestone tires that may have led to dozens of fatal crashes.

At least 46 deaths have been recorded in crashes where thetires blew out or the tread peeled away. The incidents involveone size of the company’s ATX, ATX II and Wilderness tires.

20/20 HindsightLinking the accidents with hot weather, a higher speedlimit on U.S. highways and consumers not maintaining the tiresproperly, Bridgestone vice president Tadakazu Harada said hewished the company had been able to prevent the accidents.

“With the benefit of hindsight, it would have been betterif we had made consumers more aware of keeping their tiresproperly inflated,” he told a news conference.

He said Bridgestone had found no manufacturing flaw in thetires and that many of the 193 accidents reported to the NHTSAinvolved tires damaged after they had left the factory.

Jumping off the StockInvestors fretting about consumers deserting the Firestonebrand and costs rising from a potential ballooning oflawsuits, dumped shares of Bridgestone, sending them down 11percent to its lowest point since early September 1996.

The stock has slid some 24 percent this week, initiallysparked by U.S. retailer Sears saying it had stopped selling the tires under review.

Harada said the $350 million extraordinary loss coveredonly the cost of the recall and not potential lawsuits or lossof revenue, adding that the company did expect some impact onsales.

“We are prepared for a considerable impact in the UnitedStates although we do want to minimize that,” he said.

He said 50 related lawsuits had been taken out against thecompany.