Ford Documents Suggest Safety Risks Were Ignored

February 2, 2005   6:45 a.m.

Like past cycles of business scandal that focused on corrupt accounting or biased stock research, the current round has its own theme: profit over safety. And while the drug industry has dominated the genre so far, today it is Ford Motor's integrity that's in question.

Ford ignored its own engineers' warnings 1 that the Explorer SUV needed design revisions to prevent rollover accidents and fatal injuries, according to internal company documents and employee depositions obtained by Bloomberg. Two Ford engineers advised the car maker in 1993 to reinforce the Explorer's roof supports to prevent collapse in case of a rollover, company records show, but Ford engineering supervisor Christopher Brewer said in a 2003 deposition that the car maker didn't make changes because the U.S. government didn't require any, Bloomberg reports. Other Ford Engineers, in Venezuela, warned in 1999 that flaws in the Explorer's suspension system were the reason behind the vehicle's rollovers, which had caused nine deaths -- three years after Ford engineers had written that the deficiency could be solved by relocating the vehicle's shock absorbers closer to the wheels. Ford, Bloomberg says, didn't make the change. These documents and others are currently being used by attorneys in 500 lawsuits against Ford involving defects of the Explorer. Ford isn't the only car maker currently in such troubles. Mitsubishi Motors has seen its sales plummet, after its reputation was battered by revelations that it covered up defects that led to fatalities.

And Daniel Genter, of RNC Genter Capital Management, which holds about $2 billion of debt that includes Ford bonds, tells Bloomberg that Ford's past emphasis on profit over safety is now putting future sales at risk. "You have this ongoing theme of corporate decisions made for profit and gain," Mr. Genter says. "This compromises auto companies that are already struggling." As it is, Ford had the worst performance among U.S. auto makers reporting their January sales yesterday. Ford's sales tumbled 12.5% 2 from the year-earlier month, the Detroit Free Press reports, while General Motors' sales were down 6.7% and DaimlerChrysler saw a 1.2% decline.