WASHINGTON — Foreign Tire Sales Inc. has sharply lowered its estimates of the size of the recall of Chinese light truck tires based on new information from the tires´ manufacturer.
Hangzhou Zhongce Rubber Co. Ltd. told the National Highway Traffic Safety Administration the recalled tires are safe and said FTS made faulty judgments as to the tires´ structural integrity. Meanwhile, other tire makers and importers from whom NHTSA requested comments told the agency they had nothing to do with the recalled tires.
The number of tires in the recall announced June 25 now seems likely to be closer to 250,000 than the original estimate of 450,000, according to Union, N.J.-based FTS. Because of the lower number of tires and previous overestimates of what the recall would cost, FTS revised its total cost estimate for the recall to less than $20 million, a fraction of the original estimate of $50 million to $80 million.
At first, FTS — the manufacturer of record under NHTSA regulations in case of a recall — said it could pay only 10 to 15 percent of the original cost estimate. With the new estimate, FTS now said merely it will do everything it can to ensure that every tire is recalled, according to a company spokesman.
FTS based its new estimates on a July 11 letter to NHTSA from Michael L. Kidney and R. Latane Montague of Hogan & Hartson, Hangzhou´s U.S. legal representatives.
The tires FTS imported to the U.S. were manufactured in three distinct design phases, the letter said. Only in Phase II, Kidney and Montague said, did the tires lack gum strips between the belts, and this was because those tires had thicker-than-usual rubber layers between the belts. These layers allowed for greater belt-to-belt adhesion and obviated the need for gum strips, they said.
About 270,000 of the Phase II tires were manufactured for U.S. sale, they said.
Hangzhou has found no reason to believe its tires are defective or dangerous, Kidney and Montague said, and it will submit full factual and engineering records to demonstrate the tires´ safety.
FTS´ defect determination about the tires was based on unclear and questionable information, the attorneys claim. FTS´ claim that the tires were defective based on the absence of gum strips was incorrect on its face, they said, and the company´s testing produced conflicting results.
Only one accident-the August 2006 van rollover in Pennsylvania that killed two men and severely injured a third-has been traced to alleged failure of a recalled Hangzhou-made tire, Kidney and Montague said. Even then, there are other apparent reasons for the accident, such as tires in mismatched sizes on the van, they said.
FTS attorney Lawrence N. Lavigne said he sent Kidney a letter July 18 asking for documents cited in the July 11 letter, including factual information and testing results on the Phase II tires and data on the gauge of the gum strips used in the Phase I tires. As of July 25, Kidney had not replied to Lavigne.
FTS will begin its recall campaign of the Hangzhou tires toward the end of the first week of August, about three weeks later than originally planned, according to the transcript of a July 17 telephone conversation between Lavigne and George Person, chief of the Recall Management Division within NHTSA´s Office of Defects Investigation.
Also in the NHTSA document file on the Hangzhou recall are replies from many of the companies the agency queried regarding Hangzhou tires.
In every case, the companies-many of them identified by FTS as possible importers of the recalled tires-said they did not import any of them into the U.S.
Robison Tire of Laurel, Miss., said it has never been the importer of record of any brand of tire. Cooper Tire & Rubber Co. bought some tires in the past from Hangzhou, but said that none were light truck tires. Strategic Import Supply Co. of Wayzata, Minn., said it began business only in March 2006 after Hangzhou had stopped manufacturing the recalled tires. EBEN Inc. of Alabaster, Ala., said it only imports tires to the U.S. for re-export overseas, and none of its overseas markets have reported any problems with Hangzhou tires.
Other companies that certified, as of July 25, they never imported the recalled tires included Orteck International, Gaithersburg, Md.; Cambridge Trading Ltd., Jackson, Miss.; Dunlap & Kyle Co. Inc., Batesville, Miss.; and K&D Tire Wholesalers L.L.C., Carlsbad, Calif.
The Hangzhou recall reinforces the necessity for importers and retailers to make sure foreign manufacturers are fully insured against recalls, according to William Harrison, managing director of Chicago-based insurer Aon Corp.
"Many big retailers now require it of private-label manufacturers, or else they won´t do business with them," Harrison said. "They want to make sure that if a recall is necessary, these manufacturers have the (insurance) policies to back it up and pay for it."
It´s only been in the last couple of years that importers have learned to insist on this, Harrison added. "If you´ve been dealing with a manufacturer in Milwaukee that´s been there for a hundred years, but you decide to outsource because it´s cheaper, the risk of doing that is if it comes down to a recall," he said. "To save a buck on manufacturing is not as simple as it sounds."