Another Cooper Tire RecallMar 25, 2008 | Parker Waichman LLP
Cooper Tire & Rubber Company of Findlay, Ohio is replacing defective tires for the second time in eight months and the third time in recent years. This time, Cooper Tire is voluntarily recalling 48,037 tires due to a sidewall separation problem and is filing the recall with the National Highway Traffic Safety Administration (NHTSA). The recall, which was initiated on March 14, covers over 20 different Cooper Tire brands including Cooper Discoverer, Wildcat, and Wild Country. The recalled tires were built at the company's Albany, Georgia, plant.
Last July, Cooper Tire recalled 91,000 and, in another recall in 2006, a total of 296,500 other tires. Meanwhile, at the time of this recall, Cooper Tire was in the midst of a plan to build and sell more high-end products as part of a strategy being implemented by its Chief Executive—Roy Armes—who is working to market Cooper Tire as a maker of high-end tires geared to owners of sport-utility vehicles and luxury cars.
In 2007, Cooper reached an annual profit of $119.5 million and, last month, in Cooper’s quarterly conference call, Armes promised that the company would follow quality programs to increase revenue and operational improvement in North America. The cost of this recall will be taken in the first quarter, 2008, and will be immaterial to the company's quarterly earnings, according to Cooper Tire spokeswoman Pat Brown, who did not provide any other details. In its filing, Cooper said it will pay its dealers the $ 17.50 per tire cost for mounting and balancing. The $17.50 cost alone is expected to generate $840,000 in expenses. Cooper Tire shares were up 3.6% at $17.67 in late trading Monday, in line with gains for the broader US equities market.
In July, Cooper Tire recalled 91,747 Dominator Sport A/T tires. A Cooper spokesman said the tires experienced a higher-than-normal adjustment rate, which led the NHTSA to begin a preliminary evaluation of the tire the prior year when its Office of Defects Investigation received a vehicle owner questionnaire (VOQ) concerning two size LT265/75R16 Dominator Sport A/T tires mounted on the rear axle of a pickup truck. The questionnaire said that the tires failed, resulting in vehicle damage. Cooper also submitted to NHTSA data under early warning reporting requirements confirming situations similar to that identified in the VOQ. Although Cooper’s analysis and testing found "no manufacturing or design defect" in the tires, Cooper voluntarily recalled the tires in the spirit of "customer safety and satisfaction." The Dominator Sport A/Ts were manufactured at the company's Findlay, Ohio, plant.
The 2006 Cooper Tire recall involved the Cooper Lifeliner Touring SLE H-Rated and T-rated tires. Cooper Tire determined that some tires might have been manufactured with non-conforming belt wire coat stock and that, if used, the tires could develop a belt separation due to a reduced ability to prevent corrosion of the steel wires in those cases where moisture reached the steel belt. That defect could have possibly resulted in a vehicle crash; the recall was listed as “hazardous.”