Recalls and rebounds

Honda is recalling more than 44,000 vehicles in Canada over an ignition malfunction. This is not the first time massive automotive recall, but the larger effect of recalls seems to depend on how companies handle them.

Global News takes a look at other recalls and rebounds.

Ford and Firestone

Ford and Firestone had a major rupture in their near-century-long partnership in 2000 after an unusually high number of Firestone tires on Ford SUVs blew out and caused a series of horrific fatal accidents.

The two companies initially claimed drivers were incorrectly inflating tires, but then turned on each other with allegations of defective Firestone tires and poor Ford design. Lawsuits piled up, and Firestone recalled 6.5 million tires.

Ford did not stop sales of the model, but suspended production for one week in 2001, and replaced a further 13 million tires on its vehicles at a total cost of over $3 billion.

The tire problems came during a peak in sales for Ford. But at the end of 2001, the company announced its first annual loss since 1992 and a restructuring plan including 35,000 job cuts.

A decision by the National Highway Traffic Safety Administration in 2002 essentially placed blame for the tire separation on Firestone, as the company’s sales sagged to a 20 to 30 per cent drop from the previous year.

The two companies finally came to a settlement in 2005 that saw Firestone pay a $240 million settlement to Ford.

Audi

It took almost 15 years for German automaker Audi to repair its reputation after a number of safety recalls in the 1980s.

The series of recalls from 1982-1987 involved reports of sudden acceleration with the Audi 5000 sedan, an issue linked to six deaths and 700 accidents.

The company stayed mostly silent during the recalls, and the lack of openness was seen by many observers as an admission of guilt, despite many auto experts’ belief that driver error, rather than design flaws, were behind the mishaps.

The television news show 60 Minutes aired a report on the issue in 1986, and the drop in sales accelerated. A class-action lawsuit was launched by Audi owners seeking compensation the following year, and is still pending.

The first set of repairs to the Audis involved adjusting the distance between the brake and gas pedals, followed by another fix that required the driver to press the brake to shift out of park.

By 1991, Audi sales had plunged by 83 per cent. Audi initiated a turnaround strategy in 1994, rolling out new models such as the A4 and the A8. The company offered discounts on various models, but sales didn’t reach pre-recall levels until 2000.

Tylenol

Major recalls have not been limited to automakers. Seven people died in Chicago in 1982 after taking extra-strength Tylenol that had been laced with cyanide, prompting Tylenol-maker Johnson & Johnson to recall 30 million bottles of the painkiller in the U.S.

It was determined that bottles of Tylenol had been taken off of grocery store shelves, opened, laced with potassium cyanide, and put back. Panic ensued as police searched for the culprit.

Representatives of the company were in constant communication with the media and spoke openly about the recall. Tylenol introduced new packaging to prevent tampering and discounted the product when it went back on the shelves.

Five months after the incident, Tylenol had already regained 70 per cent of lost sales, and is still a market leader today.

The killer was never found, but tamper-resistant packaging is now widely used on food and medical products.

Maple Leaf

More than 20 deaths and dozens of listeriosis cases were linked to meat produced at a Toronto Maple Leaf Food plant in 2008, prompting a massive recall of more than 200 products.

The company was also relatively open about the recall, and voluntarily extended it to include a variety of products outside the handful directly linked to the listeria bacteria.

Maple Leaf instituted new procedures and testing at its plants, and has largely recovered from the damage of the recall, posting a profit in the third quarter of 2009, and making gains in its prepared meats division just one year after the outbreak.