Firestone's Liberia Crisis


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Firestone's Liberia Crisis. Course Project for Management of International Business

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Firestone's Liberia Crisis

  1. 1. Saket Tandon (06927801) Vaibhav Jha (06927804) Aniruddha Aradhye (06927809) Bhupendra Jagdev (06927856) Class of 2006 – 2008, Master of Management, SJMSOM, IIT Bombay Firestone’s Liberia Crisis
  2. 2. History <ul><li>Formed in 1900 with 12 employees. </li></ul><ul><li>Leading tyre suppliers in North America. </li></ul><ul><li>In early 1980s non tyre related businesses was spun off to increase valuation. </li></ul><ul><li>Sold to Bridgestone in 1988. </li></ul>
  3. 3. Shady History <ul><li>FireStone 500 tread separation problem. </li></ul><ul><ul><li>Did not co-operate with authorities in their investigations. </li></ul></ul><ul><ul><li>Denied all charges and blamed the customers. </li></ul></ul><ul><ul><li>Years of bad publicity and millions paid out to victims. </li></ul></ul><ul><li>Clause K. </li></ul>
  4. 4. Liberia Crisis <ul><li>Firestone owns largest rubber plantation in Liberia since 1926. </li></ul><ul><li>Liberia war torn because of Civil War which ended in 2003 </li></ul><ul><li>Accused of </li></ul><ul><ul><li>Abusing local workers. </li></ul></ul><ul><ul><li>Child Labour. </li></ul></ul><ul><ul><li>Breaking corresponding international laws. </li></ul></ul><ul><ul><li>Exploiting Liberia Resources. </li></ul></ul>
  5. 5. Liberia Crisis <ul><li>Rubber exports worth $82 M. </li></ul><ul><li>All rubber sent to BridgeStone US for manufacturing of tyre. </li></ul><ul><li>No processing, value addition or manufacturing done in Liberia. </li></ul><ul><li>Severe exploitation of a country’s resources </li></ul>
  6. 6. Issue <ul><li>Around 10000 workers in plantations. </li></ul><ul><li>Daily Quotas </li></ul><ul><ul><li>Firestone says 650 trees. </li></ul></ul><ul><ul><li>Workers contend it and say its actually 1100 trees – equivalent to 21 hours of work daily. </li></ul></ul><ul><li>Inability to meet daily quotas results in halving of already low wages. </li></ul>
  7. 7. Child Labour <ul><li>This forces workers to get their children and other family workers to help them in meeting quotas. </li></ul><ul><li>Children work almost 12-14 hours a day. </li></ul><ul><li>Child Education goes into thin air. </li></ul><ul><ul><li>Schools go only upto 9 th Grade </li></ul></ul><ul><ul><li>School located too far away from the workers’ houses </li></ul></ul>
  8. 8. Adverse working conditions <ul><li>Tapper generates $900 monthly for the company and gets just $60. </li></ul><ul><li>Tappers forced to apply dangerous chemical treatments to plants without safety gloves, masks etc. </li></ul><ul><li>Poor housing </li></ul><ul><ul><li>Tappers provided with houses built way back in 1920 and not renovated since. </li></ul></ul><ul><ul><li>No electricity, running water etc. </li></ul></ul><ul><ul><li>Poor educational and medical services. </li></ul></ul><ul><ul><li>Use of subcontractors who treat workers poorly. </li></ul></ul><ul><li>60% of labour is subcontracted. </li></ul><ul><ul><li>No social benefits for them. </li></ul></ul>
  9. 9. Polluting Environment <ul><li>Chemical waste dumped into the local river without proper treatment. </li></ul><ul><ul><li>Has lead to tough times for fishing dependent communities along the river bank. </li></ul></ul><ul><li>No waste management or pollutant mitigation system. </li></ul><ul><ul><li>People in closeby areas suffer from many respiratory ailments. </li></ul></ul>
  10. 10. Undermining Democracy <ul><li>Firestone leased 1 million acres of land in 1926 for 99 years at a fee of $60,000 only. </li></ul><ul><li>In 2005 it signed a new lease with new government for just $500,000. </li></ul><ul><li>Inspite of all the hue and cry from democratic forces in the country it forged the new agreement with the new government. </li></ul><ul><li>Refusal to meet the first democratically elected plantation union formed this year(2007). </li></ul>
  11. 11. FireStone Under Fire <ul><li>Vehemently denies allegations. </li></ul><ul><ul><li>Claims strict child labour policies. </li></ul></ul><ul><ul><ul><li>Very poor implementation of policies </li></ul></ul></ul><ul><ul><li>Claims steps to educate parents discouraging them to bring children for work. </li></ul></ul><ul><ul><ul><li>Reports claim that efforts are just customary. </li></ul></ul></ul><ul><ul><li>Claims the houses in ramshackles are those of refugees and not it own. </li></ul></ul><ul><ul><li>Claims to be renovating old houses which was impossible due to war. </li></ul></ul><ul><ul><ul><li>Only few rehabilitated which are close to highway. </li></ul></ul></ul><ul><ul><ul><li>Even they lack running water, electricity. </li></ul></ul></ul><ul><ul><ul><li>Firestone managers have excellent living facilities. </li></ul></ul></ul><ul><ul><li>Admits to release of reasonably safe chemicals to the local river. </li></ul></ul>
  12. 12. Our Analysis <ul><li>Lack of sound legal framework in Liberia are letting Firestone getaway with its conduct. </li></ul><ul><li>By the admission of CEO each worker has 650 trees per day quota. At 2 mins per tree its 21 hours of work!! </li></ul><ul><li>Many visuals available on net to prove poor living conditions. </li></ul>
  13. 13. Power Relations <ul><li>Clause K </li></ul><ul><ul><li>Search for own rubber source for US post World War I. </li></ul></ul><ul><li>Rubber became largest export of Liberia. Almost all exported to US through Firestone. </li></ul><ul><li>Currently Media (specially online media) and Human Rights commission have taken up the cause. </li></ul><ul><li>Lots of lawsuits against Firestone in US courts. </li></ul>
  14. 14. Impact on FireStone <ul><li>Bridgestone and Firestone both getting severely bad publicity. </li></ul><ul><ul><li>Several online communities dedicated to the issue. </li></ul></ul><ul><ul><li>Lot of press reports condemning Firestone. </li></ul></ul><ul><li>Several lawsuits filed by various renowned international human rights group (including UN groups) pending in various countries. </li></ul><ul><li>Most experts say Firestone may need to loosen its purse to settle the lawsuits. </li></ul>
  15. 15. Thank You <ul><li>Questions?? </li></ul>