This paper studies the effect of labor relations on product quality. We consider whether a
long, contentious strike and the hiring of permanent replacement workers by
Bridgestone/Firestone in the mid-1990s contributed to the production of an excess
number of defective tires. Using several independent data sources we find that labor
strife in the Decatur plant closely coincided with lower product quality. Count data
regression models based on two data sets of tire failures by plant, year and age show
significantly higher failure rates for tires produced in Decatur during the labor dispute
than before or after the dispute, or than at other plants. Also, an analysis of internal
Firestone engineering tests indicates that P235 tires from Decatur performed less well if
they were manufactured during the labor dispute compared with those produced after the
dispute, or compared with those from other, non-striking plants. Monthly data suggest
that the production of defective tires was particularly high around the time wage
concessions were demanded by Firestone in early 1994 and when large numbers of
replacement workers and permanent workers worked side by side in 1996.