How The Mighty Fall
Maybe that is a bit strong, but could Toyota's recall of 2.3 million vehicles be an indicator of bigger internal problem. If you think this is the first sign of trouble, check out this comment in the WSJ:
[...] Toyota recalled 2.3 million vehicles in the U.S. affected by the accelerator assembly problem. That was on top of an earlier recall of 4.2 million vehicles to fix the floor mat issue. About 1.7 million vehicles are subject to both recalls.
Signs of significant quality problems surfaced as early as late 2004 and through 2005. The Y axis is missing, but for reference, in 2005 Toyota recalled some 550,000 Camry's due to door lock issues.
What happened? I tend to agree with those that suggest that they took their eye off the ball. Perhaps they were too focused on rapid growth and overtaking GM. Maybe they just wanted to dominate the US market and lost site of the quality that was the base for their success.
(By the way, there is another interesting article in the WSJ that discusses the risk a company assumes when they use Lean Manufacturing techniques. I may blog about this later ... interesting discussion)
Another note: Prior to this debacle, I believe the largest recall in history was in 1978 when Ford issued a recall for some 1.5 million Pintos. For those of you that are too young to remember, the Pinto had a major design flaw. How bad? Well, a rear-end collision would often result in an explosion and/or a fire. Interestingly enough, Ford rushed the Pinto design to market to compete with imports from Japan.
What next? Well Toyota needs to deal with this PR issue. They started when they stopped selling eight model. This is clearly a difficult decision, but owning the problem is one of the 1st steps in dealing with the PR issues. According to the WSJ, an unnamed Toyota executive said:
"after weighing possible consequences of not suspending sales and production of those models and coming up with the ultimate remedy for the problem quickly," said a senior Toyota executive who did not want to be identified."We were fully aware that short of this action we could be accused of selling lethal products [...]"
The CEO, Mr. Toyoda, issued the following apology:
I feel very sorry that we have caused our customers unease. We are now working to grasp the facts so that we can deliver an explanation as quickly as possible that will remove our customers' unease
We will have to watch to see how this turns out. Since he took over the company, the CEO has 'taken an extremely low media profile'. He may continue his 'low-profile' ways but I believe someone in the company, a ranking officer, needs to step up and become the face of the company during this PR remake.
What do you think?