Monday, February 8, 2010

Toyota Bashing

It seems we have a new pastime in this country: Toyota bashing.  It started when the first round of accelerator problems were announced and became a full-blown fad after the issue resulted in suspending sales of the company's most popular products.

Even Transportation Secretary Ray LaHood got into the act, saying that anyone who owns a Toyota vehicle should "stop driving it" (he later recanted his statement).  Call up virtually any news site today and there's a good chance you'll find something negative about Toyota.

I'm not here to downplay the seriousness of the accelerator problem.  The company deserves some of the criticism because of the massive scope of the problem.  We spend a lot of money on our cars and expect them to work safely and reliably.  Toyota's reputation for quality has also most likely contributed to the fallout in this situation.  They have been a hugely successful company for many years now and they have to take their licks just like any other company facing a massive recall.

The problem I'm having is that some of the criticism seems to be based on politics or ignorance rather than facts.

Lean is Not the Problem

The Wall Street Journal (WSJ) ran a story last week entitled, "How Lean Manufacturing Can Fail," claiming that the Toyota Production System contributed to the accelerator problem because of standardization of parts across models and a reduced number of suppliers.  I can see how someone who doesn't understand lean could think this, but the WSJ is a respected business news source and its reporters should know better.

Lean has been a key to the company's success (in terms of quality and profitability).  Standardizing parts across models - which, by the way is not just a "lean" concept - is what makes cars affordable.  It's the way the high volume automakers (as well as manufacturers in many other industries) do business.

Reducing the number of vendors also contributes to improved quality because it enables the company to work much more closely with each supplier.  Also, more suppliers means more variation in incoming products - thereby increasing assembly time and quality problems.

CEO Visibility

Another issue that's causing problems for Toyota is the lack of visibility of Akio Toyoda, the company's CEO.  Although I agree that this problem was large enough to warrant more media presence from Toyoda, it's really not how Japanese executives operate.

To demonstrate the difference between U.S. and foreign companies, how many people can name the CEO of Honda?  Volkswagen?  Total?  ING?  These are among the world's largest companies, but very few people can name their chief executives.  CEOs of foreign companies don't tend to grab the spotlight the way American executives do.  Toyota is learning a difficult lesson right now that Americans expect swift assurance from the chief executive that the problem is being resolved.

Japanese companies (especially Toyota) also tend to study problems methodically and do not jump to implement fixes until they feel they truly understand the causes.  Unfortunately, when we're talking about an issue like this, those using the product get very nervous about their personal safety while the problem is being analyzed.


My guess is that the media bashing is also heavily political, in nature.  American automakers have been beaten down so badly - mostly by Toyota - over the last several years that the buy American sentiment is driving many of the attacks. I guess we'll learn more about this when Volkswagen takes over as the world's number one automaker as a result of this crisis.

Several months ago, I wrote that Toyota had taken its eye off the ball and, as a result, problems were starting to surface (see Taking Your Eye Off the Ball).  It was evident to me back then that, in its push to supplant  General Motors as the world's largest automaker, Toyota seemed to forget what got them there in the first place.

I also wrote in the blog that it appeared that their problems were being addressed.  They have a new CEO and he seems to be refocusing the company on its fundamental purpose (to enrich society through carmaking).  I also don't believe that the bad habits the company developed had been around long enough to cause major damage to their culture.

My guess is that they will survive this slip-up and return to the number one spot over the next few years.  Toyota tends to be a very long-term focused company and I'm betting that they won't take short-term action that will result in hurting their future.  The company undoubtedly does not want anything like this to happen again, but if it does, they really need to channel their obsession with learning toward improving the way they deal with the American media.


Corpus Optima said...

Gregg this is a brilliant and balanced review of the facts. I love Toyota and have had only the very deepest respect for their quality, so this is painful for me as I know it must be for you as well. I am betting they will hold onto their Superperformance and NOT fade into obscurity or worse.

ctoporski said...

As someone who makes a living from Toyota sales, I must say that your view is a refreshing departure from the rest of the media and new outlets. Thank you.

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Unknown said...

Toyota's commitment to quality is total. I am sure that quite a lot of the negativity was Schadenfreude, with everyone enjoying seeing the mighty fallen, but some of it was almost racist in manner. I guess if the company had been a successful (British/American/German -delete as appropriate for where you live) the the situation would not have been blown out of proportion. The one thing Toyota failed on through, was believing their own bull too much, and not having a disaster plan in mind. Do I drive a Toyota, no but I dont drive a home grown car either, as their isn't such a thing here in the UK any more, they all all American or Japanese owned companies, except Lotus, which I cannot afford (and is owned by proton of Malasia). MArk O'Brien

Unknown said...

No, lean was not the problem. The wall street journal seems to get their information on lean by sticking it's head out the window and asking whoever passes by next.

I have been resisting writing about the Toyota case because so little is actually know about the defect itself, and cause and effect isn't clear. But I have been getting enough questions about it. I don't think this changes anything about Toyota's success. They still have dramatically fewer recalls than others. And of course no one that knows lean would say they were anything close to perfect.

I did write up some of my thoughts and lessons in observing the story on my blog here:

Jamie Flinchbaugh

Unknown said...

This whole bogus claim of Toyota bashing was clearly engineered by Obama team. He was envisioning America as a new leader in eco-friendly industries during his presidential campaign, and delineating the importance of American products to lead to that direction, not by "Prius". Now they own GM and their agenda is clearer than ever. They are hoping that GM Volt's success will change the map of auto industry. However, consumers are not that dumb any longer. Instead of letter others down to look them better, they should focus on improving their own quality.