Inside Toyota’s epic safety breakdown Auto giant failed to heed warnings in December, U.S. regulators charge

[spookyturtle 9,466]

This is a long one. I have only posted the first page. Those interested should read the entire article.

Toyota Motor Corp., the world's most dominant and profitable automaker, was not accustomed to outsiders telling it what to do, let alone some obscure bureaucrat from the United States, whose own car industry was on taxpayer-funded life support.

But in the middle of December, on a cloudy day in the middle of the Japanese archipelago's main island, Ron Medford, the acting head of the U.S. agency that regulates auto safety, was reading Toyota executives the riot act.

Medford had been quietly dispatched by the Obama administration to deliver a firm message: Toyota, he told them, had better get its act together, according to U.S. regulators.

By the time Medford arrived in Japan, Toyota was working through a recall that would involve over 5 million vehicles in the United States. The problem was mundane but potentially lethal: Floor mats were trapping the accelerator pedal.

U.S. safety regulators had tied five deaths to accidents where that seemed to be the cause, and there were growing doubts about whether the Toyota floormat and pedal design — a relatively cheap fix — was the only flaw that needed to be addressed.

Over the prior seven years, the number of U.S. consumer complaints about unintended acceleration in Toyota cars had been steadily climbing, hitting 400 reported cases for the 2007 model year, according to an analysis of National Highway Traffic Safety Administration (NHTSA) data.

But five previous investigations into Toyota opened by NHTSA under the Bush administration had hit a dead end, with no action taken. Two safety probes resulted in relatively cheap floormat recalls by Toyota in 2007 and early 2009. Neither attracted much notice.

In the closed-door meeting in Nagoya, Medford told four Toyota executives that the automaker was moving too slowly in addressing safety defects under investigation by U.S. authorities. He said he wanted changes, and he wanted them fast.

NHTSA regulators, who face new scrutiny for the agency's response to consumer complaints about Toyota vehicles, provided an account of the watershed meeting to Reuters.

One of the Toyota officials in the room, Chris Santucci, had spent two days the week before in a deposition room being grilled by lawyers for the family of a 77-year-old Michigan woman who was killed in 2008 when her Camry took off uncontrollably and slammed into a tree just four blocks from her home.

Medford's warnings went unheeded. By late January, Toyota's safety problems would explode into a crisis that has battered its finances and shaken consumer confidence in one of the world's best-known brands and an icon of Japan's spectacular post-war economic success.

Since the American team's visit, an additional 4.7 million Toyota cars have been recalled globally, the largest safety action ever for the automaker. Reported problems with acceleration now shadow the Camry, the plain-vanilla sedan that powered Toyota's success in the 1990s, and braking glitches threaten to unplug the Prius, Toyota's green "halo car" for a new era.

What's more, critics charge that the automaker still has not come to terms with the root causes of the safety issues and it has only just begun to acknowledge how badly it has lost its way.

"Anybody working on the Toyota assembly line can pull the cord and stop the line if there's a problem that needs to be fixed," said Ed Hess, a business consultant and professor at the University of Virginia who has studied the risks of growth for big companies. "Why did it get to where we are now? Why didn't somebody at Toyota pull the cord?"

Versions of that same question are being asked on Wall Street and on Capitol Hill — as well as in Toyota City, a company town where veteran workers confronted the crisis with a sense of shared responsibility that the carmaker has prided itself on fostering.

"We are not sitting on our hands in Japan," said a 30-year veteran production manager at Toyota at a bar in Toyota City where the automaker's recalls dominated the chatter. Said another worker: "We have a sense of crisis. How can we not with all the media attention? Everyone feels that way."

On February 24, the U.S. House of Representatives Oversight Committee is set to grill U.S. Transportation Secretary Ray LaHood and Toyota's senior U.S. executive, Yoshi Inaba, about why Toyota's safety complaints appeared to have spiraled out of control and whether the causes have been fully identified.

A day later the House Energy and Commerce Committee will hold its own hearing on the Toyota safety crisis.

"I just don't accept that Toyota couldn't put the dots together," said Joan Claybrook, former administrator of the National Highway Traffic Safety Administration and one of the expert witnesses called to testify in Congress.

In a sense, insiders say, Toyota has become a victim of its own dizzying success.

Consultants, suppliers, dealers and analysts say fast growth strained the company's resources to breaking point. The additional stress of achieving near constant cost reductions in parts added to the pressure.

Others say a hint of complacency crept into dealings with outsiders as Toyota moved toward taking over the industry's top spot by sales in 2008 from General Motors. The protracted back-and-forth with U.S. safety regulators on the acceleration complaints also suggests an organization hunkering down against change, critics say.

"Toyota used to be a great listener," said one consultant who asked not to be named because he still has business with the company. "But about three to five years ago, there was something that suddenly shifted. There was a view that nobody outside Toyota had the answer. It got to the point where the organization was hearing, but not listening."

When crisis hit in late January, Toyota stumbled to provide a clear message to consumers and investors. The company's secrecy and tendency to centralize decision-making in Japan contributed to the public relations debacle, experts say.

"Toyota had the perfect model for the 1980s and 1990s, but its approach now looks outdated," said Stefan Lippert, a business professor at Temple University in Japan. "The concentration of decision-making at headquarters is one of the factors behind Toyota's problems right now."

CONTINUED : 'Getcha boots on'

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http://www.msnbc.msn.com/id/35319096/ns/business-autos/

[natty bumppo 297]

and you are surprised?