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NINETY EIGHT REGENCY

Toyota's U.S.-Japan disconnect

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Toyota's U.S.-Japan disconnect

Americans had little power to respond to safety problems

Lindsay Chappell

Automotive News -- March 1, 2010 - 12:01 am ET

Toyota Motor Corp. has spent 20 years telling U.S. consumers how deeply it has sunk its roots into America.

But in congressional testimony last week, Toyota executives acknowledged that the home office in Japan continues to call the shots in its biggest market.

The disconnect between Toyota U.S.A. and Toyota Japan, as well as Toyota manufacturing and Toyota sales in the United States, partly accounts for the giant's current blizzard of problems, recalls, lawsuits and public scoldings, according to comments made during hours of congressional testimony last week.

Even as Toyota's U.S. manufacturing group is running print ads in Kentucky, Ohio and Indiana boasting that it is "dedicated to our community," corporate executives faced questions in Washington on how U.S. consumer concerns got lost in Japan.

Jim Lentz, president of Toyota Motor Sales U.S.A. Inc. and Toyota's highest-ranking U.S. sales executive, admitted under Capitol Hill questioning last week that decisions about whether to recall U.S. products for safety issues are all made in Japan.

Asked if any of Toyota's safety personnel report to him, Lentz said they do not. And he admitted that the centralized control of product issues in Japan had made it difficult for U.S. voices to be heard.

"We did not do a good job of sharing information around the globe," Lentz testified, attempting to explain why Toyota responded slowly to three years of U.S. consumer reports of unintended acceleration in some of its models. "Most of the flow was one-way."

Under chilly questioning from longtime Detroit 3 defender Rep. John Dingell, D-Mich., about his powers as president, Lentz said that he has no authority over issues involving manufacturing, engineering or safety in the United States.

In the past year, as the company coped with unfamiliar problems of financial losses and plant closings, Toyota officials acknowledged that the automaker has grown rapidly in North America with inadequate coordination between its Kentucky engineering and manufacturing headquarters and its California sales and marketing headquarters.

Toyota also has offices in New York and Washington devoted to finance and regulatory issues. Those offices report directly to Japan, not to the U.S. sales or manufacturing offices.

Lentz said U.S. customers' complaints about safety issues -- as well as complaints made even earlier by Toyota customers in the United Kingdom -- went directly to engineering departments in Japan.

He said Toyota's growth in North America had outstripped its ability to employ U.S. engineering personnel to support it.

"The complexity of our product line grew," he testified. "We outgrew our engineering resources. We had strategies to deal with that, but the strategies didn't work."

The acknowledgements stand in contrast to Toyota's marketing efforts to portray itself as an automaker with an American identity.

A series of ads being run by Toyota Motor Engineering & Manufacturing North America Inc. of Erlanger, Ky., with the tag line "Dedicated to our community," show Toyota employees involved in community service and local environmental efforts. The ads say Toyota employs 40,000 Americans, uses 500 suppliers here and has invested $20 billion in its U.S. operations.

Over the years, Toyota ads also have touted the increased American DNA of its products, boasting that the Tundra pickup and Avalon sedan were American-engineered, thanks to growing North American technical capabilities. The 2011 Avalon, which is scheduled to be launched this spring, boasts California design, Michigan engineering and Kentucky manufacturing.

Toyota remains more reliant on imports from Japan than its major rivals, though. In 2009, almost two of every five Toyotas sold in the United States was an import. For Honda Motor Co., it was less than one in five.

Akio Toyoda will appoint an American to a global safety committee. Some Congress members weren't impressed.

Toyota Motor Corp. CEO Akio Toyoda told Congress last week that, in response to Toyota's safety recall of 8.5 million vehicles, he will form a global quality committee. One of its members will be a U.S. executive, Toyoda said.

Toyota has said repeatedly that it wants to make its sprawling North American operations more self-reliant and free its Japanese resources from tending to U.S. needs. It has also pinned hopes on Akio Toyoda and senior executives he appointed last year for bringing more cohesion to Toyota's U.S. sales, marketing, manufacturing, engineering and vehicle development operations.

Rep. Bart Stupak, D-Mich., chairman of the oversight and investigations subcommittee of the House Committee on Energy and Commerce, wasn't impressed. Stupak said congressional committee members are distressed that so much of Toyota's decision making still resides in Japan.

"They're upset that every decision on recall, safety, engineering, whether to look at electronics, is all made in Japan," Stupak complained. "All we are is a country with a 'For Sale' sign on it."

Neil Roland contributed to this report

Read more: http://www.autonews.com/article/20100301/OEM01/303019924/1117#ixzz0gw1BFeOa

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