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Friday, Feb. 26, 2010
Communication breakdown at the top
By HIROKO NAKATA and NATSUKO FUKUE
A lack of crucial information in the top ranks of Toyota Motor Corp. may have prevented the world's largest automaker from swiftly responding to many defect claims and accidents overseas before massive recalls.
The carmaker's shortcomings were revealed in testimony by Toyota President Akio Toyoda at a Wednesday hearing of the U.S. House of Representatives Oversight and Government Reform Committee in Washington, experts said.
It's unclear if the grandson of the founder, who took over the top spot in June, understood the importance of such information and whether he could change the direction of the company under his presidency.
"The biggest problem is that the company's philosophy 'bad news first' did not work this time," said Aiichiro Mizushima, the author of the book "Toyota 'saisei!' " ("Toyota 'recovery' "), which was published last March.
It was that philosophy that helped propel Toyota to the top ranks in automotive quality, he said.
Toyoda revealed his apparent lack of awareness at the committee hearing, Mizushima said.
Asked if he knew that National Highway Traffic Safety Administration officials visited Toyota last year, Toyoda responded: "I know people at the quality control department met people from the NHTSA and talked with them, but I don't know about the content and the timing."
"He thought information naturally rises from the bottom, (but it didn't)," said Masaaki Sato, a freelance writer and former Nihon Keizai Shimbun reporter who has followed Toyota for 40 years.
According to Sato, there are several reasons for Toyoda's ignorance.
"To him, the issue of massive recalls came second to seeing the company's business performance recover," Sato said.
Dealing with the red ink amid the global slump had been one of the priorities for Toyota. Thanks to cost-cutting efforts and sales of its fuel-efficient cars, Toyota announced Feb. 4 that it expected an ¥8 billion group net profit for the business year to March this year, against a ¥437 billion loss for the previous year.
In addition, Toyoda's unwillingness to disclose his schedule makes it hard for underlings to contact him, Sato said.
"The workers may have been worried about who to report to because they don't know where their boss is," he said.
Sato pointed out that Toyoda's aversion to the media worsened the situation.
Since his appointment in June, Toyoda has not accepted any media interviews and he avoided reporters after news conferences.
"He failed to understand what was going on in the world by making contacts with the mass media because he probably doesn't understand that the media reflect consumers," Sato said.
By the same token, some have criticized the Japanese media for self-censorship.
Domestic media did not play up the problem of out-of-control accelerations until Toyota's massive recalls that first started in the U.S. in late January.
Toshiro Era, chief consultant at public relations consulting firm Arex Corp, speculated that this could be partly because the auto giant is one of their biggest advertisers.
The dearth of negative media reports, as well as the smaller number of recalls and a lack of car crash accidents so far in Japan, preserved many Japanese people's faith in Toyota and Lexus cars, in contrast to the sharp criticism in the U.S., experts said.
Many of the 8.5 million cars recalled globally by Toyota are in the United States.
Indeed, only 23,068 of its hybrid cars — the latest Prius model, the luxury Lexus HS250h, the Sai compact sedan and the plug-in Prius hybrid — are being recalled in Japan.
"I find they (American people) are overreacting, compared with recall issues triggered by American car manufacturers. Toyota reigned as No. 1 ahead of GM, so to Americans, Toyota may be a nuisance," said Daisuke Oku, a 33-year-old civil servant.
"Toyota is a company I look up to because I'm also in a manufacturing industry," said Masayoshi Ueki, 63. "I have the impression that Toyota cars are the best in Japan."
Toyota's reputation for quality remains high in Japan, particularly among the older generation.
During the country's fast economic expansion in the 1960s and 1970s, Toyota's Crown was a status symbol, the pinnacle for a company worker who began his career driving a Corolla and then moved on to a Corona, said Era.
TV commercials for the Crown with the catchphrase "Crown — sometime in the future" appealed to consumers, according to experts.
Also, many Japanese are suspicious of the Toyota safety issue because they feel the problem is being taken advantage of by U.S. politicians ahead of an election, they said.
However, if the safety woes continue in the U.S., the opinion of domestic consumers, which has been affected little so far, may change.
"Now that Toyota survived today's testimony, it is facing a crucial moment" as to whether it can really regain U.S. consumer trust and restore Japan's reputation, said Mizushima.