Rodney Johnson - Without Warning

 Do you wish the Toyota story would finally come to an end? Do you wish that Toyota would simply get back to the business of making great cars? Do wish that Toyota would simply come clean, take care of their problems, and move on? As much as I want to say “Yes” to each of these questions, the likelihood of it happening appears to be miniscule. The magnitude of Toyota’s problems is simply too great.

Over the past month, Toyota’s drive to fix its problems is being challenged at every intersection as new allegations, new lawsuits, and fresh dirty laundry come into the open. And from what I’ve seen, it appears that the tsunami has more destruction in its path.  Because the problems that Toyota has evidently been hiding for years are now beginning to surface, and will be fodder for front page news around the globe for the foreseeable future. And this is where Toyota’s quality and safety image is taking it on the chin.

In a Bloomberg story, Toyota Recall Crisis Said To Lie In Cost Cuts, Growth Ambitions, the authors investigate the “What went wrong” side of the story. And from the story, it’s apparent that cost cutting and corporate profits were Job 1, not quality or safety. For instance the article states, The company also had been too fixated on achieving a goal, set by Watanabe, of raising its operating margin to 10 percent to keep profit growing, the person described Toyoda as saying… At a 2006 investor conference in London Watanabe and former Executive Vice President Kazuo Okamoto discussed plans to “exceed the cost-reduction results achieved in CCC21” by eliminating vehicle parts and pushing suppliers to adopt lighter, cheaper materials. While the programs brought development advances, they may have inadvertently triggered quality glitches, said current and former company officials who asked not to be named because the information isn’t public.

Over at the Washington Post, Lawmaker accuses Toyota of withholding evidence reveals Toyota’s secretive “Book of Knowledge.”

Toyota withheld documents it was legally required to turn over in liability lawsuits the company faced and it paid higher settlements to plaintiffs to avoid revealing information contained in Toyota’s secret “Books of Knowledge,” a congressional committee chairman said Friday.

As I’ve been following and blogging about this story for over a month now, there appears to be several sides to the Toyota story now emerging.

1. The Why Story: Why did Toyota pursue a path that was built on a deck of cards. Didn’t they realize it would eventually crumble?
2. The How Story: How did Toyota go from being a company that was respected, to one that is being questioned and challenged? How did a company whose founding principles of quality and safety become a company of average quality and mediocre safety?
3. The Where Story: Where were the corporate secrets held? This story is just now being told - i.e. The Book of Knowledge . Where did all of the quality and safety issues actually go  - were they simply throw into a big black hole?
4. The What Story: What can we anticipate will surface in the future? What will Toyota attempt to do to diffuse the story and regain its fleeing customer base?
5. The Money Story: How big will the final bill be once all of the lawsuits, recalls and reduced value of the company and future earning potential be? My guess - its much bigger than most are willing to fathom - $50 Billion?

 The cost of Toyota’s silent problems is immense. Toyota’s future is uncertain. The Toyota brand has been exposed. And unfortunately, Toyota has no one to blame but itself. They brought this on, and now owners of Toyota vehicles are suffering and Toyota’s employees exposed. I expect that next week will turn up some new information.