Monday, February 1, 2010

Is Toyota Another Firestone?

If you read my first post about Toyota or saw me quoted in an Associated Press story Sunday, you would naturally assume I was a "fan" of Toyota's and approving of what they had done so far in managing the "crisis communication" issues facing them.

That was before watching Jim Lentz, President and Chief Operating Officer of Toyota Motor Sales North America talking to Matt Lauer on NBC's Today Show Monday morning.

He did a good job of responding to the questions and did not appear defensive. However, there appears to be a smoking gun in his television interview. He implied Toyota didn't know about the sticking throttle pedal until October.

But, in the same morning's New York Times, Reporter Bill Vlasic wrote, "The company said on November 2 that 'there is no evidence to support' any other conclusion. . ."
He was referring to Toyota's earlier recall and statements that the problem was a result of loose floor mats. There was no reference about any other problem with Toyota gas pedals.

On top of that, some of the victims and plaintiff's attorneys claim Toyota is not being honest when they say the problem is a mechanical part that wears and sticks in the throttle assembly. They claim it is an electronic malfunction.

I'm sure you're not surprised, nor shocked but the lawsuits are already flying. As of this writing, Bloomberg News says there are at least seven individual lawsuits and three class-action suits. The first class action suit was filed in November of 2009.

But, wait there's more! Toyota is dealing with lawsuits involving roll-over crashes with collapsing roofs, and a whistle-blower case brought by a former Toyota attorney who claims the company with-held or hid evidence from plaintiffs attorneys in the "roof" cases.

So, will we end up comparing Toyota to the Ford Explorer/Firestone ATX tire debacle or to the Tylenol case? I was thinking the massive recall and manufacturing halt was in a league with the Johnson & Johnson handling of the contaminated Tylenol.

But if the allegations are true that someone in Toyota knew much earlier about the accelerator problem and didn't do anything or tell anyone about it, we'll be comparing tires and accelerators for a long time and the lawsuits will drag on for another ten years or more.

There is evidence that quality control engineers knew as early as 1993 that there was a problem with the Firestone ATX tires installed on new Ford Explorers. But it wasn't until early 2000 that the public found out.

The most reliable estimates say 271 people died and 800 were injured when ATX tires failed and caused Ford Explorers to crash. Thirty class action lawsuits resulted and 19.5-million tires were recalled.

Ford and Firestone survived, in spite of the fact it was the second time Firestone was the center of a massive tire failure. The Firestone 500, the company's first radial tire, was prone to come apart at high speed. In 1978 the government ordered the recall of 7-million tires and hit Firestone with a $500,000 fine -- the largest business penalty up to that time. At least 34 deaths were attributed to the Firestone 500 tires.

So, there is precedent for big companies to survive these kinds of issues.

However, that does not excuse any company from "doing the right thing" as soon as it becomes aware of the problem.

I don't care how expensive the "fix" may be, the ultimate loss of customer respect and confidence, the outrageous legal fees and victim settlements will always cost more.

1 comment:

  1. Larry, I know you preach communication in such situations. Sticking your head in the sand is probably not going to help that much, and will probably make things worse.

    I understand there may be a tendency for one or more local dealers to not answer the phone these days. Regardless of what they knew before, it seems they should have immediately created a response policy and communicated that in very clear terms to the dealers, who would be fielding calls from concerned consumers. Too bad they didn't call you first.