Wednesday, January 27, 2010

Toyota's woes

While many American's might be tempted to cheer Toyota's quality, recall, and now production and sales woes, they might want to think again.

Toyota announced last week that it was recalling 2.3 million vehicles in the U.S. because of suspected problems with the gas pedals becoming stuck in those cars. However, other than identifying that problem might exist, Toyota does not appear to have a strategy for fixing it.

Yesterday, Toyota announced that it was suspending production and sales of the affected vehicles while it determines the exact cause of the problems.

Toyota's problems would seem to be good news for the Big-Three American automakers--GM, Ford, and Chrysler--which have struggled for years against Toyota's reputation for high-quality manufacturing. In time, Toyota's problems could give the U.S. automakers a boost. If nothing else, consumers will be considering a wider range of cars than they would have before the recall.

However, Toyota's problems are bad news for the struggling U.S. economy. The suspension in sales hurts owners and employees at U.S.-based dealerships.

Worse, Toyota will be suspending production at several North American plants. From yesterday's announcement
Toyota is expected to stop producing vehicles on the following production lines for the week of February 1 to assess and coordinate activities. The North America vehicle production facilities affected are:
  • Toyota Motor Manufacturing, Canada (Corolla, Matrix, and RAV4)
  • Toyota Motor Manufacturing, Indiana (Sequoia and Highlander)
  • Toyota Motor Manufacturing, Kentucky – Line 1 (Camry and Avalon)
  • Subaru of Indiana Automotive, Inc. (Camry)
  • Toyota Motor Manufacturing, Texas (Tundra)
These shutdowns won't help the economic or employment recovery. The communities in Indiana, Kentucky, and Texas certainly aren't cheering.

Americans tend to think of foreign-owned corporations as the enemy. However, when those corporations invest and produce in the U.S., Americans benefit. Toyota's current problems are more than just Toyota's concerns.

4 comments:

Jeffrey Sykes said...

Good post, Dave. I think this highlights the connectivity of the global marketplace. Trade is a complicated policy field, but in short I consider myself a free trader and don't much care for the populist bashing of globalization and free trade that lingers on the conservative wing.

I think the Japanese and German car makers have done wonders for the South especially and consider them domestic for the most part.

pino said...

Dave,

There maybe shannanigans:

http://detnews.com/article/20100127/AUTO01/1270400/1148/auto01/U.S.--Toyota-was-legally-required-to-stop-selling-models

Transportation Secretary Ray LaHood told Chicago radio station WGN that the government asked Toyota to stop selling the vehicles.

LaHood said, "The reason Toyota decided to do the recall and to stop manufacturing was because we asked them to."


I wonder if the Government owning GM has anything to do with it?

General Motors Co. said it will offer incentives to try to lure Toyota customers.

"Beginning today, GM dealers will be able to offer Toyota customers a purchase incentive for a Chevrolet, Buick, GMC and Cadillac vehicle," GM said in a statement.

Dave Ribar said...

Pino:

Your biases are showing.

The problem in question appears to be related to 275 accidents and 18 deaths. NTHSA had opened an investigation after a gas-pedal-related accident in which the floor mats had been removed.

It also appears to be a problem that Toyota has known about for several years.

You'll recall that Ford also briefly suspended production of the Explorer when Firestone tire problems came to light.

Pino said...

Dave,

Yes, Ford did suspend production, but they did it on their own. In this case, GM, ahem the US Government, ordered the suspension ;-)