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.