Is Toyota this decade’s Enron?

The latest terror suspect Najibullah Zazi, as well as the makers of Avandia and hot dogs have to be breathing a little easier this morning (well, at least the Avandia and hot dog makers are).

February 23 All three were caught in the crosshairs of breaking crises, but avoided being the lead item on nightly news and talk shows thanks to good, old Toyota.

Good and old are apt descriptors for the automaker. I say that because Toyota's management is practicing what was once considered smart management and crisis communications in the good, old days. Denial, obfuscation and evasiveness worked well in the dark, distant past. But that was then and this is now.

Silence seems to be the watchword of Toyota's communications strategy today. This, despite mounting evidence that their entire line of cars is stricken with a fatal flaw: an accelerator that doesn't have a fail safe mechanism.

As a result, politicians, consumer watchdog groups and investigative journalists alike are salivating like Pavlov's dog at the prospect of bringing down a big, bad business caught being a big, bad business. It's a Hollywood movie plot that screams out for the likes of Michael Douglas, Meryl Streep and Dustin Hoffman in the lead roles.

And, it also goes to show that all the public relations and advertising in the world are meaningless if the product is rotten and the company's leaders are caught covering up the damage. All of which leads to my question of the day: Will Toyota be this decade's Enron?

6 thoughts on “Is Toyota this decade’s Enron?

  1. While I agree that Toyota’s failures are moral and ethical, my instincts tell me the final story will be more GM-like than Enron.
    Maybe Toyota executives’ malfeasance came from a place of fear first, profit second? I’m not trying to be humanistic here. But in the Toyota Way, organization goals (more production, leaner costs, world domination) were sacrosanct and not to be challenged. Therefore, they were afraid to speak up about the inevitable problems associated with it.
    With Toyota, there are a lot more shades of gray than the pure, venal greed practiced by Jeff, Andy and Kenny Boy. Not that I expect Congress to grasp such a concept….

  2. While this is way too late, it looks like Toyota hired a new crisis firm or something because Mr. Toyoda, president of Toyota (no joke), announced the company’s course of action today. Basically, Toyoda said the company sacrificed quality in place of growth (really doctor?) and is now implementing several steps to ensure quality moving forward. This includes:
    – A new system to convey customer complaints from around the world to the company’s management in a timely manner
    – A Quality Advisory Group composed of respected outside experts from North America and around the world
    – Establishing an Automotive Center of Quality Excellence
    – Introducing a new position called Product Safety Executive
    Owning up to the problem and taking care of it should obviously have been done from the get go. And who knows what exactly the Quality Advisory Group and Automotive Center of Quality Excellence will do, but they do sound like steps in the right direction.
    Given the obvious deficiencies in the American car manufacturers, I have a hard time thinking that this is the end of Toyota.

  3. Very interesting POV, Bomberpete. Thanks for sharing. I’d agree there was no there there with Enron. But, if Toyota cars are linked to deaths in other countries, I think you’ll see them take the same sort of heat as they are in the U.S. And, I wouldn’t compare GM’s slow, self-inflicted death to Toyota’s reckless disregard of the truth. Seems to me there are some moral and ethical failings that are more akin to Messrs Lay and Skilling than, say, Rick Waggoner.

  4. If these problems make Toyota go belly up in the U.S., it will be stunning, but not on a level comparable to Enron’s fall. With Enron, there was no there there. It was all vapor — phantom trading, no products, services, cash reserves or real infrastructure. No one can say that about Toyota’s business.
    While Toyota has dug itself a very deep hole, they are a long way from done. Ford turned around after Pinto fires and exploding Explorer tires. Nissan was considered a dead auto company 12 years ago before Renault and “Le Cost Killer” stepped in. Even Chrysler, which has had miserable product quality and safety over the last 40 years, still had loyal customers and was a viable competitor as recently as 5 years ago.
    I have some experience with ashamed Japanese auto execs who play run and hide. It never works. The communication strategy will change. They’ll drop the arrogance when the once-invincible sales numbers drop even further.
    Toyota can turn this around once they finally get smart. Even if they don’t, it’ll take decades to actually destroy Toyota. GM’s been inflicting damage on itself for 40 years and they’re still alive, if comatose.
    Finally, Toyota’s a global company. Internet or not, I doubt the rest of the world cares that much about U.S.-only products. In other continents, they love their simple Corollas and HiLux pickups, and probably think U.S. drivers are too stupid to simply put the lever into neutral.