By on February 22, 2010

Ah, political spectacle. When Detroit’s CEOs took the stand at congressional hearings over a year ago, the main browbeating bullet point wasn’t the decades of mismanagement and greed, but the fact that Messrs. Wagoner, Mullaly and Nardelli had taken separate corporate jets to the festivities. The lesson: convenient focal points for anger always trump the complexity of a substantive dressing-down. And as congress gears up to grill Toyota’s CEO, the Japanese automaker has given congress just the thing to sharpen its collective knife against: an honest opinion. One document [via Politico PDF here] briefing Toyota USA boss Yoshi Inaba for the hearings, reveals that Toyota believe the current administration is “activist” and that “not industry-friendly.” True or false, this document sets up an adversarial relationship between Toyota and the majority party going into the hearings. Which would be bad enough if Toyota hadn’t also handed over evidence, already leaked by the Oversight committee, indicating that it balances recall costs against risks and lobbies the government in its own interest. On its own, this evidence might be merely embarrassing, but having slighted the Democrats, news that Toyota treats recalls like a business has become prima facie evidence in the (increasingly political) case against the Japanese automaker.

This subpoenaed document is clearly an embarrassment. An internal presentation apparently prepared by Toyota’s Washington DC staff, describes the firm’s 2007 floormat recall as a “Win for Toyota,” noting [via BusinessWeek] that it had

Negotiated ‘equipment’ recall on Camry/ES re:[sudden acceleration], saved $100M+, w/no defect found.

Of course, this ties in nicely with earlier reports of Toyota’s employment of former federal regulators to negotiate such recalls with NHTSA. The implication of course, is that Toyota pressured NHTSA to let it get away with a 55,000-unit floormat recall (thus saving $100m+) when in fact sticky pedals, or some other unexplained problem caused unintended acceleration. Adding to the perception of Toyota as mass manipulator of government regulators, is the revelation [via Reuters] that Toyota’s lobbying team also:

helped negotiate changes or delays to four proposed vehicle safety rules covering standards for roof crush, electric shock, side impact and door locks.

By winning “added lead time and phase-in” for new side-impact crash standards, Toyota estimated that it had saved about $124 million, according to the document.

For many, these documents will be shocking, but as with the rest of Toyota’s fall from grace, the only surprises come from Toyota’s unrealistically clean image going into the scandal. The fact that Toyota lobbies NHTSA to limit the costs of its recalls and other regulation should be no more shocking than the fact that it allowed its defining commitment to quality to slide. But because Toyota has already fallen from grace in the public eye, it’s vulnerable to all kinds of attacks. And because it antagonized lawmakers in the documents it handed over pre-hearing, congress will have no problem wallowing in the dirty details of how Toyota behaves like every other automaker. After all, dressing down a multinational corporation is a lot more rewarding than laying into the bureaucrats at NHTSA, who have the direct responsibility of protecting Americans.

Ultimately, the whole question comes back to quality. It’s unrealistic to assume that the largest automaker in America would not lobby the NHTSA to limit its recall costs, and given the ephemeral nature of sudden, unintended acceleration, it’s not wildly surprising that the NHTSA was satisfied with the floormat explanation (even though they were warned as early as 2004). And though certain government-backed automakers (and others) are doubtless eagerly anticipating a shllacking of Toyota by posturing representatives, they should probably think twice before raising the safety-first rhetoric to a fever pitch and goading congress into beefing up the NHTSA’s investigative capabilities. After all, quality and cost are the fundamental balance of the auto industry, and it doesn’t take much for any automaker to find itself suddenly on the wrong side of the line. Unless automakers are done lobbying altogether (and they’re not) there’s not a lot to be gained by the industry as a whole by fanning the flames of what is turning into an almost personal confrontation.

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23 Comments on “Leaked Toyota Documents Ensure Feisty Congressional Hearings...”


  • avatar
    Detroit Todd

    Looks like Toyota is in for a (richly deserved) spanking.

    Toyota behaves like every other automaker is no excuse. “Everyone else does it” does not cut it, as anyone who was once a child knows.

    Toyota let their quality and safety slide in the name of market share. Toyota also vigorously lobbied NHTSA to cut them some slack and bragged internally regarding same. Toyota also has disparaged the duly-elected U.S. political party in power.

    No one is to blame but Toyota. Not nefarious bureaucrats, not CTS, not Toyota owners. As the crowd on the Ricki Lake Show used to say when guests tried to reassign blame to anyone but themselves, “Don’t cry now ’cause you nasty!”

  • avatar
    talkstoanimals

    This may prove to be Toyota’s “Pinto fires moment.”

  • avatar
    rnc

    Toyota has style, nothing to worry about

  • avatar
    Robert.Walter

    Ed, Politico posted the 8pg pdf … the 10 pager is more interesting because it shows assumed savings by slowing down government activity.

    http://download.gannett.edgesuite.net/detnews/2010/pdf/0220toyota.pdf

  • avatar
    tced2

    I have read elsewhere that the document leak was incomplete – only 10 pages of a 16-page document. What is in the other 6 pages? Or have we seen only the part of the document that the “leaker” wants us to see?

  • avatar
    1996MEdition

    Congress = Sir Bedevere
    Akio Toyoda = the witch

  • avatar
    the_gamper

    Is anyone really surprised? I am sure this revalation is rather innocent compared to other internal documents that have yet to be, and probably wont be produced.

    I am sure that other automakers have similar documents hiding in their archives as well.

  • avatar
    Gregg

    Edward, I don’t think that any of the other auto execs (Gov Issue or otherwise) are relishing the forthcoming drubbing of Toyota.

    From the Tallahassee Democrat 02/12/10:

    Despite the competition, Mulally said American automakers shouldn’t be too critical of the massive recalls now facing Toyota.

    “You have to stay vigilant every day to make sure these things don’t happen,” Mulally said. “You will never hear me or anyone at Ford say anything bad about Toyota. This is not a time to get arrogant.”

    • 0 avatar
      crash sled

      Mullaly is mostly correct, as he’s undoubtedly reviewed the similar document that Ford produced, which was likely nearly a word-for-word recap of this Toyota document, with the exception of the phrasing on page 7, concerning the “Changing political environment”. Mullaly and Ford have nothing to fear from the “Massive government support for Detroit automakers” Toyota referenced, because he and Ford are recipients of that massive government support. Other than that, his status mirrors Toyota’s.

      This is an interesting show. If the countless hours of backroom negotiations bear no fruit, and the congresscritters go fully public here, I suspect it will get even more interesting. I’m down with that. It’d be good for us all, ultimately.

      The political fault lines are clearly identifiable. If they gape open, they will swallow all those near, as Mullaly knows well.

    • 0 avatar
      Steven02

      @crash sled

      Not to make this too political, but the current administration has also proposed ideas that are any industry, especially manufacturing where large amounts of energy are required (see cap and trade, the trade war with tire taxes etc).

    • 0 avatar
      L'avventura

      >> “Massive government support for Detroit automakers”

      The fact that Toyota knew the changes to a heavily pro-detroit government, and its repercussions, makes their inept response to all of this even more surprising.

      The fact that the Obama administration is in bed with the UAW and Detroit is well known, and that they are willing to bend public policy and regulatory agencies to suit Michigan’s desires is no secret. Toyota should have been prepared and proactive in its response being that they knew what was coming.

      This, Obama/UAW/Detroit-conflict-of-interest is openly and publicly discussed recently regarding the S.Korea-US Free Trade Agreement (FTA). Its being discussed as a matter of fact, not as a conjecture. Right now, the UAW and Detroit is disrupting to get better deals on a FTA that has already been signed, and Obama is actively blocking this agreement that already incredibly benefits Detroit. Its an astounding turn of events, and is really unnecessarily greedy being that Detroit 3 are the main beneficiaries of the FTA to begin with.

      Quote the Heritage Foundation:
      “The Obama Administration and certain Members of Congress, particularly from Michigan, have complained about an unequal playing field for sales of U.S. autos to South Korea but reject the very agreement that would remedy the problem. The two and a half years since the June 2007 signing of the FTA have exposed the falsehoods of the auto sector’s blaming others for its poor competitiveness. Let me state it very plainly: General Motors and Chrysler did not go bankrupt as the result of South Korean non-tariff barriers stopping U.S. cars from coming into Korea.

      As the Obama Administration and Congress have poured billions into the domestic auto industry, they have clearly dithered about this free trade pact. It would have been a small price to ask (and a small price to pay) to have demanded that the domestic industry and unions drop their opposition to the FTA for the billions of taxpayer bailout subsidies provided to the domestic industry. But the Obama Administration, fearful of “alienating its base,” refused to play hardball.”

      http://www.heritage.org/Research/AsiaandthePacific/hl1144.cfm

  • avatar
    mtymsi

    Once again it’s perfectly clear the majority of Toyota’s problem is how they did/are going about resolving it. Toyota’s handling of this now debacle will cost them far more business than the problem itself if correctly addressed ever would have.

  • avatar
    mpresley

    This subpoenaed document is clearly an embarrassment.

    Not sure why. Does anybody think Obama and the Democrat congress are particularly business friendly? Any business owner that thinks “the government” is their “friend” must be wholly dependent upon the government for its business.

    • 0 avatar
      Steven02

      I don’t think that part of the document is too much of a surprise, but you don’t want to exactly call the party in power names in documents that they might receive later. And I agree, the proposals on the table aren’t exactly business friendly, far from it in fact.

      But the rest of the document talking about deals made with the NHTSA and how slowing gov’t action and investigations and saving money here is what the problem is. I am not saying that other manufactures don’t feel the same way, but when you have it in writing how much you saved from having the NHTSA stop investigating issues and how you limit recalls to save money, it certainly says that money is more important that customer safety. You might find the same thinking at every other manufacturer in the world. It is another thing to find this document in the world where everyone can see it.

    • 0 avatar
      Gardiner Westbound

      “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’ – Ronald Reagan, 40th U.S. President (1911 – 2004)

    • 0 avatar
      crash sled

      “You might find the same thinking at every other manufacturer in the world. It is another thing to find this document in the world where everyone can see it.”

      Steven, the truly delicious part of this is, I can think of no other mechanism for this document to be published, other than Totota themselves released it!

      Now you can say “subpoena” blah blah blah “Congress demanded it” blah blah, but believe me, internal machinations such as this don’t suddenly drop down out of the sky, unless somebody within Toyota WANTS them to do so. Why are they doing this? This stuff is just fascinating!

    • 0 avatar
      baldheadeddork

      @crash sled

      These documents were leaked by someone on the Congressional staffs. This didn’t come from Toyota.

      Withholding documents that have been subpoenaed is playing Russian roulette. As bad as any document is, not producing it and having it be discovered later is much worse. Toyota would probably be very happy if none of these ever saw the light of day, but their attorneys aren’t willing to risk their licenses for it.

      The only really effective defense available to Toyota is to drown the Congressional committees in paperwork. This used to be effective when you were dealing with actual paper, but it’s so much easier to search electronic submissions.

    • 0 avatar
      crash sled

      b’head, you’re right that Toyota gave the committee that doc, but it would have been very easy for them not to do so… happens all the time… and no attorney licenses are revoked when it does. Of the kajillion documents in the Toyota corporation’s possession, within short order this one suddenly popped. That’s a bit too conveneient.

      I think it’s fairly clear then, that Toyota wanted that document to be made public, and that’s why I commented on the fact. It’s a counterintuitive action, at first glance, as it seemingly exposes them to some rather imflammatory charges. But everything happens for a reason. What’s their strategy in doing this? Not sure, but again, the Detroit 3 and everybody else are watching this warily. The Japs’ strategy is sometimes noted for its (over?)complexity, so we’ll see how this all plays out.

  • avatar
    Steven02

    It will be interesting to see how all of this turns out, but documents clearly stating how $$$ was put into safety is a very bad idea. I am sure other auto manufactures do the same thing, but they haven’t had to disclose documents like this so it is only speculation. With Toyota, it obviously isn’t speculation any more.

  • avatar
    Tosh

    First USA ice hockey on top, and now this! Will it be live on C-SPAN?

  • avatar
    baldheadeddork

    Ed, one point about your post:

    One document [via Politico PDF here] briefing Toyota USA boss Yoshi Inaba for the hearings, reveals that Toyota believe the current administration is “activist” and that “not industry-friendly.”

    The document was from a presentation made in July 2009. It was not in response to or in preparation for these hearings.


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