Toyota's expanding recall mess goes from global to cultural ...
... and that ain't good.
It's bad enough that Toyota Motor Corp.'s CEO, Akio Toyoda, is shunning the cameras (and, presumably, culpability) while his top-ranking American executive, Jim Lentz, gets the grilling by the national media and contradicted by the Secretary of Transportation.
It's bad enough that the recall is capturing something north of eight million vehicles on just about every continent this side of Antarctica, an enormous threat to the quality cred of an industry gold standard.
Toyota's "sudden acceleration" disaster is going cultural, a potential kill-shot to an automaker that built its reputation with big assists from coastal elites, techies and the environmental lobby wooed by the automaker's doubling-down in gas-electric hybrids and the fact that its metal isn't of sad-sack Detroit. Now, they're turning ... quickly.
Monday, Apple Inc. co-founder Steve Wozniak voiced frustration at a forum in San Francisco about the cruise control in his new Prius hybrid and its annoying (and repeatable) tendency to accelerate by itself. "It's in the software," he said, which is not insignificant coming from one of the more celebrated techies of his generation.
Tuesday, Comedy Central's Jon Stewart aired a segment on his Daily Show that he called the "Toyotathon of Death." Said Stewart: "I guess the point is, if you're driving a Toyota, you most likely can't stop."
The hits keep on comin' for Toyota, the auto gold standard
The pile-on is underway. Even as Toyota Motor Corp. today widened its recall to Europe and China, the better to forestall fears of sudden acceleration in many of its car and truck models, the influential Consumer Reports "suspended" its recommendations of Toyota models. The move, as much as anything an attempt to protect the Consumer Reports brand, is a crushing blow to the Japanese automaker's long-undisputed position at the top of the automotive heap.
Not anymore. Two congressional committees are planning hearings. Competitors are following the lead of General Motors Co. and offering sales incentives to skittish Toyota owners looking to trade out of their vehicle. Rental agencies are pulling Toyota models from their fleets (raise the specter of who will get the bill for the carrying charges of owning vehicles you cannot rent). Dealers unaccustomed to such problems are inundated with worried (and unhappy) customers.
And, to top it off, the CEO, Akio Toyoda, is mostly MIA because he's hobnobbing with the global power crowd at the World Economic Forum in Davos. And his brief interviewlate today in Davos with NHK, the Japanese network, won't cut it. Just asking, but can you imagine the reaction here and in Washington if the CEO of Ford Motor Co. effectively disappeared in the days after the Firestone tire debacle erupted?
Like politics, all business is local. The sooner Toyota talks directly to consumers, claims responsibility for the global snafu and pledges to set things right (at Toyota's expense), the sooner the company can get past the incident and contain the damage. But dawdling, dissembling and the appearance of hiding could endanger Toyota's long-eviable market position and tarnish the luster of its global brand.
Toyota's massive recall woes halt production, ding top quality rep
The nightmare for the Japanese juggernaut, reputed to be the gold standard for quality and reliability in the global auto industry, just got worse -- if that's possible. Toyota Motor Corp. said today it would halt production at five North American plants and order dealers to stop selling eight models recalled last week over concerns with sticking accelerator pedals.
It would be hard to overstate how devastating a move like this could be to Toyota's reputation and, frankly, its own corporate psyche, steeped as it is in a culture of continuous improvement, high quality and a sense of invincibility. Yes, the twin orders to stop production and stop sales could be interpreted as a gesture to safeguard relationships with customers and those who might be. But, coming as it does on the heels of slow and muted response to earlier complaints, this looks more like a) big-time CYA and b) high-level corporate confirmation of a serious and potentially dangerous problem with a big chunk of Toyota's lineup.
That's a whole lot of not good in just about any language.
Worse, it comes as Detroit's long-beleaguered automakers are showing signs of finally emerging from their decade-long detour into restructuring hell with vastly improved product lines and much more competitive business models. That, too, is a lot of not good for Toyota, et. al., mostly because Detroit is on the verge of leaving its sad-sack persona behind.
Toyota isn't accustomed to these kinds of problems. Its people in the States, reared the past 20 years on American adulation, aren't used to managing multiple crises at the same time. They don't see many "bad" headlines. They're not sure how to translate the gravity of massive recalls -- and how they resonate to an American public saturated with 24-7 media -- into a clear message for the big bosses back at headquarters in Aiichi Prefecture.
I'll help: This is huge, gentlemen. For Toyota to recall 6.5 million vehicles since November, to be the subject of national news investigations, to be seen as not moving quickly and forthrightly to address what appear to be serious engineering flaws that could endanger drivers of your vehicles is how customers stop walking through showroom doors. It's how plaintiffs lawyers, keen to Toyota's billions in cash stashed around the world, start ginning up their word processors because they see a potentially easy mark for their next product-liability class-action. It's how politicians stop giving you the benefit of the doubt, how your amen corner in the news media turns on you, quickly, how things feel upside down, how the conversation about your products changes, sometimes for years.
Detroit corruption trial shines reveals MonCon, pay-to-play culture
For years we in these parts -- and the small swath of America that bothered to pay attention -- were treated to the inane ramblings of Monica Conyers, the former City Council president who pleaded guilty last June to a five-year bribery conspiracy charge and now is awaiting sentencing. She was, it was implied, not the brightest bulb in the room.
But Sam Riddle, her sidekick and accused co-conspirator standing trial on corruption charges, conjures a different picture: Here's the wife of, ahem, the chairman of the House Judiciary Committee pushing for another $5,000 from the president of a wireless company seeking a loan from a Detroit pension fund. And he'd already forked over $15,000 with the promise the loan would be forthcoming.
"Reggie Barnett testified he felt that if he did not pay Riddle, Conyers 'would be in some kind of jealous mood or something,' and the chances of his company getting a $15 million loan from Detroit's General Retirement System would diminish further," according to a report in today's Detroit News.
"In telephone conversations picked up by FBI agents who obtained a wiretap of Riddle's cell phone, Riddle is heard pressuring Barnett to pay another $5,000 to his consulting company, telling him he needed to make sure his 'strongest advocate' remained 'geeked' about the loan deal. Barnett testified he understood that to mean Conyers."
MonCon's smarts may be debatable. Her grasp of the city's financial reality has long been questionable. Her judgment speaks for itself. But her chutzpah? Practically unrivaled -- and in Detroit politics, that's saying something.
The 'Scott' heard 'round the world reverberates for Dems, labor
Here in the Big Mitten, home to Detroit Auto and all its bad habits, we know how ugly things of our own making can be exposed by sliding revenue and economic calamity. We've lived it the past year -- and a whole lot more.
Could the victory of Republican Scott Brown in the special election to fill the seat vacated by the late Ted Kennedy be a tipping point that releases public frustration with the decades-long marriage of convenience uniting Democrats with public-sector labor? Dan Henninger, writing in today's Wall Street Journal, seems to think so:
"They broke the public's bank. More than that, they entrenched a system of taking money from members' dues and spending it on political campaigns. Over time, this transformed the Democratic Party into a public-sector dependency. They became different than the party of FDR, Truman, Meany and Reuther. That party was allied with the fading industrial unions, which in turn were tethered to a real world of profit and loss."
He continues: "But here's the party's self-destroying kicker: Feeding the public unions' wage demands starved other government responsibilities. It ruined our ability to have a useful debate about any other public functions.
Massachusetts' spending fell for mental health, the environment, housing and higher education. The physical infrastructure in blue states is literally falling apart. But look at those public wage and pension-related outlays. Ever upward."
Sound familiar? It should in places like New York, New Jersey, California and, yes, here in Michigan. Despite the implosion of the Detroit auto industry, the bankruptcy of two automakers and myriad suppliers and the stunning loss of jobs and tax revenue, the push to free precious revenue through structural reform of state government and consolidation of local governments and school districts repeatedly runs into the Democratic-Labor buzzsaw. Have there been some advances here? Yes, a few, however halting and half-measured.
The latest manifestation of this alliance: The exemption, reached recently in discussions at the White House, for most unions from the tax on "Cadillac" health-care plans imbedded in the Senate version of the imperiled health-care bill. Tells you everything you need to know -- they get the benefit and the rest of us get the bill.
Only the pope, president get a tie from Marchionne -- not Pelosi
Evidently Speaker Nancy Pelosi doesn't rate a tie from Sergio Marchionne, whirling around the Chrysler stand in his trademark faded sweater (Is it blue? Or an excessively weathered black?), blue Land's End shirt, dark trousers and brown suede shoes.
Why, the San Francisco Democrat asked the CEO of Chrysler Group LLC, aren't you wearing a tie?
Didn't hear the answer. But Gualberto Ranieri, chief spokesman for Chrysler, explained:
"The only time he dressed up was when he delivered a tractor to the pope and delivered a car to the president of the Italian republic. End of story."
Not exactly: UAW President Ron Gettelfinger piled on, too, proving that hard-boiled union leaders can be just as conservative as everyone else when it comes to sartorial convention (save the embroidered UAW logo on ol' Gettelfinger's white dress shirt).
Next round of GM-UAW talks go down at Motown Cafe
Could a "bromance" be budding between Ed Whitacre and Ron Gettelfinger? Says the United Auto Workers president about the General Motors Co. CEO:
"I like him. He's down to earth, he cuts to the chase and gets to his bottom line. I meet regularly with him."
Turns out, one of their favorite haunts is the Motown Cafe on Jefferson, hard by the Day's Inn -- where Whitacre, the lanky Texas telecome retiree, quickly befriended the chef he calls a great cook.
Talk about the "New GM." In the old days of, say, 12 months ago, relations would be business-like; the GM and the union boss would never meet in a diner for breakfast; and the candor Gettelfinger prizes would instead be filtered between corporate talking points. Funny thing, this mutual respect stuff, and too long overdue ....
Cherry concludes running on Granholm legacy would be the pits
We're eleven months and three weeks (or so) from the end, and the legacy of Gov. Jennifer Granholm's two terms is shaping up to be, well, not much of anything. Forget the "Lost Decade" that is Michigan's economy; she can't even get her two-term deputy to a nominating convention, much less his own term in the governor's chair.
The decision by Lt. Gov. John Cherry to abort his bid to succeed her, confirmed today, is the clearest sign yet that her own party -- starting with Cherry and the Obama White House -- has concluded the G4G record has loser written all over it. The only surprise is that it took this long for the guv's machine, and Cherry's role in it, to recognize the unmistakable signs because they were there.
She got a photo-op or two with the president, but she didn't get labor secretary on Team Obama. She didn't get energy secretary. She didn't get a nomination to the Supremes. And now she's lost any hope of getting her hand-picked heir to succeed her, among the surest signs there are of complete political impotence.
Instead, the prospect of a free-for-all looms. Speaker Andy Dillon, the Redford Democrat that labor (and the guv) loves to hate, is likely to move forward with plans to run. Lansing Mayor Virg Bernero -- borrowing a rhetorical page from BHO's "it's not about Republican or Democrat, labor or business, city or suburb" playbook -- won't have much hope of getting a Democratic nod if he doesn't make it about Democrats and labor ... cuz labor needs to go somewhere.
This is not what a Democratic White House facing the likelihood of bracing losses in the mid-term elections wants to see: the prospect of a wipeout in the state that arguably has been the repository of more federal aid and White House attention than perhaps any other state in the union. Cherry's exit represents an intra-party verdict on the Granholm legacy, a verdict that doesn't need Republicans, business leaders or pundits to join the fray because what the Democrats are doing to one of their own speaks for itself.
Granholm's 'grand bargain' on taxes requires leader who leads
Ya' gotta love the guv: Seven years into her eight-year stint as governor of the economic basket case that is Michigan, Jennifer Granholm still talks like a bureaucrat who actually believes bureaucrats can make the wisest economic decisions the state's future.
Based on what? The Big Mitten's flatline-to-negative growth rate in every year this decade? The stellar record of job creation by her Michigan Economic Development Corp.? The strong support she and her administration get from the Michigan business community? The corporate exodus during her tenure -- Comerica, Pfizer, Kmart and Volkswagen of America? The wise, competitive tax-and-regulatory regime lambasted by a recent survey of CEOs for being "a disaster?" The economic successes of the Soviet Union?
And yet, the potted plants that are (most of) the Lansing press corps dutifully nod at her suggestion that the state is making progress picking winners (alternative energy, natch) and losers (anything industrial/automotive) in the state economy. They inquire about her plans after leaving office, as if there's any doubt she'll leave the state, too, because that's a time-honored tradition for Michigan leaders in business (see the Detroit disapora down in Naples) and politics (with the arguable exception of Bill Milliken). They report her readiness to support a "grand bargain" to restructure Michigan's tax code -- so long as the end-product reaps as much cash for the state as the current structure did two years ago.
Just asking, but is anyone curious why a governor with some of the strongest executive powers of any sitting governor in the nation didn't long ago lead a comprehensive overhaul of Michigan's tax structure -- on business, on personal property, on income, you name it? Answer: It'd be too hard to implement, for one thing, and it might make her more unpopular than she already is.
Business people won't say so cuz the potential reprisals are not worth the aggravation, but they are way past disgusted with the gubernatorial cluelessness about how business operates and makes investment decisions. (So are more than a few people in the guv's own party.) Now, as the budget crisis moves from critical to terminal, the state's CEO signals a readiness to reach a "grand bargain?" Where, it's fair to ask, have you been, governor?
If Michigan was a for-profit corporation instead of the revenue-gathering arm of public-sector unions, the board of directors would have shown her the door by now. Not because she doesn't work hard or take the job seriously or mean well, because she does all of that. But because a) good intentions are a poor substitute for action and b) she lets her ideological world view and a self-evident belief that she and her people can best divine the economic future dictate policy. Or not.
Won't work. Capital goes where it is invited, stays where it's wanted and creates jobs along the way. What we're seeing in the guv's year-end presser are two things: first, requisite optimism because that's her job. Second, the makings of a roadmap for the Big Stall, the play that will enable her to exit -- stage left, of course -- and leave the mess for her successor.
Quote of the day: "'I don't know how to make people vote the way I want them to vote,' Granholm told The Detroit News, adding she recommends the next governor have legislative experience." That or at least a governor who knows how a legislature works. Sheesh.
GM kills Saab, capping 20 years of woulda, coulda, shoulda
You could see this on coming all the way from Trollhaettan. Confirmation today that General Motors Co. is pulling the plug on Saab Automobile AB, the Swedish automaker it has controlled for 20 years, should not be a surprise to anyone who's been paying attention. Its demise, confirmed today, symbolizes a truism in the industry that is too often overlooked -- you can't build something substantial out of very little.
And if there's anything that GM put into Saab it was just that -- very little. It starved the brand for new investment, forward-leaning technology and the high standards required to compete with the best. The list of uglies is long: In need of a compact, or so it thought, it married the quirky Swedish brand "born from jets" to the underpinnings of a Subaru, begetting a trans-national Frankenstein that tarnished the Saab brand instead of burnish it.
In need of an SUV, or so the marketing geniuses thought, GM converted a Chevy Trailblazer into a Saab 9-7X. Nevermind how much of a figurative silk purse Saab's product gurus made of the automotive sow's ear they were given, the 9-7X represents another metal spike through the heart of Saab. And yet ...
... it took a general manager of Saab Cars USA -- after the "Saabaru" debacle and after the 9-7X embarrassment -- to pitch a perfect fit to get a then-prince of GM's global product apparatus, departed GM-Europe boss Carl-Peter Forster, to green-light an all-wheel drive version of the core 9-3 sedan. The car appeared in 2008, 19 years after GM acquired the first 50 percent of Saab.
You can't build something with nothing. GM, in theory, positioned Saab against the premium Europeans -- Audi, BMW, Mercedes-Benz and cross-town rival Volvo. All of them offered multiple models with all-wheel drive packages, premium materials and the newest infotainment technology. Not Saab, whose future came too little and way too late.
The worst part, especially for Saab's employees and its dealers: GM has long known better. More than a decade ago, the guy who got the fun job today of explaining GM's decision to euthanize Saab -- John F. Smith, vice president of corporate planning and alliances -- was the same guy who rammed through a $4 billion-plus plan to revamp Cadillac as its then-division chief. His plan included a new plant; a new multi-product "architecture" that spawned the CTS, SRX and STS, including all-wheel drive variants for each model; an all-new design philosophy; and a commitment to make Cadillacs legit technical peers of the best in its segments.
Drive a new CTS wagon today and you'll know GM has pretty much succeeded. Drive an '08 or '09 Saab 9-3 Aero -- the top of the line -- and you'll know they pretty much haven't. Which, unfortunately, is the bottom line to Saab's unfortunate demise.
