Opinion

The Great Debate

Toyota’s “exceptionalism” came back to bite

e-neidermeyer– Edward Niedermeyer is the editor-in-chief of The Truth About Cars. The views expressed are his own. –

(Paragraph 7 corrected on February 10.)
Life rarely offers easy answers to important decisions, but up until a few weeks ago, it seemed that new cars buyers simply couldn’t go wrong buying a Toyota. For decades, the Japanese automaker had built up an unmatched reputation for quality and reliability, on its way to becoming the best-selling automaker in the U.S and the top car producer worldwide. A Camry might not have been a particularly glamorous or exciting choice of vehicles, but consumers could buy one without doing a lick of research, and expect it to run reliably and efficiently for years. At least they could until a flurry of defects and recalls suddenly brought Toyota’s untouchable reputation back down to earth.

In a matter of days, Toyota’s good favor in the eyes of consumers has been replaced with suspicion and doubt. Having first ignored reports of unintended acceleration in its vehicles, Toyota then blamed floor mats before finally recalling some eight million gas pedals worldwide. When a brake software problem on the Prius hybrid emerged within days of the gas pedal recall, and Toyota’s leadership moved slowly to get in front of the burgeoning PR nightmare, the automaker’s spotless image suddenly found itself in shreds.

This rapid reversal of Toyota’s fortunes indicates that its reputation as an unquestionably logical choice in car brands was already wearing thin. Having refined the most efficiency and quality-focused manufacturing system in the industry by the late 1980s, Toyota responded to currency fluctuations in the early 90s by cutting costs on the design-end of the business.

According to the company’s logic at the time, a “lean” manufacturing operation couldn’t afford to build “fat” or “overquality” products in the face of intense pressure on profitability.

The uncharted waters of government ownership

lou-lataif– Louis E. Lataif, a former president of Ford Motors of Europe, is dean of the Boston University School of Management. The views expressed are his own. —

Government ownership of General Motors (60% U.S. and 12% Canada) will be fraught with difficulties.

Given the large taxpayer stake in the company, it will be impossible for elected officials to stay out of the fray. Congress inevitably will interject itself in business decisions affecting employment, the kind of vehicles the company builds, or the company’s position on nationalizing health care – just as it is now asserting itself on the question of dealership closures.

Revival of U.S. automaking awaits if UAW will follow Toyota

morici– Peter Morici is a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission. The views expressed are his own. –

General Motors and Chrysler are on the anvil of history. United Auto Workers President Ron Gettelfinger holds the hammer and will determine whether they emerge more competitive or shattered in pieces and sold to foreign investors.

In December, George W. Bush granted $17.4 billion in temporary loans on the condition those firms convert two-thirds of their debt into equity. Another condition was to persuade the UAW to accept stock for one half of what these companies owe to fund retiree health care and align wages, benefits and work rules with those of the Japanese automakers operating in the United States.

Green business and the conscience premium

bryan-welch-ogden-publicationsWelch is the publisher and editorial director of Ogden Publications, home to Mother Earth News and Utne Reader. Any opinions expressed are his own.

Green business is arguably the most important marketing innovation of the century. And it’s here to stay.

When we talk about green business, we’re really talking about the provenance of the products and services we sell. A business is green if its creators take into account its impact on the environment, and on society. Like a historic work of art, a pair of running shoes now has a provenance – a chain of collaborators, stakeholders and events that led to its appearance in your closet.

Don’t let U.S. automakers delay restructuring

morici– Peter Morici, a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission, testified before the Senate Banking Committee on the proposed bailout for the domestic auto industry. The following is his written testimony to the committee. The opinions expressed are his own. —

The domestic automobile industry has two major components—the Detroit Three and the Japanese, Asian and European transplants that also assemble and source components in the United States and Canada. Both contribute importantly to the vitality of our national economy. Ensuring these companies have the means to compete globally is vitally important.

The gradual erosion of the market shares of the Detroit Three over the last several decades stems from higher labor costs—having origins in wages, benefits and work rules–poor management decisions, and less than fully supportive government policies. Although the U.S. government has been sympathetic to the needs of the industry, the industry has fallen victim to currency manipulation and other forms of protectionism in Japan, Korea, India, and China.

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