Toyota Motor Corp.'s quality crisis is exposing -- and exacerbating -- a long-simmering internal feud. The battle pits the founding Toyoda family against a group of professional managers, each blaming the other for the auto maker's woes.
Behind the scenes in recent weeks, the skirmishing has grown intense. President Akio Toyoda, the 53-year-old grandson of the founder, has tried to push out one of the nonfamily executives: his predecessor as president, Katsuaki Watanabe, now vice chairman.
Not long after the company made one of its massive safety recalls in mid-January, Mr. Toyoda suggested to Mr. Watanabe, through an intermediary, that the former president leave the auto giant and instead run a Toyota affiliate, according to an executive who says he was told about the move by Mr. Toyoda.
Mr. Watanabe refused.
The standoff, which hasn't been reported before, is a dramatic example of how the old split between the two camps is bubbling to the surface amid Toyota's crisis. The feud is a distraction for a divided leadership as officials struggle to regain their footing after three months of attacks unprecedented in the company's 75-year history.
Mr. Toyoda and his allies have been saying openly that when he took the top job last year after a 15-year hiatus for the Toyoda clan, he inherited a company weakened by nonfamily predecessors who sacrificed quality for faster growth and fatter margins.
The problems arose when 'some people just got too big-headed and focused too excessively on profit,' Mr. Toyoda said at a Beijing news conference in March. He acknowledged the 'ultimate responsibility for mistakes . . . lies in me.'
A week earlier, Jim Press -- once the top Toyota executive in the U.S. before he jumped to a rival auto maker -- issued a statement declaring: 'The root cause of their problems is that the company was hijacked, some years ago, by anti-family, financially oriented pirates.'
Those executives 'didn't have the character to maintain a customer-first focus. Akio does,' said Mr. Press, who had a run-in with nonfamily Japanese bosses several years ago.
A Toyota spokeswoman declined to comment on the infighting, saying: 'We do not discuss executive changes unless they are formally decided.' She declined to comment on the statements by Messrs. Toyoda and Press, or to make Mr. Watanabe available for comment.
Privately, the nonfamily managers have been waging their own campaign within the Toyota group. They say Mr. Toyoda never publicly opposed their profit-growth strategy when the company was widely praised for making big money and surpassing General Motors Corp. to become the world's No. 1 auto maker. They say Toyota's current troubles are less a quality crisis and more a management and public-relations crisis of Mr. Toyoda's making, reflecting their longstanding warnings that he wasn't ready to run a global corporation.
'Is Akio ducking criticism of being a beneficiary of nepotism by accusing us and trying to justify his ascendancy to the top job?' one of Mr. Watanabe's top aides said. 'One of our biggest social responsibilities is to generate profits and pay taxes. To criticize the company's effort to maximize profits and thus taxes is just complete nonsense.'
Hiroshi Okuda, a nonfamily president who ran the company from 1995 through 1999, has told at least two associates since the recalls of cars involved in sudden acceleration incidents earlier this year: 'Akio needs to go.' The 77-year-old remains a key company adviser even though he gave up his board seat last year.
Toyota declined to make Mr. Okuda available for comment. The Toyota spokeswoman declined to comment.
Takahiro Fujimoto, a professor of economics at Tokyo University who has studied Toyota extensively, says airing problems openly is very much part of Toyota's corporate culture focused on kaizen, or continuous improvement. 'But it's highly unusual for anybody inside Toyota to publicly criticize certain individuals by name,' or to criticize in a way that it's easy for anybody to identify the targets.
The feud dates to the mid-1990s, when the family relinquished control of the chief executive's office for the first time since Eiji Toyoda, the cousin of the founder, became president in 1967. Non-Toyodas also ran the company from 1950-67.
By the time Akio's uncle, Tatsuro, stepped down as president in 1995, after a stroke, the company was losing market share and risked posting its first loss since 1950. It was vulnerable to a weak Japanese economy, trade friction with the U.S., and a strong Japanese currency that crimped exports.
A series of non-Toyodas took the helm, beginning with Mr. Okuda in 1995 and ending with Mr. Watanabe in 2009. During their terms, the company revived financially and emerged as one of the most admired and studied companies in the world.
The gist of the Okuda-Watanabe strategy was to take Toyota's globalization efforts, launched under the previous generation of family management, to new levels. Even though the company had begun to build factories in the U.S. and other markets in the 1980s, it still was seen as largely insular and Japan-focused.
In 1996, Mr. Okuda and aides unveiled a new strategy dubbed the '2005 Vision.' They aimed to retool the auto maker over the coming decade, growing rapidly while relying less on exports and more on factories producing locally in target markets, from Argentina to Thailand to the U.S. Mr. Watanabe was one of the authors of the plan.
To realize this 10-year vision, the executives devised interim 'global master plans' to assign resources efficiently to different divisions, along with 'global profit management' plans that required sales executives around the world to attain certain profitability goals.
The 2005 Vision also pushed Toyota to implement kakushin, or revolutionary innovations, in vehicle design and manufacturing. That included efficiency drives to reduce costs, not only through conventional means, such as simplifying designs and using cheaper materials, but also by changing the way cars are engineered. For example, engineers were pushed to combine functions into fewer parts and systems. Their aim: cut the number of components in a car by half.
In 2002, the plan morphed into the '2010 Vision,' aiming for 15% global market share by the early 2010s, an ambitious jump from the 10% mark Toyota had at the time. Toyota has yet to achieve this goal. Its consolidated group market share rose to as high as about 13% in 2008, according to CSM Worldwide, a consulting firm that tracks auto makers.
The effects of those measures were phenomenal. Starting around 2000, the company's global sales began growing by up to 600,000 vehicles a year, more than the annual overall volume achieved by Volvo.
During this 15-year non-family reign, Toyota achieved other milestones: operating profit margins zoomed to an industry-leading high of 8.6%. In 2008, Toyota displaced GM as the world's biggest auto maker by unit sales.
As part of his strategy, Mr. Okuda sought to diminish the family's role. According to executives close to him, Mr. Okuda said founding-family dominance was an outdated concept -- especially when the family controlled less than 2% of the stock in the publicly traded company.
At the peak of his power, Mr. Okuda publicly was frank about that belief. 'The Toyoda family will eventually become a 'shrine' to the company's foundation, to which we will pay respect once a year,' he told The Wall Street Journal in a 2000 interview.
Asked then about future prospects for Mr. Toyoda, then a 43-year-old general manager, Mr. Okuda said: 'Nepotism just doesn't belong in our future.' He elaborated: 'Akio-class talents are rolling around all over Toyota, like so many potatoes.'
At the time, Mr. Toyoda seemed to have been sidelined. When he was assigned to lead Toyota's Chinese operations in 2001, China was still a backwater in Toyota's global strategy. Mr. Okuda, by then Toyota chairman, likened the job to 'mopping the floors' -- a safe place for grooming a scion with more ambition than experience, according to a separate Journal interview in 2003.
But Mr. Toyoda fixed the troubled Chinese subsidiary and put it on a path for growth. He was then promoted in 2005 to the position of executive vice president, where he had broad responsibilities, including quality, product management, purchasing and global sales.
Even as he climbed the ladder, Mr. Toyoda said little in top management meetings, according to some nonfamily executives. As Toyota made progress, the non-family executives began dismissing Mr. Toyoda and treated him as a not-so-bright spoiled rich kid, say several non-family managers.
Executives close to Mr. Toyoda dispute the notion that he was overpowered by top management. While the company's financial reports were improving, a number of vehicle recalls signalled that its famed quality was slipping, and Mr. Toyoda began to sound the warning bell. On Dec. 2, 2005, the end of the year when Mr. Okuda's 10-year vision was coming to fruition, Mr. Toyoda gave an unpublicized, internal speech questioning the new direction.
Talking to engineers and mid-level executives, Mr. Toyoda said the rapid expansion exceeded the company's ability to assure the quality and reliability of each model. He called on the engineers, seated inside an auditorium at Toyota's global headquarters, to shift their mindset and attain the 'resolve to make a big turn from emphasizing volume to quality,' according to a summary of the speech reviewed by the Journal.
Top executives at the time say Mr. Toyoda never took such complaints directly to them.
In 2008, the question of family vs. nonfamily management came to a head as Mr. Watanabe was preparing to retire as chief executive. Mr. Okuda, then a board member, angled for a close aide, another nonfamily executive, to take the job. Shoichiro Toyoda, a former president who remained an influential adviser, weighed in for Akio, his son, according to senior Toyota executives.
In January 2009, the company announced Akio Toyoda would replace Mr. Watanabe as president in June. Taking charge at 53 years old, Mr. Toyoda became Toyota's youngest chief executive since his grandfather became president in 1941 at age 47.
The younger Mr. Toyoda declared as one of his first priorities undoing many of his predecessor's policies. He began by signaling to underlings that he didn't share Mr. Watanabe's informal goal of hitting two trillion yen or more in annual operating income. He immediately killed the 'global profit management' plan, associates say.
The reality of Toyota's quality problems -- the main battleground inside the company today -- is a bit ambiguous.
Two separate surveys conducted by J.D. Power & Associates show the Toyota brand quality has actually improved over the past decade, measured by a decline in the rate of owner complaints. This occurred even as the number of vehicles the company recalled around the world skyrocketed in that time.
The surveys also show that Toyota rivals improved faster. In 2000, Toyota's luxury brand Lexus placed first in quality rankings for used-car owners, while the Toyota brand ranked fourth. By 2009, Lexus fell from the top spot, ranking behind Buick and Jaguar, while the Toyota brand again placed fourth. In quality rankings for new-car owners, the Toyota brand in 2000 tied with BMW for fourth. In 2009, Toyota ranked sixth.
Mr. Toyoda's supporters blame the slippage in relative quality rankings -- as well as the sharp rise in recalls -- on the company's previous non-family managers. It takes two to three years to develop a new car, so the models experiencing problems were developed before Akio Toyoda took the helm last June.
The nonfamily executives acknowledge they made some mistakes. One says a large number of inexperienced contract engineers hired from outside agencies -- an effort to save money as they tried to boost engineering capacity -- led to at least some of the increase in quality glitches.
But the non-family managers blame Mr. Toyoda's management style -- both external and internal -- as much as anything for letting the defects turn from a fixable problem into a full crisis.
Mr. Toyoda's in-house detractors say the president has created an informal team of loyalists, making it tough for managers trying to communicate through the formal channels. One nonfamily manager says the current executive structure operates like a 'shadow management team,' doubling up information and management.
In terms of handling the American public, politicians and press, they say Mr. Toyoda was slow to address publicly the controversy. And when he did finally speak out, they say, his statements were widely criticized as vague and halting.
Mr. Toyoda's supporters say, on the contrary, he's been clear and direct about the direction he wants to follow. At a press conference last month, Mr. Toyoda said the previous expansion push may have caused it to scrimp on quality, compromising its just-in-time production system, for example. 'I would like to make sure we re-embrace those basics and rebuild the foundation of Toyota and its production system,' he said.
近幾週來﹐雙方的紛爭暗中變得激烈起來。豐田公司創始人53歲的孫子、現任豐田總裁豐田章男(Akio Toyoda)試圖將一位非豐田家族成員高管擠出管理層──前任總裁、現在的副董事長渡邊捷昭(Katsuaki Watanabe)。
私 下裡﹐非豐田家族管理人員一直在豐田集團內部開展自己的宣傳活動。他們說﹐當公司因大幅盈利、超過通用汽車公司(General Motors Corp.)成為全球第一大汽車生產商而獲得普遍讚譽的時候﹐豐田章男從未公開反對過他們利潤增長的戰略。他們說﹐豐田公司目前的困境與其說是質量危機﹐ 不如說是豐田章男造成的管理和公關危機﹐折射出他們一直以來認為豐田章男沒有準備好運營一家全球企業的警告。
“2005 願景”還促使豐田公司在汽車設計和生產中實施“革新”(kakushin)。這包括提高效率、降低成本﹐其實現途徑不僅僅是簡化設計、降低材料成本等傳統 手段﹐還有改變汽車的建造方式。例如﹐工程師們被要求用更少的部件和系統來實現各種功能﹐目標是要把汽車的組件數量減半。
2002年 ﹐“2005願景”演進為“2010願景”﹐目標是到2010年代初期取得15%的全球市場份額。相比當時豐田公司10%的份額﹐這是一個很有野心的跳 躍。目前豐田公司還沒有實現這一目標。據跟蹤汽車生產商的咨詢公司CSM Worldwide稱﹐2008年﹐豐田公司的集團綜合市場份額達到了13%左右。
與 豐田章男關係密切的高管駁斥了認為他被高管層壓制的看法。雖然豐田公司的財報有所好轉﹐但多起車輛召回事件表明豐田的高質量聲譽正在下滑﹐豐田章男也開始 敲響警鐘。2005年12月5日﹐在奧田碩10年願景即將實現的那一年年末﹐豐田章男發表了不公開的內部講話﹐對這個新的方向提出質疑。
2008 年渡邊捷昭準備從首席執行長的位置上退休時﹐家族管理還是非家族管理的問題浮出了水面。當時任董事會成員的奧田碩試圖讓與他關係密切的一名副手接任﹐此人 也非豐田家族成員。豐田高管說﹐曾任豐田總裁、當時仍擔任頗有影響力的公司顧問的豐田章一郎(Shoichiro Toyoda)則支持其子豐田章男。
消費研究機構J.D. Power & Associates分別進行的兩項調查顯示﹐從車主投訴率下降來看﹐過去十年間豐田品牌質量實際上有所提升。這種情況也剛好是豐田公司在全球召回汽車的數量不斷飆升之際。
調 查還顯示﹐豐田的競爭對手提高更快。2000年﹐豐田的豪華車品牌雷克薩斯(Lexus)在二手車主的質量評級中排名第一﹐豐田品牌則排名第四。2009 年﹐雷克薩斯的冠軍位置不保﹐排在了別克(Buick)和捷豹(Jaguar)之後﹐豐田品牌再度排在第四位。在新車車主的質量評級中﹐豐田品牌2000 年與寶馬(BMW)並列第四﹐2009年豐田排第六。
Toyota Delayed a U.S. Recall, Documents Show
Published: April 11, 2010
DETROIT — The sense of frustration — and urgency — in the e-mail message was palpable.
“I hate to break this to you,” a Toyota executive wrote, “but we have a tendency for mechanical failure in accelerator pedals of a certain manufacturer on certain models.”
The message continued: “The time to hide on this one is over. We need to come clean.”
The message was written in January by Irving A. Miller, then a group vice president for Toyota Motor Sales U.S.A., to another Toyota staff member. Three days later, the carmaker, bowing to pressure from Congress, federal regulators and consumers, issued a recall on sticking pedals affecting millions of vehicles.
The cry for action by Mr. Miller, disclosed in documents made public for the first time last week, came at the end of an extraordinary four-month period for the Japanese automaker. In that time, federal regulators say, there had been deliberate efforts by company officials to keep information about possible defects from the government.
While Toyota’s pattern of dragging its feet over the years on safety issues has drawn recent attention, the decision by transportation authorities last Monday to seek fines against Toyota provides an unusual close-up look at the company — well known for its opaque corporate culture — as it handled its biggest safety crisis since it started selling cars in the United States in 1957.
In announcing that he would seek the maximum $16.4 million fine over the sticking pedal recall, Transportation Secretary Ray LaHood, who has repeatedly called Toyota “safety deaf,” zeroed in on the months between late September and mid-January for particular criticism.
New details about the company’s actions — based on government timelines, 70,000 pages of Toyota documents and interviews — show the degree to which regulators say the company stalled in fulfilling its recall pledges and treated safety concerns in the United States differently from those in Europe and Canada.
The documents Toyota provided to Congress and the Transportation Department are still being reviewed by federal investigators for possible additional fines. On Friday, the National Highway Traffic Safety Administration released a letter to Toyota indicating that it might seek a second fine related to the recall for sticking pedals.
The materials outline the company’s efforts to juggle two sets of recalls, one for the sticking accelerator pedals and the other for floor mats blamed for sudden acceleration problems.
On Monday, Sept. 28, a warm early autumn day in Washington, officials at Toyota met with the safety agency and said the company would recall cars whose floor mats could become entangled in accelerator pedals. The agency pressed Toyota to also announce how it would repair the cars, which Toyota did not do until Nov. 25.
The discussions on floor mats began the four-month period in which the carmaker and the agency were repeatedly at odds over Toyota’s handling of its mounting safety issues related to both recalls.
Along with Toyota’s tardiness, that period has raised questions about whether the traffic safety agency was remiss in not pushing the company to act sooner. While it has become the norm in Washington to let automakers recall cars voluntarily rather than order safety measures, which can require years of investigation and a formal finding of a defect, some lawmakers suggested that the federal government shared the blame.
“The bottom line is that both industry and regulators failed,” said Kurt Bardella, a spokesman for Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform.
Toyota officials in Japan, who are responsible for recall decisions, declined to comment for this article.
But the documents and chronologies show the company had ample knowledge of incidents of sticking pedals well before its recall. They also show that Toyota treated consumers in the United States differently from those in Europe and Canada when it came to fixing the problems of sticking pedals and floor mats.
On Sept. 29, the day after regulators say Toyota had pledged to order a floor-mat recall, the company issued a safety advisory — a step short of a recall — to the owners of 3.8 million vehicles in this country, warning them that their floor mats might become entangled in the pedals.
Rather than say how it would fix the problem, as regulators wanted, Toyota told those owners to remove the floor mats until the company could come up with a remedy. Toyota said a recall would come later.
Yet on that same day, Toyota told dealers in European countries that it was changing the way it would build cars sold there, and outlined the repair procedures the dealers should follow in the event of sticking gas pedals, sudden engine surges or unexpected acceleration, the documents show. And a week later in Canada, Transport Canada, the Canadian regulator, issued a recall of more than 378,000 vehicles for the floor mat issue. It told owners there how those vehicles would be fixed: by changing the shape of the pedal, and in some cases, reconfiguring the floor. Some Canadian cars also might get brake override systems, meant to stop the car if it accelerated unexpectedly, the agency said.
All the while, the complaints about acceleration problems continued in the United States. From October through January, Toyota told the traffic safety agency that the company had received field reports about the same sticking pedals issue it had warned dealers about in Europe.
James E. Lentz III, the president and chief operating officer of Toyota Motor Sales U.S.A., told Congress in February he did not know of the reports of sticking pedals in Europe until January. But Toyota’s own chronology shows that engineers in the United States were told about those pedals as far back as April 2009.
A spokesman for Toyota in the United States, Brian Lyons, said on Friday, “Back in that time frame, they had felt that this was a uniquely European market issue.”
Meanwhile, Toyota issued its recall for floor mats in the United States on Nov. 2, but it did not outline the remedy for several more weeks. By mid-December, traffic safety officials were so frustrated with the back-and-forth over the issues that they decided to fly to Japan to urge the company to act more quickly.
Still, it took another month for Toyota to acknowledge to the agency that its pedals might have a “dangerous” sticking defect, according to the agency. That acknowledgment came on Jan. 16, the same day as Mr. Miller’s plaintive e-mail message.
“We are not protecting our customers by keeping this quiet,” wrote Mr. Miller, a tireless defender of Toyota who for years was its public face in this country.
It would require one more meeting, on Jan. 19 at the headquarters of the Transportation Department in Washington, before the company reached a decision to order the recall.
Toyota executives, including Mr. Lentz and Yoshimi Inaba, the president of Toyota North America, left that meeting without agreeing to take action, agency officials said, but they agreed to a recall during a telephone call that evening. Two days later, on Jan. 21, Toyota recalled 2.3 million vehicles in the United States for sticking pedals, and issued a similar recall in Canada.
Appearing before Congress a month later, the company president, Akio Toyoda, said his company had “pursued growth over the speed at which we were able to develop our people and our organization.”
He told lawmakers, “I am deeply sorry for any accidents that Toyota drivers have experienced.” Since then, Toyota has shifted its public posture toward blaming miscommunication for its problems.
“Once we thoroughly explored and tried to identify the root cause, we came to realize the problem was rather with communications than with quality itself,” Mr. Toyoda told investment analysts on Wednesday.
In a statement later that day, responding to questions about the e-mail message by Mr. Miller, who has since retired, Toyota said much the same. “We have publicly acknowledged on several occasions that the company did a poor job of communicating during the period preceding our recent recalls,” the company said.