Tune in to CNN on any given day, or to any other network for that matter, and there’s a good chance Toyota’s recall troubles will be near the top of the newscast. Whether it’s sticky gas pedals, bad brakes or new government investigations, the world’s top automaker has given news media plenty of material.
Media coverage has been intense , with much of the focus on what Toyota knew, when, and why they were so slow to react. What started as a recall has turned into a full-fledged scandal. And all the attention is raising questions about whether the company, and Japan for that matter, is being treated fairly.
The issue is clearly on the minds of some in Japan. Government minister Mizuho Fukushima said in an interview with Bloomberg News last week if Toyota had responded sooner, it wouldn’t have resulted in Japan and Toyota bashing. There are those in Japan who suggest the U.S. response was really an attempt to discredit Japanese car makers and boost domestic ones.
True, Toyota’s troubles seem to have evolved far beyond automotive shortcomings. They’ve evolved into a PR disaster. Lawsuits have been filed, government investigations are underway, and U.S. lawmakers have jumped into the fray.
It shouldn’t be a surprise that discussions about Toyota’s recent woes have moved beyond the cars themselves. Companies can be more than just a business. Take the recent takeover battle between Kraft and Britain’s Cadbury. For some in the UK, Cadbury was more than just a chocolate maker, it was an icon – and they were less than thrilled about a U.S. corporate giant swallowing it up. In Japan, Toyota is more than just a car maker. It’s a company that symbolizes the nation’s rise to economic might – a pillar of Japan Inc.
But underneath the politics, the rhetoric and the pride , there is something that shouldn’t be forgotten. Recalls can be serious business, especially if the problems raise safety concerns. And, unfortunately for Toyota, these problems do. Is Toyota the victim of a bandwagon bashing? Maybe. In the end does it really matter? No.
Toyota may be a Japanese company, but it also is a global company operating in an age of 24-hour news cycles, Twitter and Facebook. To maintain its position as a global leader, it must maneuver in the modern media age with same drive that turned it into the largest automaker in the world.
“Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole.” The clear message from the European Union statement left no one in any doubt. When it comes to Greece, and other Eurozone members, we will deal with the problem, thank you.
Then tucked away, in the middle of the statement, the acknowledgement that the European Commission would draw on the experience of the IMF in monitoring the position. Which left me wondering…why didn’t the IMF just deal with the whole sorry mess in the first place?
The IMF’s very raison d’etre is to help countries re-build economies after years of mis-management. It has decades of experience of sorting out these problems.
There's hardly a continent in the world that hasn’t felt the lash of the IMF’s reform programs, usually imposed under threat of withholding vitally needed funds.
The Fund’s own Web site admits it lends to “countries in severe financial trouble...helping a member country avoid sovereign default…something that would be extremely costly both for the country and possibly for other countries through economic and financial ripple effects.”
Have you ever read a better definition of the situation facing Greece and the Eurozone?
Indeed, the IMF has been monitoring Greece for years through the regular Article IV process, with a prescient warning of events that have now happened.
In 2006 it warned: “The current account deficit has widened to an unsustainable level.” Then in 2007: “Private sector credit has risen very rapidly and inflationary pressures have continued, resulting in a gradual but steady erosion of competitiveness."
This was an accident everyone knew was going to happen.
So why not let the fund dig deep and do the dirty work? Politics pure and simple.
It would be embarrassing for the EU and Eurozone to admit that it could not run economies in its own backyard. Greece has been allowed to run Olympic sized rings round the strict rules of Euro membership thus vitiating the Eurozone and creating the current crisis.
For the IMF to ride to the rescue would be a stunning admission of failure, even though EU countries are members of the Fund and are entitled to its assistance.
There is also the heavy involvement of French presidential politics. IMF Managing Director Dominique Strauss-Khan might well stand as the socialist presidential candidate against Nicolas Sarkozy in 2012.
The last thing President Sarkozy wants is for Strauss-Khan to be seen as the savior of the Eurozone. So the IMF is relegated to the role of “technical assistance” in helping the European Central Bank and European Commission “monitor” the situation.
In the past two decades the IMF has lent money to Russia, Argentina and Brazil. It has defused financial crises from Asia to Latin America and Africa. The Fund is now the G20’s preferred group to coordinate member countries’ strategies post-recession.
In recent years it has even reformed its bad cop image to be the more friendly face of international lending.
With its vast experience of implementing macro-economic reform the IMF is uniquely suited to whipping Greece and any other euro-miscreants into shape, without worrying too much about intra-continental rivalries. But it won’t be allowed to.
The EU, with a Panglossian view of its own abilities and an inability to recognize its practical limitations, remains stubbornly firm in saying 'non'. It should let the IMF get on with the job before any more damage is done.
Pilots at Lufthansa, one of of the world's largest airlines, went on strike Monday, grounding hundreds of flights per day.
Thousands could be affected by a four-day strike.
The four-day walkout by Vereinigung Cockpit, the pilots' union, came after a last-ditch effort at negotiations over pay and job security failed, the company said.
The strike threatened to disrupt travel on more than two dozen partner airlines, including United, U.S Airways and Continental, later on Monday. About 800 of 1,800 scheduled flights per day through Thursday have been canceled, the company said.
Cockpit said strike action had been supported by about 94 per cent of those who had taken part in a ballot.
Are you scheduled to fly next week with Lufthansa?
Are you worried your plans might be put on hold? Would you be angry if a strike happened?
We want to hear your stories of how a strike might affect you - please leave your comment below.
Lufthansa has also been responding to some of your questions and complaints directly via this blog, so there's a strong possibility that what you submit will get a response.
Toyota President Akio Toyoda said he has no plans to appear before a U.S. Congressional committee next week, despite pleas for him to show.
His comments came during a news conference where Toyoda addressed reporters for the third time in two weeks about the massive global recall.
Toyota has recalled more than 8.1 million vehicles worldwide for problems related to sudden acceleration and unresponsive brake pedals, among other things.
The company has apologized for the safety lapses and pledged to repair the recalled vehicles quickly.
Still, U.S. lawmakers and consumer groups are furious with the automaker and have already launched dozens of class action lawsuits against the company.
We want to know what you think.
Are we being too tough on Toyota? Do you think there's a sense that consumers are ganging up on the automaker?
NEW YORK CITY – Let's face it: the news these days is pretty depressing. High unemployment, spiraling deficits, lawmakers quitting because the mood is so poisoned in Washington. So, it was a breath of fresh air when I sat down with Jack Dorsey, co-founder of Twitter (@jack) to talk about his new company Square.
You might think that someone who has achieved so much so young might be… well… a little self-important. But I found the exact opposite. When I met Dorsey, he was passionate about his work, polite and generous with his knowledge – basically a really really NICE guy. Maybe it is his mid-western background that keeps him grounded, I don’t know. But it was refreshing.
Square, Dorsey’s new project is looking to take mobile banking to a new level. They have developed software and a small hardware device that will allow anyone will a portable computer or smart phone to accept credit-card payments. If you meet a friend for dinner and have no cash, you can whip out your card and pay them right there on the spot.
In the demo we did, Dorsey charged me $4 for the interview (well $3 and I gave him a $1 dollar tip!).
Banking through mobile phones is not new in Africa, but those of us in Europe and the U.S. are a bit behind. This payment system hopes to change that. Square is beta testing with iPhones now, but plans to expand to Blackberries, Android and laptops and officially launch this summer.
The day I interviewed Dorsey, we met at one of his local haunts, Third Rail coffee shop on Sullivan Street. The two proprietors are guys who left their former jobs in the pursuit of perfect cup of java (and they’ve come pretty close!).
Dorsey and I then talked about Square, the competition (a handful of other companies are also working on mobile payments systems) and tech start-ups and I left feeling… well… hopeful.
Despite all the gloom and despair, New York City is humming with entrepreneurs. Some are chasing their own dream, some working on new ideas that have the potential to radically change the way we live/do business. And there isn’t any economic data that captures that. No monthly government reading that measures innovation. It is important to remember that when you read yet another headline about sub-par growth and lost jobs (even if I am the one writing, or saying, it!).
Toshiro Era doesn’t look like a radical. Dressed in his conservative blue blazer and tie, he looks like your average businessman in Japan.
But when he starts talking about his plans for corporate Japan, “radical” is among the words that leap to the minds of Japan, Inc. watchers.
Don’t lie. Move quickly. Be transparent. Allow in the media. Get your CEO out front early, even if there’s no consensus.
That’s Era’s message as he lectures two dozen senior managers at a food manufacturing plant two hours outside of Tokyo. It’s the opposite message most of the graying men in this room have heard their entire lives in corporate Japan. They need to change when crisis hits, argues Era.
“Japan is a homogenous and monolingual society. We assume we can gain understanding if we explain well later, even if we don’t talk about it immediately. Unlike Western companies, Japanese companies tend to specify the cause of the problem and fact-find internally first, before coping with the crisis. This move looks very slow and it is the worst move you can make when it comes to crisis management. Japanese companies, especially a conservative company like Toyota, will misstep,” said Era.
Temple University Professor and Japan scholar Jeffrey Kingston says Toyota followed the secretive rules of corporate Japan, a culture that closes off amid challenges instead of opening up.
“In Japan, there has been a greater movement towards more transparency, more accountability, better communication, but it’s a slow movement. This case highlights how much farther it has to go,” said Kingston.
Former National Highway Traffic Safety Administration administrator Joan Claybrook says when safety problems with Toyota’s cars began to emerge, Toyota as a corporation closed ranks.
The NHTSA was also not on the ball and that led to the ongoing safety issues, says Claybrook. “There’s too much secrecy that Toyota was allowed to get away with– withholding information, with not being transparent and forthcoming with the Department of Transportation. And as a result, we’ve had people die, and be injured, and I’m sure there are going to be more.”
Preventing further problems will require a culture change within Toyota, says Kingston. It’s something that appears to be happening, as Toyota’s President, Akio Toyoda, makes more public appearances and reassurances to his consumers.
He has yet to confirm that he will testify before US lawmakers in Washington February 24 and 25, something that Kingston says will be the marker of a true turning point for Toyota’s internal culture.
Back at Era’s seminar at the food manufacturing plant, he’s running through various examples of failures within corporate Japan. With his power point presentation and laser pointer, Era pushed the senior managers to go against the corporate grain. Change is never easy, he says, especially in Japan. But Toyota is proving that sometimes it needs to happen.
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