Toyota Witch Hunt

Is Toyota automaker the victim of a government and/or automaker union witch hunt?

One Toyota Dealership owner certainly thinks so.

In terms of automaker recalls, the recall over an accelerator which can stick is very minor. To understand how minor this issue is, we recall the Ford Motor Company Pinto disaster of about 30 years ago.

Do you remember the Ford Motor Company disastrous lawsuit over their poorly-designed fuel tank in the Pinto car? Ford engineers knew that the fuel tank was most unsafe and would rupture if the car was hit from behind at speeds over 30 miles per hour and they knew it in pre-production testing!

Yet, Ford made the executive decision that it would be cheaper to pay the lawsuits from victim's families rather than stop and redesign that fuel tank. Listen to the facts:

"According to Ford's estimates, the unsafe tanks would cause 180 burn deaths, 180 serious burn injuries, and 2,100 burned vehicles each year. It calculated that it would have to pay $200,000 per death, $67,000 per injury, and $700 per vehicle, for a total of $49.5 million. However, the cost of saving lives and injuries ran even higher: alterations would cost $11 per car or truck, which added up to $137 million per year. Essentially, Ford argued before the government that it would be cheaper just to let their customers burn!" ("Ford Pinto", Engineering)

When you click to the ("Ford Pinto", Engineering) link, you will discover that Ford engineers knew that the fuel tank was defective and would cost lives, in the pre-production phase! In other words, Ford executives knew of the fatal design flaw before the first Pinto rolled off the assembly line! Had they initiated the $11 per car change before beginning production, not one Ford customer would have burned to death! Not one Ford customer victim would have suffered incredible burns! Yet, because profit Dollars were more important to Ford executives than people's lives and loved ones, hundreds of people would have been spared death or burns. The Dollar meant more than people's lives.

In light of this horrific and callous decision by Ford Motor Company, the Toyota sticking accelerator problem is minor, indeed. This morning, I read numerous reports on the accelerator problem and could find no statistic reporting the number of deaths and injuries. Therefore, I can only conclude that the death toll is very minor, certainly far less than the numbers of the Pinto disaster.

Truly, it does appear that this accelerator problem is a classic example of "making a mountain out of a molehill".

Now, let us return to the premise that this entire episode is being fueled by government and auto union leaders, as this Toyota owner believes. What elements would cause him to believe that Toyota is a victim of a true "witch hunt"?

1) General Motors (GM) is now Government Motors in this new Fascist Economy. (Read full details in our News Alert of March 30, 2009, Paragraph IV). Quoting a portion of that News Alert:

NEWS BRIEF: "White House Moves To Reshape Auto Industry", Yahoo Finance, March 30, 2009 "President Barack Obama is sending a blunt message to Detroit automakers: To survive -- and win more government help -- they must remake themselves top to bottom. Driving home the point, the White House ousted the General Motors chairman as it rejected GM and Chrysler's restructuring plans."

The 'White House ousted the General Motors chairman'? People who still believe that America is a Capitalist economy must be reeling over this piece of news. When, such people will ask, did the Federal Government get this kind of control over a privately-owned company? The answer is both simple and profound. When the Federal Government gave $17 billion to General Motors and Chrysler, it received $17 billion worth of company stock. Therefore, the government is now such a large stockholder that it can order these companies to do its bidding, and possess the "Hire and Fire" capability over its officers! Since a Fascist Economy severely controls the number of competitors making the same product or providing the same service, I am not surprised at all that the President has fired the CEO of General Motors and has declared that their restructuring plans are unacceptable to him.

Therefore, General Motors has become Government Motors with President Obama holding "Hire and Fire" capability over every auto executive with GM and Chrysler too. This reality brings with it accountability, and that is a serious issue for the White House.

Now that Obama has been President for over one year, he is now being held responsible for the preservation of existing jobs and the creation of new ones. GM, Chrysler, and Ford would certainly benefit if Toyota sales were curtailed, at least in the short term. Already, Toyota has closed its American plants for a short while and has curtailed production in other plants throughout the world.

News reports have also been posted stating that American consumers now have less confidence in Toyota's quality than before this accelerator recall began. Other news stories have been noted where American auto quality is now said to be equal to that of Toyota.

If our premise is correct, we should see Toyota hauled before a Congressional subcommittee to answer questions about the recall. Indeed, this action is already in the planning stage and the CEO of Toyota is being called upon to appear before the Congressional panel.

NEWS BRIEF: "Toyota's president to testify before Congress", Yahoo Finance, Yahoo News, February 19, 2010

"TOKYO (AP) -- Toyota's president Akio Toyoda, under fire for his handling of sweeping recalls, will testify before a congressional hearing next week, appealing to U.S. lawmakers and aggrieved customers for understanding while the company fixes its safety problems. Japanese officials praised the decision by Toyoda, grandson of the company's founder, to accept a formal invitation to explain the recalls and outline plans by the world's largest automaker to ensure safety and satisfy worried car buyers."

Toyota executives might find themselves appearing before a rigged Congressional committee; if these hearings are planned to be "hanging jury" hearings, Toyota might find itself in a very embarrassing Public Relations scenario. Consumer confidence in the quality of a car brand is a very fluid, and very subjective, matter. If Toyota faces a prolonged exposure to the Mass Media on this recall issue, it could lose a great many sales, many of which could flow to GM and Chrysler, and even Ford.

This next news segment reveals how a "rigged panel" might actually be possible.

" 'Obviously, the hearing will be nasty. It's a political showplace for those congressmen so I'm sure you are going to see all sorts of unfriendly questions', said Koji Endo, managing director at Advanced Research Japan ... 'He has to be extremely well-prepared to take responsibility. He should take the full force of the most hostile criticisms he gets and welcome them', said Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management."

How extensive is this problem? Have the numbers of deaths and severe injuries come close to the many hundreds in the Ford Pinto fiasco?

"The Transportation Department's preliminary investigation into steering problems at highway speeds will encompass 487,000 Toyota Corolla and Corolla Matrix compacts from the 2009-2010 model years. The government has received 168 complaints and reports of 11 injuries and eight crashes on the Corolla and Matrix compacts with electric power steering ... Reports of deaths in the U.S. connected to sudden acceleration in Toyota vehicles have surged recently, with the toll of fatalities allegedly attributed to the problem reaching 34 since 2000, according to new consumer data gathered by the government."

Miniscule, especially considering the millions of Toyotas sold during this time period. Making a mountain out of a molehill.

President Obama may see increased sales in American vehicles because of this crisis.

Finally, let us address the issue of union anger aimed at Toyota because the company has refused to unionize its American factories.

NEWS BRIEF: "United Auto Workers, Teamsters Call Toyota 'A Danger to America' ", PR Newswire, January 28, 2010

"WASHINGTON ... Teamsters General President James P. Hoffa and United Auto Workers (UAW) Vice President Bob King joined representatives from labor, environmental and consumer groups outside the Embassy of Japan in Washington today to call on the Japanese government to hold Toyota accountable for waging an attack on thousands of good-paying jobs in the United States ... In addition to endangering 5,000 middle class jobs in the carhaul industry, Toyota is also planning to close its New United Motors Manufacturing Inc. (NUMMI) assembly plant in Fremont, CA, which will mean a loss of up to 50,000 jobs at NUMMI and suppliers and other supporting businesses."

Where are these 50,000 jobs going --according to these union leaders?

" '... Toyota is turning its back on American workers and American taxpayers by closing the plant in the state where they sell the most cars in the U.S., shipping these jobs to Japan, and then importing the cars back to the United States for sale', said King."

This statement contains one lie of omission and one outright fib.

The lie of omission is that this Fremont, California, auto plant was a joint venture between Toyota and the now bankrupt old General Motors Corporation. In fact, the decision to close the plant was not even made by Toyota! Listen:

NEWS BRIEF: "Pending closure of Toyota plant in California protested", L.A. Times, February 12, 2010

"Toyota spokesman Mike Michels said the company was 'disappointed' by the picketing plans 'because the decision about NUMMI was one without a choice'. New United Motor was a joint venture between Toyota and the now-bankrupt General Motors Corp. and is governed by an independent board. After General Motors abandoned the venture last July, Toyota had no choice but to announce in August that it too was pulling out, Michels said. Keeping the plant open no longer makes sense financially, Michels said. He stressed that the decision to close the plant rested with the New United Motor board, which operated as an independent company supplying vehicles to both Toyota and General Motors."

The decision to close this plant was not even made by Toyota! That decision was made by the "New United Motor Board", a decision made inevitable after General Motors abandoned the joint venture with Toyota.

The outright lie in the union statement that Toyota is shipping these 50,000 jobs back to Japan where the cars would be created and then shipped back to America. Toyota has long been committed to building plants in America operated by American workers for two basic reasons:

1) The Japanese Yen is extremely strong against the American Dollar, and has been for many years. This means that Japan makes a lot less profit when it ships a Japanese-made vehicle to the United States. Currency fluctuations mean that a lot more profit is made when the Toyota is manufactured within the United States by American workers.

2) Toyota has long believed that the best way to counter the perception that their sales were taking jobs from Americans would be to aggressively open manufacturing facilities in America, operated by Americans. To a large degree, this strategy serves a Public Relations function, making Americans feel better about buying a Toyota.

However, American auto unions are still angry, because Toyota has steadfastly refused to unionize these plants. Therefore, union bosses are using the safety recall issue as a means by which they can hit Toyota day after day.

Watch this development carefully. If our theory is correct, we should see a lot more negative Toyota news, including the government hearings in Washington, D.C. The objective of this entire negative campaign is to convince Americans to stop buying Toyotas and begin buying American!

President Obama's attempt to create new jobs in this country may well hinge upon the success of this negative campaign against Toyota.