This will be short and sweet but something that I think is worth monitoring quite closely. There’s a storm coming in the automotive market and it’s called Toyota. As we know, Toyota has broken ahead of GM in sales world-wide but that surge has come to a screeching halt and not because of faulty brakes. Transportation Secretary Ray LaHood is backing off a comment he made this morning before Congress regarding Toyota's recall issues. “My advice is if anyone owns one of these vehicles, stop driving it,” said LaHood. Now the Transportation Secretary is backing off his initial comment and I have to ask why? Is it because it's going to cost a LOT of cash to get out of this one? Let’s look at the totality of the situation as it stands.
Overall, it is estimated 8 million Toyotas are to be recalled world-wide. Judging by past performance when it comes to spin, let’s just round it up to 9 million. Toyota claims dealers will be open 24 hours per day, 7 days per week to fix the cornucopia of issues which have surfaced. That’s all well and good, but who exactly is going to pay the price? Let’s say it costs Toyota $100 per automobile. That’s $900 million, folks. Toyota already lost $7.1 billion in the last two years. Their goal was to turn a profit starting in April. That isn’t going to happen. Toyota’s January sales are projected to be off 14% for January alone. That may be good news for US automakers but is it?
I’m waiting for the spin here, folks. How long will it be before Toyota claims that their American manufacturing facilities are to blame? How long will it take for the publicists to place the blame on the US autoworkers? We’re hearing rumblings in Congress about hearings. Let’s face it. This is an election year and members of Congress are going to spin every disaster they can to take our attention away from the real issues which confront our society. Toyota is going to be yet another political smokescreen which will take our minds off a horrific economy, health care reform failure and big bonuses at AIG and Bank of America. It won’t be long before Conservatives and Libertarians will claim too much government involvement in the Toyota debacle. My argument is quite to the contrary. It has been the Federal Government’s lack of safety oversight which contributes to the problem.
Just days before the Presidential Elections in 2008, George W. Bush’s Administration pushed to rewrite a wide array of federal rules with changes or additions that could block product-safety lawsuits by consumers and states. A year later Ed O’Keefe reported in the Washington Post about the performance of the Federal Consumer Products Safety Commission. What becomes clear in the article is the CPSC’s poor performance record. They way I see it, this is one area which requires the role of government in our lives. I’m all for government creating a level playing field in order to allow our free market capitalist society to thrive but it must be done with the knowledge that corporations who manufacture and sell products which are unsafe must be held to a higher level of accountability.
In the United States corporate executives routinely get away with shoddy management. In China, they get executed. Granted, China’s reaction may be extreme but when it comes to the safety and well being of consumers, what punishment is appropriate when corporate executives turn a blind eye to safety issues? Consumer product safety was not in the cross-hairs of the Bush Administration because they were too busy using scare tactics concerning domestic security. Is not the safety of products sold in the marketplace an integral part of domestic security? While Congress gears up to put on a Broadway-style production featuring indignant politicians and contrite Toyota executives, we Americans need to look beyond the hype at the bigger picture. The automotive industry is about to get hit with a loss of Toyota’s making. And somehow consumers around the globe will pay the price. The Japanese government has summoned Mr. Toyota himself — short of falling on his sword, I don’t see him worming his way out of this in Japan.
The Toyota situation is yet another manifestation of just how ineffective our federal system of government has become. There was a time when Americans were proud to buy American manufactured products. We’ve replaced pride in our purchases with him that has the most wins — regardless of quality. We’ve devolved into a society where we’ve no respect for government officials yet remain indifferent in challenging the status quo. We’ve got corrupt special interests financially supporting self-serving politicians who have no clue what it means to be a public servant. Our food supply is compromised. Automobiles are unsafe. Toys we buy our kids might poison them. So when your Camry goes off the cliff filled with the latest spoils of your weekly spending spree at WalMart, thank your Congressman.