What Did They Know, and When Did They Know It?

As the wreckage from the Toyota recalls continues to dominate the daily news (or at least however much is left for non-Olympics, non-Tiger Woods coverage), it’s hard to know whom to root for: the world’s biggest automaker or the U.S. Government. The only thing that’s clear right now is that both Toyota and the regulators who were supposed to be monitoring the U.S. auto industry had, at the very lease, some lapses in judgment. Exactly how severe those lapses might be, and precisely how widespread that culture of looking-the-other-way might be ingrained throughout the entire automotive supply chain remains to be seen. But as things stand, there doesn’t seem to be a “good guy” in this nasty mess.

Up until recently, Toyota was known for a very different kind of culture, one predicated on two core principles: continuous improvement and respect for people. Every employee at a Toyota plant is empowered to shut down a production line whenever necessary, and every operation within a plant adheres to the philosophy of reducing and eliminating waste wherever it’s found. The Toyota Way is taught in lean manufacturing seminars throughout the world, and numerous companies have patterned their own processes on the Toyota Production System. Furthermore, contrary to the standard practices of the Detroit Big Three automakers to treat their suppliers almost as adversaries, Toyota has popularized the idea of the keiretsu, where OEMs and suppliers function as a joint partnership, sharing production and other proprietary information.

In short, Toyota hardly fits the profile of a company hell-bent on producing defective automobiles and turning a blind eye to safety issues. But then again, it’s only been recently that Toyota has ascended to the ranks of the world’s leading automaker, and it would not be unprecedented for a company to put profits ahead of safety.

One reason why it’s not a huge stretch to ascribe me-first motives to Toyota’s taking so long to issue recalls is that we’ve seen other automobile companies do precisely the same thing over the years (remember the Ford Explorer/Firestone recall debacle at the turn of the century?). What’s different in 2010 is that the U.S. Government itself is now running two of the Detroit Big Three car companies, and thus we have the unique spectacle of seeing the owner of GM and Chrysler investigating the actions of its biggest rival, Toyota.

Can you imagine Coke hauling Pepsi into court, or Microsoft conducting an investigation into Apple’s practices, or Target issuing subpoenas against Wal-Mart? Hard as it is to imagine those scenarios, that’s pretty much exactly what’s happening right now in the case of the U.S. Government vs. Toyota.

In the coming days and weeks, we’ll learn more about exactly when Toyota discovered problems with sticky accelerators, what happened when regulators from the Department of Transportation learned about the problems, and perhaps even why this particular recall is substantially different from any of the other automotive industry recalls.

It would be nice to think that what we’re seeing is a completely unbiased federal government investigating an anomalous slip-up by an otherwise blameless corporation. But I suspect that’s not how this is going to play out.

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