05 May 2010

Toyota Gives U.S. Execs Voice

The Detroit News

Toyota Motor Corp. makes big decisions such as safety recalls at its headquarters in Japan, but American executives can now go right to the top to appeal them.

"I have a direct line to (President) Akio Toyoda for any quality issue," Steve St. Angelo, Toyota's new chief quality officer for North America, said in an interview. "It's very different."

Before the rash of recalls that drove Toyota to review every aspect of its operations, the automaker's U.S. and other regional managers contributed data and analysis to engineers in Japan who'd make the final call.

Now decisions about recalls are made by consensus from a group that includes Japanese engineers and Dino Triantafyllos, vice president of quality at Toyota's North American manufacturing operations in Erlanger, Ky.

But if Triantafyllos disagrees with the collective thinking, "I review the data in detail, and if I side with Dino, then I'd plead my case with Akio Toyoda," St. Angelo said.

In February, as Toyota grappled with damage to its reputation after recalling millions of vehicles, Toyoda announced he would create a Special Committee on Global Quality and lead it himself. In March, St. Angelo joined the committee as the chief quality officer for North America.

St. Angelo, a Detroit native, started his career with General Motors Corp. but became familiar with Toyota in 1995 when he worked at the GM-Toyota New United Motor Manufacturing Inc. venture in Fremont, Calif. He joined Toyota in 2005.

Last year, he was appointed executive vice president of Toyota's U.S. manufacturing operations as well as managing officer of the parent company, Toyota Motor Corp.

As Toyota's troubles unfolded late last year, "honestly, I was totally stunned," St. Angelo said.

"I know what kind of vehicles we build. When we look at all our quality indicators, our warranty costs, all the measurables, we've never built better cars -- ever."

But since November, Toyota has recalled more than 6.5 million cars and trucks in the United States and was fined a record $16.4 million by the U.S. Transportation Department for failing to report safety defects in time.

Toyota officials have estimated the cost of the recalls at $2 billion during the fiscal year that ended March 31. The company may give an indication of the total cost next Tuesday when it announces its annual results.

The automaker's U.S. sales have recovered, rising 24.4 percent last month, bolstered by substantial incentives. "About 40 percent of our business continues to be conquest," said Bob Carter, general manager of the Toyota brand division at Toyota Motor Sales USA. "That's a historic norm for us, and we haven't seen movement on that."

According to auto research firm Edmunds.com, Toyota's loyalty ratings fell four points to 58 percent in the first quarter, but are still the industry's highest.

So far, Toyota dealers have conducted repairs on 3 million vehicles, including 1.5 million that could have sticky pedals, St. Angelo said. The company has fixed 1.3 million cars and trucks to prevent pedal entrapment that could lead to unintended acceleration.

Toyota has updated the software on 100,000 vehicles to address braking problems.

It now has 150 event data recorders -- including 10 that were supplied to U.S. National Highway Traffic Safety Administration. They register a car's responses in the final seconds before an accident.

Toyota engineers are reviewing complaints more carefully in NHTSA's database, and new teams of engineers have reviewed about 500 vehicles that were the object of complaints.

"We felt we didn't do a good job listening to voices of customers," St. Angelo said.

Toyota has suffered from poor communications in general, he said -- with customers, with government officials and NHTSA, and with the headquarters in Japan. "Part of it is the language barrier, part of it is the time difference," St. Angelo said.

The company needs to do a better job educating customers and explaining systems such as radar cruise control, which can slow down a car when another vehicle goes in front, then allow it to gain speed if the vehicle moves away, St. Angelo said. "Some customers thought the cars were taking off on their own."

Industry analysts say Toyota's rapid growth may be part of the trouble. "When you get to be a large organization, you get a lot of communications issues," said Jack Nerad, editorial director at car pricing firm Kelley Blue Book. "And when they revolve around something as critical as auto safety, they become an issue."

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