Recall. Recall. Recall. Recall. Recall. It is all over the Web, in the papers, even on television. Toyota has issued a number of recalls recently for varying issues, some of which have lawyers across the country scrambling for a piece of class action lawsuits. At the top of the list is an accelerator problem that seems to have been the forerunner of the complaints. In the wake, 19 people are dead, an uncertain number have been injured but survived, and more than 2,000 incidents of “unintended acceleration” have been reported (No quick fix, 2010, p. 71). Sales are down and owners are afraid to drive their cars. The company’s approach to the impending crisis left a lot to be desired, and today it is uncertain whether it will reach it’s once glorious position as the number one automobile manufacturer in the United States. Toyota’s actions, or rather inactions, have illustrated to public relations professionals and students alike what not to do in a crisis situation.
Rules In A Crisis
One of the first rules in a crisis situation is to get to the public before the rumor mill does. More than two weeks after the famous accelerator-pedal recall that is reported to cost Toyota $155 million weekly until it is fixed (Welch, 2010, p. 21), company president Akio Toyoda finally called a press conference to apologize for the problems that initiated the recall. Catherine Levy, director of public relations for R&R Partners, told Las Vegas Business Press, “The company’s president should have publicly addressed Toyota’s customers right from the start” (Lucht, 2010, p. P21). University of Nevada, Las Vegas, marketing professor Michael LaTour agrees. “‘Speed is essential,’ he said, ‘You’ve got to get on it right now and start mitigating the problem right away.” (Lucht, 2010, p. P21).
Another rule in a crisis situation is to listen to the public. According to London’s The Economist (No quick fix, 2010), Toyota received hundreds of complaints from concerned consumers, but failed to heed the warning that there may be a problem (p. 71). A New York Times article (Bunkley, 2010) also cites that insurance companies, specifically State Farm, “alerted regulators in 2007 about instances of Toyotas experiencing sudden acceleration” (p. B3). In April, Toyota was fined 16.4 million dollars, the maximum allowed by law, for either hiding defects or waiting too long to report them. U.S. Transportation secretary Ray LaHood said, “Safety recalls are very serious matters and automakers are required to quickly report defects” (Bunkley, 2010, p. B3). Had Toyota listened to the complaining customers, they may have avoided the fine by reporting defects early on.
Not A Well-run Organization
Toyota has, according to a New York Times article (Kanter, Maynard, & Tabuchi, 2010), a notoriously slow response pattern to safety issues. Kanter, Maynard, & Tabuchi (2010) state that Toyota knew about the pedal issue from European customers in December of 2008. The article also stated that Toyota was made aware of a steering mechanism issue on two models in early 1996, but did nothing to fix it until after an accident in 2004 sparked a police investigation. A recall was finally issued, but by then, Japanese government demanded Toyota corporate revamp its recall system (Kanter, Maynard, & Tabuchi, 2010, p. A1).
Cameron (2008) suggests that, “… well-run organizations … develop a general crisis plan as a first step in preparing for the worst…” (p. 44). Toyota did no such thing, according to Michael LaTour (Lucht, 2010). He states, “‘This is a real case study on the lack of stratety and lack of respoinse. They didn’t have a crisis management strategy’” (p. P21). Welch (2010) agrees that “Toyota's handling of the biggest crisis in its history has at times seemed inept and plodding,” citing Firestone’s John T. Lampe’s promise to take care of customers during his company’s crisis 10 years ago as a model act to follow (p. 21). Planning for crises that may never happen is a crucial function of public relations. In this case, the crisis did happen, and no one was prepared. “All companies, … no matter what sector they operate in, should be prepared for a potential crisis…” (Regester & Larkin, 2008, p. 107).
Because of the obvious lack of contingency planning on Toyota’s part, the company may well lose its position as the leading manufacturer of automobiles in the U.S. GM, Ford, Nissan, and Hyundai, Toyota’s leading competitors, all experienced growth equal or greater to that of Toyota’s loss for the month of January 2010 (No quick fix, 2010, p. 71). According to an article in Business Week (Welch, 2010), “many Toyota owners” are feeling “buyer’s remorse” (p. 21). In a hearing at the House of Representatives, Transportation Secretary Ray LaHood accidentally warned Toyota owners to “stop driving recalled models until they had taken them into a dealership for repair” (Welch, 2010, p. 21).
If the bad feelings Toyota has invoked in its customers continue, the company will “lose its edge” (Welch, 2010, p. 21).
The Bernard Matthews Turkey Flu
Loss of customer faith damaging a company is nothing new. In a different country in a different industry, the UK poultry industry, in fact, a major turkey supplier suffered a 40% drop in sales and had to lay off 200 of its staff due to poor communication and contingency planning during a crisis (Regester & Larkin, 2008, p. 107). Regester and Larkin (2008) tell the tale of Bernard Matthews turkey company’s bird flu crisis in 2007. The company had to shut down operations to contain an outbreak of the disease. Although they had the problem rectified within 72 hours of its discovery, poor communication to the public caused enduring reputation damage (p. 106).
It is as if Aiko Toyoda had consulted the head of the company, Bernard Matthews himself, who also chose to remain silent for two weeks after the announcement. He did eventually show himself and apologize, making certain he mitigated his company of responsibility for the incident. Negative media coverage of the issue prior to the appearance of Mr. Matthews incited a panic. Just as Toyota insisted its pedals were becoming caught in floor mats, Bernard Matthews company insisted it was not to blame, and attempted to divert attention to a bird flu outbreak in Hungary. Like Toyota, this only fueled the media’s perception that the company was not cooperating with requests for information (Regester & Larkin, 2008, p. 106).
As they will do if they believe a company is trying to hide something, the media went digging for dirt, prolonging what would have been an otherwise short story. In Toyota’s case, the media hit mud, and the company is slowly being swallowed by it. Articles emerged in major newspapers around the company about just how much Toyota knew about their issue and when they knew it. Just as in the Bernard Matthews case, “the company … failed to convince its customers that it was doing all it could to protect them” (Regester & Larkin, 2008, p. 106).
Learning Experience
In an editorial written to the Washington Post (Toyoda, 2010), Toyota president Akio Toyoda apologized again for the lack of action Toyota has taken in this case. He acknowledged the mistakes made by the company and announced that they would “take responsibility [for them and learn] from them.” He also promised to spearhead the endeavor to regain the trust of Toyota consumers (p. A17). Indeed, two months later, a congressman from Michigan accused the company of putting too much energy into repairing its image and not enough into researching the cause of “unintended acceleration” in its vehicles (Shepardson, 2010, p. B7). Shepardson’s (2010) article states that Toyota hired a professional consulting firm to advise it on how to “repair damage to the company’s image,” apparently, before it hired an engineering firm to investigate the acceleration problem (p. B7).
Ford Truck’s former public relations chief, John Harmon, who was active during the 2000 Explorer/Firestone crisis, believes that the slow response by Toyota to its consumer complaints, “suggests lawyers, not PR experts, are handling its communications”(Cowan, 2010, p. 14). He notes that lawyers will insist on a company not opening itself up to blame by apologizing. Regardless of the lawyers’ advice, however, Toyota has to find a way to recover the confidence of its publics. “Larry Smith, president of the Institute for Crisis Management in Louisville, [Kentucky states,] ‘You have to take responsibility for what went wrong and then say how you're going to fix it’”(Cowan, 2010, p. 14). Toyota’s noted PR firm, Robinson, Lerer, & Montgomery, did not return calls to AdWeek requesting comments (O’Leary, 2010, p. 4).
While Toyota may or may not be learning from its own mistakes, other automobile manufacturers are taking the hint. Chrysler and Ford have begun issuing recalls of their own due to faulty accelerator pedals, according to an article in the Los Angeles Times (Hirsch, 2010, p. B2). The recall comes only a week after the National Highway Traffic Safety Administration (NHTSA) announced an investigation of some models. Ford and Chrysler both use the same pedal supplier as Toyota, CTS Corp. out of Indiana. With the large number of possible pedal incidents in a variety of makes and models, NHTSA plans to launch an examination of CTS Corp. as well (Hirsch, 2010, p. B2).
One For The Record Books
While the international recall itself is being compared to the Ford/Firestone recall of 2000, PR experts are comparing Toyota’s sluggish response to the phenomenal crisis communications of Johnson & Johnson during the Tylenol recall of 1982. The first victims were discovered on Thursday, September 30h, and by Friday, October 1st, Johnson & Johnson announced they had ceased manufacturing of Extra Strength Tylenol capsules pending investigation. By the following Monday, the company had asked all distributing stores to remove the product from their sales shelves (Associated Press, 1982, p. 1). Toyota did the exact opposite. Consumers and insurance companies began to complain in 2007 about their problems with Toyota automobiles, and people were dying in accidents long before that, but the massive recall did not come about until 2010. Toyota waited more than two weeks after the announcement of the recall to put a top executive in front of a camera, and only then said it had stopped manufacturing. “And this will likely be … a case study for other companies on what not to do” (Lucht, 2010, p. P21).
Suggestions for Recovery
Regester and Larkin (2008) suggest re-examining and reorganizing a company that has survived a major crisis to be sure a similar situation does not happen again. They go on to suggest that the company offer counseling to bereaved family members who may have lost loved ones in relation to the crisis, whether it was the company’s fault or not (p. 231). Any offer to help publics who feel victimized by the company is a step in the right direction toward rebuilding reputation.
Toyota would do well to offer assistance to the many owners and former owners who have complained over the years. It should also do some article clipping and spend some time on the Internet to find out what people are saying. Reputation damage goes wide and deep. People who have never owned a Toyota will use the crisis as a reason never to own one in the future.
The company should offer to reimburse funeral expenses to families who have lost loved ones due to perceived defects. Whether the accidents reported were actually caused by some oversight on the part of Toyota is mute. The company needs to balance its actual guilt level with the perceived level of guilt and find a happy medium.
Toyota shoulders a lot of blame in the eyes of its publics, but that alone should not bring the company down. The way it handles the remainder of this crisis and any future crises will determine whether it regains its once regal reputation. Regardless, the colossal communication blunders Toyota made this year will remain on the minds of customers, public relations professionals, and students for years to come. Much as the Tylenol recall of 1982 is still discussed as one of the best handled PR cases in history, Toyota’s will be remembered as one of the worst.
References
Associated Press. (1982, October 6). Tylenol chrolology. Boston Globe, p. 1.
Bunkley, N. (2010, February 17) U.S. Wants to Know When Toyota First Knew of Problems With Accelerator Pedals. New York Times, p. B3.
Cameron, G. T. (2008). Public relations today: Managing competition and conflict. Boston, MA: Pearson.
Cowan, J. (2010). Toyota has hard time with ‘sorry’. Canadian Business. 83(2), 14.
Hirsch, J. (2010, June 5) Toyota’s woes haunt Chrysler: The automaker recalls about 25,000 vehicles after complaints of sticky gas pedals. Los Angeles Times, p. B2.
Kanter, J., Maynard, M., & Tabuchi, H. (2010, February 7) Toyota's Pattern Is Slow Response On Safety Issues. New York Times, p. A1.
Lucht, N. (2010) Crisis Mismanagement. Las Vegas Business Press, 27(7), P20
No quick fix; Toyota's troubles deepen. (2010) The Economist, 394(8668), 71.
O'Leary, N.. (2010, February). A Battered Giant. Adweek, 51(6), 4.
Regester, M. & Larkin, J. (2008). Risk issues and crisis management in public relations today: A casebook of best practice. London: Kogan Page.
Shepardson, D. (2010, May 21) Toyota’s priorities come under fire: In contentious hearing, automaker accused of putting spin control before action. Detroit News, p. B7.
Toyoda, A. (2010, February 9). At Toyota, working to regain trust. The Washington Post,p. A.17.
Welch, D. (2010, February 15) Oh, What A (Hideous) Feeling. Business Week, 21