Culture of Quality – A Comparison of Toyota and GM Recalls

One of the main aspects of lean manufacturing is quality. This post discusses the differing attitudes regarding quality in different corporate cultures. In particular, the Toyota brake recalls and the GM ignition recalls are compared.

Introduction

The world is not perfect. The idea of zero defects is usually unrealistic. Occasionally, even with the best safety measures, a defective car slips through automotive production lines. Depending on the severity of the problem, the maker can or must fix the problem even for products that have already sold. For the least serious problems, a technical service bulletin is issued and the car is fixed at the next check-up without the customer ever noticing. For more serious problems, the maker can choose to issue a voluntary recall. The most serious problems lead to a mandatory recall ordered by the National Highway and Traffic Safety Administration (NHTSA). In either of the latter two cases, the general public is informed that they should have the problem fixed as soon as possible.

Due to the complexity of modern products, especially automobiles, recalls are a part of life. Every major auto maker is in the news regularly for recalls. In average every car sold in the  US every is recalled at least once throughout its lifetime. However, to ensure safety for the consumer it is necessary that recalls are done quickly to fix the problem before anybody gets hurt.

The Toyota Recalls – (Relatively) Speedy Recall

Between 2009 and 2011, Toyota issued different recalls related to accelerators in some of its models. The first recall addressed the problem of a floor mat from a different vehicle being able to jam the gas pedal, which caused an accident with four fatalities. Soon after the accident, Toyota issued a voluntary recall for the affected vehicles.

One year later, Toyota received reports of sticking accelerators, where in rare instances the accelerator did not completely return to zero when released (tests showed that even with almost full acceleration, simultaneously using the brake would stop the vehicle). Hence Toyota issued another recall. Yet a third recall was for hybrid anti-lock brake software problems. Overall, 9 million vehicles were recalled worldwide.

There were numerous deaths initially connected with the sticking accelerator, but the NHTSA eventually concluded that driver error, especially “pedal misapplication” was the cause of these accidents. The first accident with four fatalities due to the jammed floor mat was the only accident caused by technical problems related to the Toyota accelerator recalls.

Overall, Toyota issued these recalls relatively promptly after receiving information about problems. While the government fined Toyota for a delay in recalling, this delay pales in comparison to the delays of GM discussed below. Toyota did, however, mess up the public relations side of these recalls, with the public receiving somewhat confusing information about the actual cause of the problem.

The GM Recalls – Saving 90 Cents Per Vehicle is Worth More than 13+ Lives

GM has also been in the news for its recalls. The problem at GM was an incorrectly designed ignition switch that could turn off while driving. Unfortunately, without engine power, the vehicle lost its power steering, power-assisted brakes, and function of the airbags. Hence it gets more difficult to steer, more difficult to brake, and if you hit something your airbags wouldn’t deploy. GM issued a recall in 2014.

However, as it turns out, GM had known about the problem since 2005. Fixing the problem would have cost $0.90 per vehicle, whereas the expected warranty costs were only around $0.10-0.15 per vehicle (see email excerpt below). Later reports claimed a cost of only $0.57 to fix the switch.

Hence, GM decided not to fix the problem and also not to release information about it to the public or the authorities. Subsequently, the problem continued and the death toll mounted. In May 2007, GM finally decided to fix the problem for new cars but not to recall the older vehicles.

However, when fixing the problem for the new car, they made a major mistake. They did not give the new part a new part number! There is a solid rule in industry that a new part must have a new part number to keep track of what is what. This leads to suspicion that this may have been a move to hide evidence. Hence it seems that they not only delayed the new part and the recall, but also may have tried to hide the evidence.

So far, GM officially claims only 13 deaths associated with the faulty switch, although other sources claim higher numbers up to 300 fatalities and more.

Even as evidence of GM dragging its feet is mounting, there is new information about a similar case regarding GM airbag recalls. In March, GM submitted a less-urgent customer-satisfaction campaign related to airbag problems. The very next day, the NHTSA forced GM to upgrade this to a full recall. Again, GM had known about this problem since 2008 and acted on it only in 2014.

The cost of the ignition recall is now at $1.3 billion, with possibly more to come. This by far exceeds the initial estimate of $0.10-$0.15 per vehicle.

The Government Reaction

During the Toyota recall, the US government came down pretty harshly on Toyota. While stern measures are needed to deter bad behavior, Toyota seemed to get a much rougher treatment when compared to other car makers before (e.g., the Ford “Exploder” or Ford tire issues). In foreign news it was suspected that the US government was less reluctant to hurt a foreign automaker than it was to hurt domestic manufacturers (even though Toyota does have more US domestic content than many other US manufacturers). It also appeared that there was a certain schadenfreude about quality problems at Toyota, which is famous for its quality.

It did not help that Toyota bumbled the public relations side of the recall. Toyota president and CEO Akio Toyoda appeared before a congressional hearing, but despite apologizing did not come across very smooth. Toyota, however, did not make the mistake of blaming its customers for the accidents. Toyota also (so far) has not picked on GM for the GM recalls.

In the past, GM has gotten away with recall problems much more easily than Toyota. Even for the current recall, there seems to be not yet as much pressure on GM as on Toyota – yet. However, GM CEO Mary Barra  was also called for a congressional hearing, and my impression is that the heat is increasing.

GM is already focusing on avoiding such problems in the future. Unfortunately it is not clear how much technical actions have been taken. On the other hand, we know from released documents the measures to make problems sound nice. For example, for internal communication GM listed 69 words that cannot be used. GM also gave some suggestions for alternative phrases. Both are listed below:

always, annihilate, apocalyptic, asphyxiating, bad, Band-Aid, big time, brakes like an “X” car, cataclysmic, catastrophic, Challenger, chaotic, Cobain, condemns, Corvair-like, crippling, critical, dangerous, deathtrap, debilitating, decapitating, defect, defective, detonate, disemboweling, enfeebling, evil, eviscerated, explode, failed, flawed, genocide, ghastly, grenadelike, grisly, gruesome, Hindenburg, Hobbling, Horrific, impaling, inferno, Kevorkianesque, lacerating, life-threatening, maiming, malicious, mangling, maniacal, mutilating, never, potentially-disfiguring, powder keg, problem, rolling sarcophagus (tomb or coffin), safety, safety related, serious, spontaneous combustion, startling, suffocating, suicidal, terrifying, Titanic, unstable, widow-maker, words or phrases with a biblical connotation, you’re toast

 Summary

Overall, it seems that quality is still taken much more seriously at Toyota than at GM. Toyota issues recalls relatively quickly and tries to fix the problem. GM seems to drag its feet, may have tried to hide problems, and works hard at making problems sound less daunting than they are. The new GM CEO Mary Barra uses lots of words to state that GM is changing (the old GM before bankruptcy and hence not liable versus the new GM after bankruptcy and hence liable). Unfortunately, experience shows that words from industry bosses are cheap. Even if Barra is serious, changing the culture of a company is a major project that will probably by far exceed her tenure at GM.

In any case, it is my hope that the government doesn’t let GM get away with what it’s done and that it pursues justice as vigorously as it did with Toyota.