The town Toyota built hopes US fightback can jumpstart economy

As the car giant's president prepares to face Congress, David McNeill talks to the people desperate for its survival
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The Independent US

An unexpected note of poignancy greets visitors to the museum of the world's largest car company. In the cavernous museum lobby, a lone trumpet plays the mournful opening bars to "Over the Rainbow", a plea for escape from the dreary, difficult realities of the present.

The song is performed by Asimov, Toyota's showcase humanoid robot, on a giant screen that hangs over a showroom full of the company's world-beating products, cars that have become household names, Prius, Lexus, Corolla.

It is unlikely that Asimov's human minders gave the tune much thought when they chose it in what were far better times. Just as Toyota should have been celebrating ending General Motors' 76-year reign as the planet's largest automaker, it has been racked by a series of scandals and escalating recalls totalling about 8.5 million cars that have wiped about $23bn (£15bn) from the company's share value.

Now Toyota is trying to mount a fightback. Akio Toyoda, the embattled president who has even drawn criticism for an insufficiently scraping bow of apology, has agreed to head to the US next week to testify before a hostile congressional committee charged with investigating the recalls. "I will be happy to attend," he said yesterday, but his claimed enthusiasm is perhaps hard to credit. In front of the television cameras, American politicians are unlikely to be particularly conciliatory about a problem alleged to have caused 34 deaths in the US since 2000.

Amid allegations of Japan-bashing, corporate cover-ups and with class-action lawsuits, the words to the museum's song seem sadly, eerily appropriate: "When all the world is a hopeless jumble, there's a rainbow highway to be found to a place ... just a step beyond the rain."

Toyoda's decision to appear may not have been entirely his own choice. The company's leader had said this week that he would not attend the hearings unless invited to do so, a statement that drew strong criticism in the US, and eventually a summons from Representative Edolphus Towns, the chair of the organising committee. Now that Mr Toyoda, grandson of the firm's founder, has agreed to go, albeit reluctantly ("It was not just up to me to decide," he said yesterday), Japanese government officials have heaped him with praise for doing so, partly out of a fear that Toyota's problems could spread to the rest of the country's car industry if the wound were not staunched.

But those directly affected by this vast company's crisis are concern enough. The business is, after all, big enough to have a town named after it, and fortunes in the 420,000-resident Toyota City rise and fall on the back of its namesake's balance sheet. About eight in 10 of the local workforce are said to depend directly or indirectly on the company's seven local factories and thousands of subsidiaries and suppliers. Locals opted to change the city's name from Koromo permanently in 1959. Half a century later, many are fretting about what the future holds.

"We rely on Toyota for over half our business," says Yoshie Tamura, a manager in Aunties, a business hotel near the company's headquarters. Like many locals, her life is directly tied to the town's namesake: her husband has worked in one of the factories for 10 years. "Our business was already 30 per cent down because of the recession, then we all began hearing about the recalls, which were such a shock. But a lot of us also wonder if there is not too much fuss being made."

That is not an isolated opinion. Japan's mass-selling weekly magazines have waded into the bitter controversy over Toyota's mounting problems with accusations that the US press is exaggerating, and worse. "America is at war with Toyota," screamed Shukan Shincho, which accused US newspapers and television of playing up the Japanese car-maker's problems for political effect.

Few at Toyota will openly back such claims but, off the record, sources close to the company agree. "I think there has been a fair dose of bewilderment at the way things have spun out of control," said one. "A lot of people here think we have done everything by the book. There is that sense that problems are being created where there are none."

As evidence, he cites brake problems in the Prius. "One of our executives said very clearly that the braking in the Prius meets Japanese performance standards. Period."

That executive claim is another sign that Toyota is preparing to mount a counterattack, and not just against the US media: Japan's Transport Minister, Seiji Maehara, has issued a rare rebuke to the company for dragging its feet on the Prius's brake problems. This week, Mr Toyoda denied its electronic throttle control system was faulty, a denial that coincided with a series of one-page mea culpas in the Japanese newspapers. And ahead of his visit to Washington, Toyota's lawyers and lobbyists are working behind the scenes to steer the looming investigation its way.

Publicly, the company will stand by its line that Mr Toyoda agreed to go because Mr Towns has finally formally requested he attend the hearing. Privately, Toyota executives were worried that their boss was being invited to attend a media lynch-mob in a country that still struggles to understand the mysteries of Japanese corporate behaviour. Mr Toyoda reportedly changed his mind only because the situation could not be much worse. "Toyota is certainly not perfect but it is not one to run and hide away," he told the Japanese press this week.

But analysts scoff at Toyota's claims that it is the victim of a Stateside witch-hunt. "Toyota has this massive arrogance and they cloak it with false humility and top it with this halo of quality," says John Harris, a Japan-based communications consultant to the car industry. "They just don't get what this is about. They dragged their feet and covered up their problems. They saw the chance to get the world's top spot and they took it, but there has been a price."

Like many analysts, Mr Harris believes Toyota grew too big too fast, and lost control over its key selling point: quality. "In manufacturing, you can have good, quick and cheap, but you can't have all three," he says. "Toyota tried it. They were cutting costs faster and harder than other car companies, while bringing in new plant and people. Expansion and cost-cutting puts a strain on any organisation. Something was bound to give."

Toyota has moved quickly to head off those criticisms. But in Toyota City, there is a fear that the company's quality issues are emblematic of the country's declining fortunes. "We started with nothing after the war and fought hard to get to the top," said the owner of a cake shop near the company's factories. "People seem to be forgetting that struggle today and are letting things slip."

Pride in the company is still strong. Though the recession has hit many local businesses, few shops seem shuttered. But the company likes its privacy. Security guards outside the plants wave away photographers and even try to confiscate pictures. In the Toyota HQ, spokespeople have been instructed to batten down the hatches and ignore the media. "Executives are doing most of the talking now," said one source. That leaves analysts to speculate if the company will ever bounce back.

"That depends on whether American opinion calms down, perhaps if the media finds another target," says Yozo Hasegawa, an author and motoring expert. He believes the company will go back to basics, shifting from expansion back to maintaining quality. "It will wait for things to settle down, and then it will be back. Definitely." But some visitors to the museum had doubts. "Maybe," one said. "If they stick to making cars instead of violin-playing robots."