banktime.com

The US government is acting like the mediator of a schoolyard fight as it tells the press to stop bashing the Toyota Motor Corp. But officials are not stepping in out of the goodness of their heart. They are actually worried about the impact that the further denigration of the Toyota name could have on the already fragile U.S. economy, according to reports. Toyota is currently in the midst of a major drop in consumer confidence. It is a Japanese auto manufacturer in origin, but its presence in the United States is huge and cannot be underestimated. Toyota has plants in no less than seven American states and over fourteen hundred dealerships from coast to coast. The company employs hundreds of thousands Americans in a number of capacities.

The governors of four states where Toyota holds operations (Bob Riley of Alabama, Mitch Daniels of Indiana, Steven Beshear of Kentucky, and Haley Barbour of Mississippi) have asked lawmakers to intervene in what they call “unfortunate and unfair” media coverage of the Toyota recalls, and to consider all the jobs that are hanging in the balance if American consumer no longer want to buy these cars. The governors also suggested that lawmakers should reconsider their actions before they come down too harshly on Toyota, which faces accusations of not recalling the defective vehicles soon enough and not being transparent enough with regards to what was going on with the cars and trucks. The letter called Toyota a “valuable friend” of the domestic auto industry, and pointed out that, although Toyota is foreign, its tremendous domestic presence has made it “as thoroughly an American company as the so-called ‘domestic’ manufacturers” that were actually originated in the United States.

Toyota caused major waves in the news during the last week of January, when they recalled no less than eight of their best-selling models due to problems with sticking accelerator pedals. The Avalon, Camry, Corolla, Highlander, Matrix, RAV4, Sequoia, and Tundra were all affected by this recall, which was later expanded to include the Pontiac Vibe. Just this week, a second major recall implicated the best-selling hybrid vehicle the Prius as having malfunctioning brakes when used on uneven roads. This recall also affected a popular Lexus hybrid. The total number of affected vehicles is currently estimated at eight and a half million worldwide.

Toyota’s shares have sank in the wake of the recall news. One factor that undoubtedly amplified that effect was the announcement from U.S. Transportation Secretary Ray LaHood that all Toyota owners driving an affected vehicle should “stop driving it” and bring it directly to the nearest Toyota dealership. LaHood almost immediately amended his impassioned announcement to say he meant only that drivers “in doubt” about their particular vehicle’s status should take the vehicle off the road. LaHood has led something of a one-man campaign against Toyota, accusing the global company of not responding quickly or effectively enough to the crisis.

For their part, the quartet of national governors accuse federal lawmakers of having a “conflict of interest” in the Toyota matter, given the current public ownership of domestic competitors Chrysler and General Motors after those companies fell into bankruptcy. The letter says that Toyota is being accused of many things, but nobody is focusing on how quickly the company addressed its problems, identified solutions to those problems, and then subsequently delivered the solutions to its thousands and thousands of dealers the world over. The letter cites the U.S. government as having a “huge stake” in Toyota’s competitors, and making untrue statements as a result of that bias.

To date, the Toyota company has not yet laid anyone off as a result of the controversy having to do with the recalls. The governors, however, seem concerned that this could become a possibility if the defamation of the Toyota name is allowed to go on for much longer. The Kentucky governor’s office reported that the company employs some eighty-five hundred people in that state, mostly at a Georgetown plan that makes Camrys. The two Toyota plants in Indiana announced that they would not cut any jobs, but that was before the bombshell of the Prius recall was dropped. And there’s concerns that the recalls could impact the planned opening of a Toyota plant in Tupelo, Mississippi, that was set to employ some two thousand people. Toyota also has manufacturing plants in West Virginia, Alabama and Texas, and co-operates another plant with General Motors in California.

The Obama administration has expressed optimism that Toyota will recover from the recall drama. The President referred to the company as “an extraordinary automaker for a very long time,” and stated his belief that this trend would continue well into the future. It’s true that Toyota’s popularity in this country is phenomenal. Up until recently, it had enjoyed the top amount of sales in the country as well as the best measured reputation for perceived quality and reliability. Last year, during the well-received “cash for clunkers” program, it was recorded that more old cars were traded for Toyotas than for any other auto maker’s vehicles.

Back in January, before the official recall was announced, the House Energy and Commerce Committee sent a letter to Toyota officials calling into question their assertion that badly-designed floor mats were to blame for gas pedals getting stuck and causing accidents in several new Toyota cars. The letter stated that it was “quite clear” that a greater malfunction was at work, and called for the manufacturer to address the issue. There is some controversy over the fact that government officials claim to have been aware of the problems with Toyota cars since spring of last year, when Toyota claims that it was not aware of the problem until late October 2009.

Subsequently, questions were raised about “Toyota’s understanding of the risks and the condition,” as the HECC put it in an open letter. Company CEO Akido Toyoda’s reticence in making a public appearance to discuss the issue and answer questions was also criticized heavily in the national press.