Toyota hands over union letter to US watchdog

Toyota hands over union letter to US watchdog
By Jonathan Soble in Tokyo
Copyright The Financial Times Limited 2010
Published: March 11 2010 13:27 | Last updated: March 11 2010 13:27
http://www.ft.com/cms/s/0/b670c60e-2d0f-11df-8025-00144feabdc0.html


Toyota has handed over to US lawmakers a 2006 letter written by Japanese employees warning that aggressive cost cuts had undermined the quality of its vehicles.

The letter, from a small dissident labour union, was sent to Katsuaki Watanabe, Toyota’s former chief executive, and accuses the company of “sacrificing safety” by curtailing vehicle testing and hiring thousands of “amateur” short-term contract workers.

Toyota turned over the letter at the request of Edolphus Towns, the New York Democrat who chairs the House Oversight and Government Reform Committee, one of several congressional committees investigating accelerator-related problems in millions of the company’s vehicles.

At the time the union registered its complaints, Toyota was struggling to contain an increase in the number of defects affecting its products. Between 2000 and 2006, the carmaker recalled an average of about 1m cars a year – a sharp rise on previous periods.

Concern over the defects reached a peak in mid-2006, when Japanese police launched an investigation into the company over the crash of a Toyota Highlander sport utility vehicle – one of the recalled models – that injured five people. Prosecutors eventually dropped charges of professional negligence against three executives in the case.

The same year Mr Watanabe ordered a broad review of Toyota’s quality control – a review whose effectiveness is now being questioned in light of the recent recall crisis. Toyota declined to comment on the complaints made by the workers’ group, the All Toyota Labour Union.

Tatsuo Wakatsuki, the union’s leader, referred to the Highlander crash in the letter, saying: “We fear that processes vital to safe automaking have been cast aside in the name of competitiveness.” Without reform, he added, Toyota could face “a major problem that could threaten the existence of the company.”

The union’s main complaint was about Toyota’s use of temporary contract workers to meet fast-rising production demands. Two years after the group sent its letter, Toyota overtook General Motors to become the world’s highest-volume carmaker.

At one point in 2004, Toyota had more than 12,000 “irregular workers” who comprised almost 40 per cent of its domestic production workforce. The number of contractors has fallen sharply since the financial crisis in 2008, however, and now stands at 2,200, according to the company.

The All Toyota Labour Union – which broke away from Toyota’s established in-house union in 2006 and has only a handful of members in comparison with the main worker’s body – also criticised the company for shortening product-development times, putting pressure on suppliers to slash component prices and replacing real-world safety tests with cheaper computer-based ones. All of those issues have been cited by analysts as possible contributors to Toyota’s recent problems.

Separately, Daihatsu, a Toyota subsidiary that makes ultra-compact ”minicars”, on Thursday announced a recall of more than 274,000 cars in Japan to fix a loose joint in their front wheels.