Toyota Scandal Submission Template

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Introduction

In 2009 and 2010, three related recalls of automobiles by the Toyota Motor Corporation. The company initiated these three recalls in conjunction with a potentially disastrous turn of events. Beginning in 2008, reports began to trickle out that some Toyota automobiles were involved in accidents caused by unintended acceleration. While it was Toyota that instigated the recall, there are several ethical questions that must be addressed regarding the whole affair. What were Toyota’s motivations? How did they handle the ordeal publically? What did the company know and what did they do with this knowledge?

Here we look at several articles’ take on the Toyota recalls, and the ethical questions that they bring up, in comparison with the National Society of Professional Engineer’s (NSPE) Code of Ethics. We will also address the implications of these ethical questions in terms of their global, economic, environmental, and societal impact. Finally, we will look at life-long learning as a possible means of assisting managers in avoiding these ethical violations.

Part 1: Reference of Articles

Article 1:

“The Toyota way: Workers warned management about cutting corners”, By David Macaray, March 18, 2010, http://www.counterpunch.org/2010/03/18/the-toyota-way/

Article 2:

“Toyota recall: Five critical lessons”, By Michael Connor, January 31, 2010, http://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/

Article 3:

“Toyota president Akio Toyoda ‘very sorry’ for safety recalls”, By Justin McCurry, February 5, 2010, http://www.theguardian.com/business/2010/feb/05/toyota-president-very-sorry-recalls?guni=Article:in%20body%20link

Part 2: Ethical violations for Article

NSPE code violation 1:

(Fundamental Canons) Section I, 1: Engineers, in the fulfillment of their professional duties, shall hold paramount the safety, health, and welfare of the public.

Supporting text from the article:

“Workers blamed the recalls on a lack of adherence to traditional Toyota quality standards. As Wakatsuki noted, every single car that came off the assembly line used to be tested for safety and quality. By 2006, they were inspecting barely 60-percent of them. And what was the result of the memo? As expected, the executives did not respond. ‘They completely ignored us,’ Wakatsuki said. ‘That’s the Toyota way.’ First, the safety defects appear to have been the result of manufacturing shortcuts (a reduction in quality control measures)—shortcuts that were pointed out well in advance of the problem but willfully ignored. Second, if we’re to believe what’s been reported, Toyota’s initial response was, reflexively, not only to avoid any culpability, but to actually conceal the problem.” (Article 1 – CounterPunch)

Impact of ethical violation 1:

Regardless of your opinion on the inherent culpability of Toyota in the unintended acceleration cases, it is clear that, at least to some extent, they violated Section I, 1 of the NSPE Code of Ethics. In this article, we hear from a former Toyota employee, who witnessed firsthand the deterioration of safety standards at Toyota. According to Wakatsuki, only 60% of cars were inspected off the assembly line in 2006 (so one is left to wonder what this number looked like in 2009-2010). The context of the portion of this article is that Wakatsuki and the worker’s union submitted a memo highlighting these defects in the protocol to company management. As Wakatsuki notes, the executives do not respond. Therefore, it is a combination of two aspects that make this a violation of ethics: the fact that inspection was operating at or less than 60%, and that executives directly ignored the safety concerns of their employees.

NSPE code violation 2:

(Rules of Practice) Section II, 1: “Engineers shall hold paramount the safety, health, and welfare of the public. If engineers’ judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client and such other authority as may be appropriate.

Supporting text from the article:

“Aggressive growth can create unmanageable risk. Toyota’s desire to supplant General Motors as the world’s number-one carmaker pushed it to the outer limits of quality control. One wonders if, when accepting management’s plan for aggressive growth, Toyota’s board of directors exercised appropriate diligence to ensure that growth could be achieved without betting the entire franchise. Were quality control and safety part of the discussion? Maybe gaining market share wasn’t worth the trade-off.” (Article 2 – Business Ethics)

Impact of ethical violation 2:

The main aspect of the Code of Ethics that this article highlights is the engineers’ judgment. While the executives of Toyota may not be engineers, per se, they are held to the same standard in their field. This article points out that perhaps Toyota’s judgment had been “overruled in circumstances that endanger life or property.” That is, the drive for higher profit margins and gaining market share forfeited the desire to be safe by the book. The aggressive growth that Toyota pursued had to come at a cost; one of the costs, it appears, was quality control in the company and, therefore, the safety of their customers. This is perhaps the direst violation of the Code of Ethics.

NSPE code violation 3:

(Professional Obligations) Section 1, a&b: “Engineers shall be guided in all their relations by the highest standards of honesty and integrity. Engineers shall acknowledge their errors and shall not distort or alter the facts. Engineers shall advise their clients or employers when they believe a project will not be successful.”

Supporting text from the article:

“Toyoda had come under fire for his apparent refusal to publicly explain his company's response to the latest recall, which affects almost 4.5m cars around the world, including the hugely popular Camry and Corolla models. The new recall was announced on 21 January, but it took almost two weeks for a Toyota executive to appear in public. That unenviable task fell to Jim Lentz, president of Toyota Motor Sales USA.” (Article 3 – Toyota President ‘Very Sorry’)

Impact of ethical violation 3:

While this violation does not have to do with the safety of the public, it most definitely deals with the rights of the public. In the aftermath of the recalls, as this article highlights, it took a Toyota executive weeks to make a public appearance, and the company president even longer. While Toyota was (for the most part) upfront about the responsibility for the cases of unintended acceleration, the fact that the company’s most public face hid for weeks is a strike against them upholding the “highest standards of honesty and integrity.” This is still related to ethical behavior, as the public deserves an upfront and honest confession and discussion by the leadership of the company. This was provided only after the pressure of public opinion was too great to withstand.

Part 3: Implications & Impact

Global impact:

One of the most obvious impacts of the Toyota acceleration scandal is on the company itself, on a global scale. Because the company is international, with sales all over the world, one can easily imagine that the impact was not limited to the United States (or to Japan, for that matter). Instead, it is quite possible that Toyota’s global sales and reputation suffered. Even if Toyota took responsibility for the failures, its worldwide reputation faltered as a result of the negative publicity. In turn, it is easily imagined that the sales of one of the United States’ (and world’s) most popular (and reportedly dependable) automobile suffered.

Economic impact:

As we see in Michael Connor’s article, the Toyota years preceding the acceleration scandal were defined by a model for aggressive growth. Connor states that the company was determined to replace General Motors as the world’s number-one car-maker. Instead, it quickly became clear that Toyota was expanding “too much and too quickly,” which eventually lead to a financially disastrous scandal. This, in turn, led to a vacuum in market share, leaving competition wide open for companies like General Motor to step in. An interesting research question to address would be to examine the sales of US-made automobiles following the Toyota recalls – including used automobiles. Again, it is not hard to imagine the relative sales flipped in an economy largely dominated by imported goods.

Environmental impact:

While the most significant impacts may be financial and economic, it is worth noting the potential environmental impact of the recalls: the transport of the recalled cars, the energy exerted to redesign and release them, and amount of resources diverted to this endeavor all must have taken a toll on an environment so entrenched in production. There is no doubt that the recalls had this sort of impact.

Societal impact:

The most significant societal impact of this acceleration scandal is its effect on the public’s trust of companies and corporations in general. This effect is not necessarily limited Toyota alone – some may very easily extrapolate their mistrust to global corporations more broadly, especially those having to do with the production of goods. Whether this mistrust existed already or not, the scandal certainly did not help the matter. In a phrase, the Toyota acceleration scandal may have lead to a further mistrust of public companies in an economy already steeped in general suspicion.

Life Long learning:

Life-long learning is a new phrase used to describe a pursuit of knowledge (either for personal or professional means) that is ongoing, voluntary, and self-motivated. As the Commission of the European Communities states, participating in life-long learning “enhances social inclusion, active citizenship and personal development, competitiveness and employability.” Given these definitions, it is clear how engaging in life-long learning would help managers to avoid ethical violations such as those found in the Toyota acceleration scandal. On-going training would keep employees and managers up to date on how to remain ethically compliant as technologies and production schemas change. On-going personal development would encourage the same managers to take an active part in defining and determining these ethical boundaries and standards in the company. As personal stakes increase, ethical transgressions will become less and less likely.