Toyota Review Reveals Need for More Quality Checks

[Rich Parsons]

I got this in an e-mail:

Toyota Review Reveals
Need for More Quality Checks
By NORIHIKO SHIROUZU
December 11, 2006 5:32 p.m.; Page B3D

TOKYO -- Toyota Motor Corp. has concluded after a two-month review of its product-development processes that Toyota engineers in some cases may have rushed out products without conducting enough quality checks, such as building physical prototypes, as they should have, said Toyota President Katsuaki Watanabe.

Skipping those quality checks and relying too much on computer simulations to assure quality might be a factor in a recent rise in quality problems and recalls, Mr. Watanabe said in a recent interview.

"We found out through the study that we outsourced engineering perhaps more than we should have, and we relied on computer-aided engineering and other computer analysis and didn't conduct as many quality checks as we should have," Mr. Watanabe said in a recent interview.

"We are determined to build more physical prototypes" in the future to quell recalls and quality glitches, he added.

According to Mr. Watanabe, Toyota also has decided to tap the brakes on its ambitious growth plans around the world after the study, which also reviewed the company's product plans for the next several years. The move was in response to mushrooming product recalls and other quality problems, he said.

The Wall Street Journal reported earlier this year that the Japanese auto maker was considering delaying introductions of some new models by as much as half a year in an effort to address quality issues. One big reason for the move was the run-up in recalls in major markets around the world: In the U.S., the number of Toyota recalls hit 2.38 million vehicles last year, more than the 2.26 million vehicles the auto maker sold the same year.

In order to improve the engineering and design of vehicles thus their quality, Mr. Watanabe said Toyota now has decided to delay product introductions in order to extend the allotted times it takes to develop products, and in some cases has decided to eliminate planned products altogether, while in some cases introducing new products that had not been in its original plans. He also gave the green light to a move to hire 8,000 engineers globally in part to help conduct more of those checks and produce more physical prototypes to assure vehicle quality.

"We went through and reviewed all of our plans, product by product, market by market," he said. The executive, however, didn't elaborate further, and it was not immediately clear which new and redesigned vehicles are going to be delayed and by how much, among other changes.

The move will likely force Toyota to sell some of its existing products longer than it had planned earlier, but Toyota executives said they believe those delays will have little material impact on its revenue and profit.

Indeed, even as it slows down the pace of new product introductions, Toyota still wants to extend its business in "every segment (of the auto market) in every region of the world," Mr. Watanabe said in an investor meeting in Tokyo earlier this year.

A select group of Toyota's top brass, including Mr. Watanabe, is currently drafting what they describe as a "global master plan" to guide the company over the next 10 years. Mr. Watanabe won't divulge details, but around the world, he sees much of Toyota's growth coming from three key efforts: to transform its Lexus premium brand, a North American-only franchise today, into a more global premium franchise; to launch low-cost $6,000-7,000 cars in emerging markets around the world; and to develop commercial vans that would compete globally, including in Europe and North America.

To fuel its expansion, Toyota has said it plans to sustain capital spending at unprecedented levels -- around the record $13 billion it spent last fiscal year -- over the next several years. The money will go toward building more new plants and expanding capacity of existing manufacturing facilities.

In North America, Toyota is gearing to choose a site to produce more four-cylinder engines and add another vehicle-assembly plant, a No. 8 in the region, to catch up with surging sales, both moves that Toyota is likely to announce next year.

Write to Norihiko Shirouzu at [email protected]

I am glad to see this. Not does Toyota look to be hiring new engineers, but it also seems to be stating in public something I know form my personal experience. Outsourcing of work and jobs is not always cheaper and in the end your name is on the product and needs to be checked out by your team. Yet the issue of outsourcing is to reduce structure cost.

The other thing I like about this is the move from all Modeling template to going back to proto-types and development parts with modeling. I think this is a good idea.

I also noticed that Toyota has stated that they might slow down some launches to avoid issues of quality. I think this comment with a recent comment by Ford about looking to making money and not worry about number 2 in the USA market and also by Rick Wagner CEO of GM to not worry about number 1 market share in the world and worry about being profitable, shows that the whole market realizes that quality and being able to not loose money is requried to sell vehicles.

 

[Carol]

I got this in an e-mail:


I am glad to see this. Not does Toyota look to be hiring new engineers, but it also seems to be stating in public something I know form my personal experience. Outsourcing of work and jobs is not always cheaper and in the end your name is on the product and needs to be checked out by your team. Yet the issue of outsourcing is to reduce structure cost.

The other thing I like about this is the move from all Modeling template to going back to proto-types and development parts with modeling. I think this is a good idea.

I also noticed that Toyota has stated that they might slow down some launches to avoid issues of quality. I think this comment with a recent comment by Ford about looking to making money and not worry about number 2 in the USA market and also by Rick Wagner CEO of GM to not worry about number 1 market share in the world and worry about being profitable, shows that the whole market realizes that quality and being able to not loose money is requried to sell vehicles.

Thanks for posting that, Rich!

That is very, very, very good news. Its good to see any company waking up to the true costs of many outsourcing decisions that are made.

Speaking as someone that's just a consumer and not with any connection to the industry, quality/reliability is the most important factor when deciding upon a vehicle. And to me, quality isn't a television voice-over actor saying something is a quality product, it is proving that something is a quality product.

Some folks are OK with taking the chance on car repairs...this to be particularly true with folks that have multiple cars available to them...such as having adult children living at home, or perhaps they are car enthusiasts.

Me, however, I live alone and I only want to buy one car to get through all of the extremes of New England weather. I don't want to deal worrying about a car breaking down when I'm driving home at 2am, or wrangling around for car repairs and renting a car when the car is being repaired and hoping its going to be fixed on time. I must have a car that works well and won't break (yes, I'm demanding...LOL!) and I base my purchases on that main criteria.

I hope the road ahead is good all around.

 

[SFC JeffJ]

I've been a loyal Toyota and Lexus buyer for years. Good to hear they are going to be even better quality than what I've grown accustomed too!

Jeff