"The verdict is in," Transportation Secretary Ray LaHood pronounced this past February in releasing results of a study by NASA engineers for the National Highway Traffic Safety Administration. "There is no electronic-based cause for unintended high-speed acceleration in Toyotas."
While the result of the study into the possibility of electronics problems with Toyota and Lexus cars appeared to dispel that issue, the Japanese automaker, an icon of manufacturing quality, had already paid a heavy price. Toyota recalled 8 million cars to make alterations designed to prevent two mechanical issues -- "sticking" accelerator pedals and a design flaw that made it possible for accelerator pedals to become trapped by floor mats. Toyota estimated the cost of the recall at more than $2 billion. The company also paid $48.8 million in civil fines for being tardy in reporting quality issues. And this past December, Toyota settled a closely watched liability suit in California for $10 million. More litigation is pending.
Major brands such as Toyota face the most scrutiny in the 24/7 media world when a product recall is initiated, but Toyota's difficulties only underline one of the plain truths of 21st century manufacturing -- product recalls are a common and costly occurrence.
A quick scan of www.recalls.gov, the website set up by six federal agencies charged with recall responsibilities, shows just how pervasive product recalls have become among the world's best known brands. In July 2011 alone, NHTSA lists 43 recalls from companies including Polaris, Chrysler, Ford, Honda, Kawasaki and Mack Trucks.
Recalls have become so common that Stericycle ExpertRecall, an Indianapolis-based company that helps firms manage product recalls, started an index recently to track aggregate recall activity and trends in five product categories: medical devices, pharmaceuticals, food, consumer products and children's products. Among the aggregate totals noted by ExpertRecall was that the pharmaceutical industry recalled 35 million units in the second quarter of 2011 and there were 587 incidents connected with children's and infant's products.
Kevin Dooley, a professor at the W.P. Carey School of Business at Arizona State University, says better communication from the field to manufacturers may account for some of the uptick in product recalls. He said manufacturers may also be more willing to engage in recalls because they have a body of experience to draw on for how to handle a recall well.
Danny Lin, a partner in Accenture's process and innovation performance practice, said on the whole "companies are more aware today of the impact that product quality is having to their consumers and are much more responsive when defects are caught."
In a manufacturing environment where the drive for quality has been going on for decades, it might seem counterintuitive that recalls at least appear to be increasing. Lin opined that the drive for increased sales may be undermining quality efforts at some companies because they have not been able to scale successfully for increased production levels. "They may be overreaching and it leads to some of the problems we have seen," he says.
