Toyota President Acknowledges Defeat, Says Company "Grasping For Salvation"
In a rare example of corporate accountability and humility, the president of Toyota, arguably the best run auto company in the world, Akio Toyoda, had some very harsh words for not just his company's recent decline, which he characterized as "grasping for salvation", but for his own failure at prevent this collapse. One wonders when Mr. Toyoda's American counterparts, whose own failures are orders of magnitude worse, will do admit even a minor fraction of comparable culpability.
The world's largest car company was once targeting annual sales of 10 million vehicles but now expects sales of 7.3 million this year, down from 8.97 million in 2008, Toyoda said today at a news conference.
Citing the five stages of corporate decline outlined by Jim Collins, author of How the Mighty Fall, the Toyota chief warned that his company has slumped to stage four, which Collins calls “grasping for salvation.”
“We are grasping for salvation,” Toyoda said, adding that the company already has spiraled through the first three stages: (1) hubris born of success, (2) undisciplined pursuit of more and (3) denial of risk and peril. His self-admonitions echoed the apologies commonly made by Japanese executives who take responsibility for financial turmoil or corporate scandal.
“Toyota has become too big and distant from its customers,” the grandson of the automaker's founder said as he prepares for a second-straight year of substantial financial and unit-sale decreases.
What is shocking is the humility in Toyoda's confession: while Toyota is nowhere near Jim Collins' Fifth stage "Capitulation to irrelevant or death", this is precisely the circle of hell in which the Detroit 3 find themselves yet continue deluding themselves that they provide relevant, innovative products. Ironically, these same American companies never cared to admit as they were spiraling out of control through the first four stage either, and now it is far too late for redemption. And compliments of a subsidy-happy and union-friendly administration, US auto makers will continue their perpetual state of denial, long after Toyota has been reduced to a shadow of its former self, despite having an incomparably better business model.
And as to why not just subsidies, but a Bernanke-mandated policy of trade isolationism, simply for the sake of pumping up a Ponzi stock market, will be the ultimate reason for capitalism's downfall, as otherwise efficient companies are unable to compete in a world market supported by a flounder reserve currency, this is what the Toyota president had to say:
Toyoda called the current dollar-yen rate "very tough," saying the weak U.S. currency made it difficult to return to profit on an unconsolidated level.
If anyone thinks Toyota is alone in its plight of taking on the Fed's printing presses head on (even as Japan's finance minister inexplicably is for a strong Yen policy and thus suicidal to his country's trade balance), you are wrong. As America is a major net global importer (or has been until Bernanke decided to kill the dollar), all who wish to sell their wares to the US consumer are at a significant disadvantage as they have to cut prices, thus eating into profit margins and bottom line earnings.
Will things change? No. After all Obama needs to subsidize every single dead or dying industry in order to spend the billions of dollars that the Chairman has printed. Expect numerous such dislocations in all aspects of the US economy. Ironically, even Toyoda is against an ongoing tidal wave of endless government subsidies:
Toyoda said he would welcome an unlikely extension of Japan's cash-for-clunkers program beyond March, while adding it would not be prudent to keep depending on the government for help.
Unfortunately, at this point in the life cycle of American capitalism, "depending on the government for help" is the only thing the shattered business world of a formerly great country can rely on.