Toyota may slash its upper management ranks.
In the wake of a year of crisis that saw the Japanese giant pay record fines to the U.S. government, recall 11 million vehicles and face the wrath of Congress, Toyota is reportedly planning a major shake-up in its senior management roles.
The maker to reduce the size of board of directors by nearly 40%, from 27 members to 17, according to various sources. Toyota also will make sharp cuts in the number of managing directors, executive directors and possibly other senior positions.
The move appears to be motivated by a variety of factors: first, to make the company more lean and nimble and speed up the decision-making process. Toyota paid a record $48.8 million in fines levied by U.S. regulators, last year, because of delays in responding to safety defects. Insiders blame that, at least in part, to the company’s oversized bureaucracy.
But the cuts may also be part of a strategy by Toyota President Akio Toyoda – grandson of the company founder – to purge powerful elements within the automaker’s upper ranks that had resisted his policies.
“Nothing has been decided yet on our management personnel changes, including that of directors,” Keisuke Kirimoto, a Toyota spokesperson, told the Bloomberg news service.
The Tokyo Shimbun, one of the country’s leading dailies, had also reported on the likely shake-up.
The timing would be more than coincidental. Toyota recently reported a nearly 40% decline in third-quarter profits, though it predicted it will exceed earlier forecasts for the full fiscal year, which ends March 31, 2011.
Meanwhile, the maker just received a clean bill of health from the U.S. Department of Transportation, which ruled that there is no evidence of defects with Toyota electronic engine controllers. Critics had argued that mysterious digital gremlins were behind many of the complaints about so-called sudden acceleration involving products like the popular Toyota Camry.
Nonetheless, the maker faces extensive litigation connected with the problem – which was involved in two major recalls in October 2009 and January 2010.
Toyota announced more recalls last year than at any time in its history, and Bob Carter, one of the maker’s top U.S. executives, said the company will err towards ordering further recalls, going forward, if it discovers potential safety problems.
Carter told TheDetroitBureau.com, last week, that he believes Toyota is “well positioned” to recover from the damage to its reputation suffered since late 2009, but industry analysts remain cautious and warn it will be difficult for the Japanese giant to ever fully rebuild its reputation for producing safe and reliable products.