Toyota recall: As firms go global, so do their glitches

You don't get much more "made in America" than the Chicago Telephone Supply Co. Founded in 1896 in the Windy City and later moved to Elkhart, Ind., it started corporate life by selling phones to rural Americans.

More than a century later, CTS, as it's now known, produces a wide range of made-to-order products for Hewlett-Packard, Cisco Systems, Raytheon, Ford – and Toyota.

Last month, the Japanese automaker pointed to a faulty CTS accelerator mechanism as the reason for the recall and suspended production at its North American facilities for the week of Feb. 1. Toyota's problems have since mushroomed, with the federal government looking into broader quality problems. On Feb. 4, under pressure from the Japanese government, Toyota acknowledged a software glitch that caused braking problems in its made-in-Japan Prius hybrid.

Welcome to the dark side of globalization.

For decades, corporations have increasingly sourced parts and ingredients from around the world to produce its products. The effort has chopped prices and brought consumers better technology. But it can also blindside them if a shoddy part escapes detection and gets whisked around global distribution systems. Just ask anyone who bought a luxury US home with tainted Chinese drywall – or South Koreans put at risk by recalled peanut butter made in Blakely, Ga.

The issue is no longer Made in America versus Made in Japan or Germany. The challenge for consumers is that the product they buy is only as good as its weakest component, which can be made anywhere and everywhere. Globalization can make shoddy products harder to track. It can also make problems difficult to spot if corporations don't track trends globally.

"When someone publishes a list of affected products, can you figure out if you've got one in your pantry?" asks Elliott Grant, chief marketing officer at YottaMark, a Redwood City, Calif., firm specializing in product tracking. "There was a list of some 2,000 products listed in [the recent] peanut recall, so there is a need for someone to determine what is and what isn't affected."

US recall spreads abroad

When Toyota announced its US recall Jan. 21 for sticky accelerators, the action quickly spread around the globe. It recalled another 1.8 million vehicles in Europe, which used the same CTS part. Ford announced it was temporarily halting production of a Chinese commercial vehicle, which also used the CTS accelerator mechanism. Because Toyota produced a generation of the Pontiac Vibe in a former General Motors plant, 2 million Vibe owners will be receiving recall notices.

1 | 2 | 3

Next