Toyota loses some luster in hometown over recalls

TOYOTA, Japan — Even in its hometown, the great automaker has lost some of its mystique.

Rising out of the barren winter rice fields of central Japan, this city of 400,000 people is probably the most Toyota-friendly place on the planet. Renamed after the company 51 years ago, it hosts the corporate headquarters as well as enormous factories and is beholden to the automaker for tens of thousands of jobs and the bulk of its tax income.

Residents say they, like the rest of the world, were surprised by the safety problems that have led to a mass recall of Toyota vehicles. But it was the company's response that was more shocking — the global icon came across as dithering and unprepared.

"Maybe Toyota isn't any different from ordinary companies," said Akari Mizunaga, who works at a local trading company that depends on Toyota for much of its business.

As the company grew in the 1930s from its roots as a producer of mechanical looms, it has transformed the formerly rural town into a thriving municipality. Toyota dealerships are strung along the city's main street, and the automaker's curly T logo is everywhere — on cars, signs and buildings.

"You can't really separate the town from the company," said Hideki Nagata, who works independently in auto repair. "And now there is this sense of — are we OK?"

None of the people interviewed in Toyota said they would hesitate to buy one of the company's vehicles in the future, and several said they thought the automaker would now work harder to ensure quality. But there was a palpable disappointment in the way it had handled the recent safety concerns, almost as if let down by a relative.

Akio Toyoda, who took over the company in June, is a grandson of Toyota's founder and was seen as a charismatic choice that would lead it back from deep losses incurred during the global economic slump.

The company name is spelled and pronounced differently from the founding family name because Toyota is written in Japanese script with eight brush strokes, considered luckier than the 10 required for the family name.

In the company museum at corporate headquarters — where the address is 1 Toyota Town — there is nothing subtle about the safety message. Main exhibits are devoted to subjects like "Active Safety," "Passive Safety," and "Intelligent Safety." A large room in a prime location next to the entrance is devoted to the hybrid, with a dissected, flashing Prius demonstrating how it works.

Kazuhide Ueyama, 54, visited the museum Saturday on a tour from his home in Osaka, about 100 miles away.

"This trip was planned before these problems came up, but everyone was talking about it on the bus over here," he said, referring to the recall woes. "I have no doubt they will deal with the problems firmly, but it does raise some questions."

The city, 150 miles southwest of Tokyo, has suffered in the latest global downturn along with the company, which cut temporary workers at its Japan plants to 3,000 workers at the end of last fiscal year from 9,000 a year earlier.

Toyota struggled to its first yearly loss in nearly 60 years last fiscal year, and as its tax payments fell the city budget shrunk, leading to cuts in municipal services.

Despite the loss, many point to the company's strong financial standing. Unlike competitors in the United States, the company boasts solid finances — a report from investment-research firm Morningstar on Jan. 27 after the gas-pedal problems came to light called Toyota's balance sheet "fortresslike."

Last week Toyota said it would become profitable again in the current fiscal year through March, after earlier forecasting more deep losses. It now expects a profit of 80 billion yen ($890 million), versus an earlier projection for a 200 billion yen loss.

For many Japanese, Toyota is a source of pride because of the legend of its success — from when its founders tore apart a Chrysler in 1933 to see how it worked, to the company eventually passing General Motors and becoming the No. 1 automaker in the world two years ago.

Now the fear in Toyota is that the company's recent stumbles could see it lose the top spot. "This is a chance for American companies like GM, who could catch up," Ueyama said.