#1 Lahood vs Toyota
Feb-04-2010

U.S. Transportation Secretary Ray LaHood, charged with getting to the bottom of Toyota Motor Corp.'s vehicle-safety crisis, served up more confusion than clarity yesterday.

At about 9:30 a.m., LaHood told reporters that drivers of recalled Toyota cars and trucks should "exercise caution" until repairs can be made. Then he told a House panel that owners should "stop driving" them. Then he told reporters his stop-driving comment was "obviously a misstatement."

Toyota's American depositary receipts, each representing two ordinary shares, gyrated on his remarks. They fell as much as 8 percent to a 10-month intraday low of $71.90 in New York Stock Exchange composite trading after he said owners shouldn't drive, and then climbed to close at $73.49 following the retraction.

For the 64-year-old LaHood, barely a year into the job as the only registered Republican member in President Barack Obama's cabinet, the day may have reinforced a principal of behavior in the nation's capital, said Robert Johnson, former Transportation Department chief of staff under President George W. Bush.

"You can't open your mouth whenever you feel like it and expect to get away with it, especially in Washington," Johnson said in an interview.



Toyota's Crisis



"The secretary has been consistent over the last week," said his spokeswoman, Olivia Alair. "He's consistently said Toyota needed to be pushed, but they're doing the right thing now."

The context for LaHood's remarks was the biggest crisis to hit Toyota, the world's largest automaker. Some of its vehicles unexpectedly accelerate, sometimes causing drivers to lose control. Henry Waxman, a California Democrat who heads a House committee that plans hearings on the matter, this week linked the accelerations to 19 deaths in the U.S.

Toyota began shipping steel plates to U.S. dealers on Feb. 1 as a fix for sticky gas pedals that the company says have caused the recall of about 2.57 million vehicles in the U.S. and Canada. In addition to tarnishing Toyota's reputation for quality, the turn of events has wiped out $29.5 billion in Toyota market value since the current recall began on Jan. 21.

"It just points out that no one is ever really ready for the intensity of a crisis like this," Jon Harmon, a Chicago communications consultant, said of LaHood's don't-drive comments.

"He should not be making policy pronouncements on the fly," said Harmon, who wrote "Feeding Frenzy: Inside the Ford- Firestone Crisis," a book about fatal accidents linked to Ford Explorers equipped with Firestone tires that led to recalls about a decade ago.



'Extremely Confused'



For LaHood to say that Toyota owners should stop driving the cars was "very significant," said Michelle Krebs, senior analyst at auto research firm Edmunds.com, based in Santa Monica, California.

"People are extremely confused about whether their Toyotas are safe to drive," Krebs said. "We have struggled with what we should say, and we aren't the top safety person in the country."

LaHood has appeared to change course at other times when discussing the Toyota recalls. He told WGN Radio in Chicago Jan. 27 that the reason Toyota decided on the recall was "because we asked them to."

The following day, when asked by a reporter whether Toyota did the recall at the government's request, LaHood said the company acted because it was following the law. "I have no criticism of Toyota on this," LaHood said. "They did what they're supposed to do."

On Feb. 2, he told the Associated Press that Toyota was "a little safety deaf" and federal officials had to "wake them up" to the seriousness of safety issues.



Unfamiliar Role



Asked yesterday why his comments changed from the previous week, LaHood said, "because I talked to our people, and I did a more complete review." At the time of his earlier comments, he felt that Toyota had done all it should have done, he said.

LaHood was forced into the leadership role on the Toyota recall because the National Highway Traffic Safety Administration, which is part of his agency, didn't have a confirmed chief until last month, said Joan Claybrook, a former NHTSA chief.

"The secretary of Transportation rarely gets involved in these kinds of recalls," Claybrook said. "He's probably not used to the kind of intense scrutiny over these kinds of enforcement actions."

Still, LaHood has pushed Toyota to be responsive, she said. "He has no problem dealing with controversy," said Claybrook, former head of the Washington-based advocacy group Public Citizen. "He certainly has been tough dealing with Toyota."



Obama, Emanuel Ties



Before becoming secretary in January 2009 LaHood served seven terms in the U.S. House of Representatives for a district that includes Peoria, in Obama's home state of Illinois. He has known Obama for more than a decade and is close to Rahm Emanuel, the White House chief of staff who also was an Illinois congressman.

Bob Michel, a former Illinois representative who was the top Republican in the House when LaHood worked as his aide, said LaHood's comments yesterday won't blemish his record as secretary.

"He's a very resilient individual," Michel said. "There's no sinister move on his part other than just wanting to be sure of safety."

Asked yesterday whether the president still has confidence in LaHood, White House deputy press secretary Bill Burton replied, "You bet."

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