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Toyota recall taints reliability reputation; highlights reliance on suppliers

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Toyota said on Friday that it has remedied the problem behind its recall of 2.3 million vehicles in the United States, but the hit to the company's legendary reputation for reliability remains so because of its reliance on a vast network of suppliers.

Toyota said on Friday that it has remedied the problem behind its recall of 2.3 million vehicles in the United States, but the hit to the company's legendary reputation for reliability remains so because of its reliance on a vast network of suppliers.

Cars are complex machines with thousands upon thousands of parts that can be made by outside manufacturers. Toyota's suspension and recall of eight models due to a sticking accelerator problem -- linked to a "disproportionately high number of deaths," according to Democratic representative Bart Stupak -- shows that it has lost quality control over its partners.

The problem is technically the fault of U.S. firm CTS Corp., which made the accelerator pedals in question. CTS says it manufactured the pedals based on Toyota's design specifications, but Ford recently halted production of a Chinese model that uses CTS-made pedals.

Nevertheless, the cars have Toyota's name on them, and drivers hold the company responsible.

Toyota is long-known for owning many of its Japanese suppliers outright, keeping the entire operation much more tight-knit than its rivals. It's renowned for practicing the "just in time" inventory strategy that minimizes inventory and carrying costs.

But after aggressive expansion overseas in the last decade, the question is whether Toyota has rushed into relationships too quickly with parts makers for which it can't vouch.

Toyota maintains that it inspects every part before it's installed in a vehicle. The question is whether the parts were defective before installation or because of it.

Worse, the company is under fire for cutting costs too aggressively across the supply chain, despite complaints of runaway vehicles. Cost-cutting has been even more prevalent in the wake of the recent global economic downturn.

Now the company's on the defensive, batting back criticism that it pursued the bottom line at the expense of its management strategy.

The backlash could ripple through the dozens of other industrial companies Toyota owns, including a steel manufacturer, precision equipment maker and auto parts maker Denso Corp.

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure