Transport Committee on June 1st, 2010

[The Chair, Conservative, Merv Tweed]

Good morning, everyone. Welcome to meeting number 20 of the Standing Committee on Transport, Infrastructure and Communities. Orders of the day are, pursuant to Standing Order 108(2), a study of the recall of vehicles manufactured by the Toyota Motor Corporation.

Joining us again today, from Toyota Canada Inc., is Mr. Stephen Beatty, managing director, and from Toyota Motor Corporation, Minoru Tanaka, general manager, underbody design division.

Just for the information of committee members, Mr. Tanaka has a translator and we will have a bit of a delay between question and response. I would ask that members, if they want to preserve the most time for their questions, keep their questions as short as possible for the second translation.

I understand, Mr. Beatty, that you have an opening comment. Then we'll move to questions and answers.

[Stephen Beatty, Managing Director, Toyota Canada Inc.]

Thank you, Mr. Chairman.

Mr. Chairman, the committee has indicated that it wants to follow up on the matters that were discussed at the last hearing. You also requested the presence of someone with a technical understanding of the pedals used in Europe and Canada, For that reason, I'm joined here today by Mr. Minoru Tanaka.

Mr. Tanaka is a veteran body engineer who has been with Toyota since 1984. Since joining Toyota, he has focused his work on underbody design engineering, and currently he is general manager of the division that is responsible for design of these aspects of all Toyota, Scion, and Lexus models.

Also, since March 16, when we appeared before the committee, Toyota has made substantial progress towards completing the recalls that are the subject of your review. I'd like to take just a couple of minutes to update members on developments, and then Mr. Tanaka and I will answer any remaining questions you may have.

When Toyota was last here, I said that we were confident that a review of the facts in this case would bear out the conclusion that we had never put profit before the safety of our customers. We also confirmed that our customers, Parliament, and the general public could be assured that the remedies we offered were simple, robust, and above all, effective; in other words, that Toyota vehicles are both safe and long-lasting and that our customers can be confident that the company stands behind the product and supports their needs long after they've left the showroom.

Several questions arose at the last committee hearing, and Toyota was asked to respond to those questions and to provide certain information items. This was a substantial body of work, but I can report that we have collected, translated, and provided the responses back to the committee. That has taken time, but hopefully members of the committee have received copies of that material.

Toyota holds the safety of its customers paramount. We believe we've taken appropriate steps to ensure that issues arising in the Canadian marketplace are investigated, assessed, and fixed. These are complex issues, with which all manufacturers are challenged.

We believe our response to these issues is in keeping with the actions of other members of the industry; however, we're striving to be an industry leader in this regard. We've tried to go above and beyond to ensure that Canadians retain confidence in our brand. That trust, of course, is central to the health of our business.

As a result, we've taken steps to ensure that repairs are carried out quickly and efficiently, with the least inconvenience to our customers; that regular updates are provided to regulators, the media, and the public about the progress of campaigns and other information related to them; and we've established and enhanced quality and safety structure and process, with Canadian representation. Finally, we continue to meet and, more significantly, aim to exceed the requirements of the Motor Vehicle Safety Act in addressing other issues as they arise.

It's fair to say that differences in vehicle architecture, climatic or other environmental conditions, issues of maintenance or wear and tear, as well as various human factors, make it difficult to infer that an issue encountered in one part of the world will necessarily translate to vehicles operated in a different region. But as for Canada, we had no reports of sticking pedals until late last fall.

We moved quickly to address the issue, and in addition to issuing the recall, Toyota suspended production and delivery of vehicles until a remedy could be delivered to the marketplace. We then undertook the most comprehensive and rapid rollout of a recall campaign in our history, and today completion stands at over 88%. We're encouraged by this result and we're aiming for 100% completion.

Now, we understand that public expectations are growing, and as we noted in our last appearance before committee, Toyota has committed to the creation of a new safety and quality structure in North America, with a greater role in safety determinations. Since that time, a chief quality officer has been appointed, committees established, and an independent advisory panel--including a senior Canadian representative--appointed. Also, our individual corporate entities across North America are all looking at our internal procedures to find potential areas for improvement.

Mr. Chairman, Mr. Tanaka and I look forward to your questions.

Thank you.

[The Chair, Conservative, Merv Tweed]

Thank you.

Mr. Volpe, you have seven minutes.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you.

I wonder if I could clarify some things before we begin.

[The Chair, Conservative, Merv Tweed]

Sure.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I think the committee had invited some members from the department to be sitting here. Are they here?

[The Chair, Conservative, Merv Tweed]

We have members of Transport Canada with us, and if we need them or have questions of them, we'll invite them to the table.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

That's good. Thank you very much.

It may be that during the course of my interventions, one of my colleagues may substitute for me. I want to give you and committee members advance warning that we might be sharing some time, even though it won't be formalized. Is that fair enough?

[The Chair, Conservative, Merv Tweed]

You bet.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Can we begin?

[The Chair, Conservative, Merv Tweed]

Begin.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Thank you very much, Mr. Beatty and Mr. Tanaka.

Mr. Beatty, there's something you said a moment ago that causes me to look very seriously at some of these things.

I assume you're familiar with the Motor Vehicle Safety Act, section 10.

[Stephen Beatty]

In general, yes.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I'll quote from it:

A company that manufactures, sells or imports any vehicle...shall, on becoming aware of a defect in the design, construction or functioning of the vehicle or equipment that affects or is likely to affect the safety of any person, cause notice of the defect to be given in the prescribed manner to (a) the Minister....

And to drivers.

So in view of what you just said, when did Toyota become aware of the defect resulting in sticky pedals?

[Stephen Beatty]

Mr. Chairman, I was notified on January 20 that the determination had been made that a safety defect existed, and we moved immediately the following day to issue a notice of the defect.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

That's January 20, 2010?

[Stephen Beatty]

That's right.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

However, in a letter dated February 19, 2010, to the “Head of Recalls”, defect investigations, Transport Canada--and it contains a comprehensive chronology of the recall process--you state that between March of 2007 and June of 2008 Toyota received reports of sticky pedals in the Tundra model. In that same letter, you say that the material of the friction lever, PA46, was “susceptible to humidity”. Did you then issue a notice of defect to Transport Canada?

[Stephen Beatty]

No. The conclusion at the time from engineering was that it did not constitute a safety defect, but simply resulted in notchiness in the pedal.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I realize that you chose to consider this to be a driveability issue and, as you say, unrelated to safety, an assumption or a conclusion that was later changed.

But in testimony to the committee on the date that you mentioned, March 18, the deputy minister of transport addressed the issue of...you'll recall that I asked about safety-related defects and the lack of a clear definition. There currently isn't one under the act. But she made reference to judicial decisions, and she did refer in that context to the department's guidelines for enforcement and compliance policy for defects.

Let me just refresh your memory on some of that. The guidelines also state:

A safety-related defect is generally one that is common to a group of vehicles...of the same design or manufacturer. These defects are likely to affect the safe operation of a vehicle...without providing any prior warning to the vehicle operator or user. Therefore, the defect poses a risk to the vehicle operator, occupants and others.

In its examples of safety-related defects, it clearly states, and I quote: “Accelerator controls that may break or stick”.

Mr. Beatty, could you explain how, based on these guidelines, you would not have issued a notice of defect? How could you justify that?

[Stephen Beatty]

Well, again, the Motor Vehicle Safety Act and regulations provide not just the general guidelines but very specific guidelines with respect to testing of various vehicle components and so forth. Whenever we have complaints, those are reviewed against the provisions of the Motor Vehicle Safety Act and regulations.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

And you're saying that the department didn't ask you to do anything more than what you did?

[Stephen Beatty]

The determination of the safety defect within the terms of the Motor Vehicle Safety Act is something that, in the first case, left to the determination of the manufacturer; it's subject to review by the department.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

So because you chose to consider it a driveability issue, then you could put it over to one side as a safety-related defect.

[Stephen Beatty]

Because of the specific conditions that arose and the manner in which the vehicle performed.... I should mention that there has never been a reported case in Canada of a sticking pedal with that formulation of plastic. It relates to a high-temperature and high-humidity condition and we haven't observed it here.