Total recall: Lessons from major product recalls

Toyota’s recall of more than 6 million vehicles in the US is certainly not the first time a major company has been forced into an about-face on a product. A chronological look at some of the major product recalls in the last 28 years also shows that how a company manages its product recall can have quite a dramatic effect on future profits.   

1982 – Tylenol murders
When seven people in September 1982 died in a small district in Chicago, Illinois – two after gathering to mourn the death of another victim – and it was discovered that the cause of death was cyanide-laced extra-strength Tylenol pain relief capsules, experts sounded the death knell for the popular American drug.

Video: CBS report on murders in 1982

However, there was a ray of light for Johnson & Johnson, the drug’s manufacturer when Illinois police quickly ruled out contamination at the company’s plants, saying they were looking for a rogue operator, possibly taking bottles off the shelves in local pharmacies to contaminate. J&J acted quickly to recall the drug – which was their most profitable product at the time – and started a big two-phase public relations campaign. The first involved cooperating with the media and advertising the message that the public should not use any Tylenol-based drug but should return them to the company for a refund.

The second phase was a re-launch with triple tamper-free packaging and more advertising, this time to push the drug back to its original market share – a goal the company achieved by December of the same year. The incident is now considered by public relations experts as a text-book example of crisis management.

1990 – Perrier bottled water
Unlike Johnson & Johnson, Perrier had a public relations stinker when it was discovered that the carcinogen benzene was present in bottles of their sparkling spring water. The amount of the clear solvent was only tiny but Source Perrier decided on a mass recall of the bottled water in the US in a bid to protect its reputation.

Video – Food & Drink show reports on Perrier

However, the mass recall failed to protect its image as the message from the company was confused. American and UK sections of the company were hamstrung by a confused message from French HQ. A suspicious public steered clear of Perrier, damaging the company’s reputation to such an extent that it never recovered its hugely dominant market position.

2000 – Bridgestone/Firestone – Ford Explorer
The most famous partnership in the American auto industry – that between Ford and Firestone, starting in 1906 with the Model-T Ford – ended in bitter acrimony and recrimination over who was to blame for up to 250 deaths in car accidents involving Ford Explorer SUVs rolling after the tread of their Firestone tyres separated.

The companies blamed each other: Ford was quick to claim the tyres were defective, while Bridgestone/Firestone countered that the Explorer was prone to rolling. Ford recommended a lower tyre pressure and said the same tyres were perfectly fine on other SUVs.

video – When a business marriage goes sour (ABC)

The accusations and counter accusations reached crisis point when Bridgestone/Firestone announced it would recall 6.5 million tyres from August 2000 before writing a letter in May the following year stating that it would not do business with Ford again. The cost in lost sales, lawsuits and recalls for both has been estimated at about $10bn.

video – NBC report on Firestone tyre recall

1987 – Audi out of control

Audi, the German carmaker, hoped scientific analysis would quell reports of unintended acceleration in its 5000 model in the mid-1980s. But its near-silence on the issue was perceived as an admission of guilt. Its problems reached a climax in November 1986 after allegations that an out-of-control Audi had caused the death of a six-year-old boy in the US.

A class action lawsuit bought the following year by Audi 5000-model owners seeking compensation is still being contested in a county court in Chicago after appeals at the Illinois state and US federal levels. About 7,500 plaintiffs are involved.
Sales plummeted in the 80s following a recall of almost 8 million vehicles. Regulators later cleared the company of wrongdoing but it was a decade before Audi returned to the US market in full force.

2003 – The Yo-Yo ball
The Yo-Yo ball – a rubber ball filled with water and hurled around one’s head via a rubberised bungee chord – became the must-have toy in playgrounds across the world in 2003. But the ball had a deadly tendency to wrap tightly around a child’s neck and was incredibly difficult to remove when a popular trick called ‘the helicopter’ was performed. A recall of the Chinese-made balls was ordered when a schoolgirl from Newcastle-upon-Tyne was strangled. They were subsequently banned in the UK, France, Australia and Canada.

2006 – Sony battery recall
Sony was forced to instigate a chain reaction recall of its laptop batteries that affected up to ten laptop manufacturers, including its own brands, when it was reported that lithium-ion cells in the batteries were catching fire (see video).

 

While Sony engineers claimed that under their own tests they had been unable to reproduce the battery failures – suggesting blame lay partly in the system designs of other laptop manufacturers, batteries continued to explode with alarming regularity. Lenovo was forced to recall 526,000 batteries after one of their ThinkPads caught fire while it was being carried on to an aircraft at LA International Airport, forcing a fire extinguisher to be used.

Toshiba, Fujitsu, Dell, IBM and Apple were also affected. Sony’s claim of other manufacturers’ culpability was put into perspective when it recalled 440,000 of the Vaio TZ series laptops because 209 overheated, causing minor burns in seven customers.

2007 – Made in China products recall
It was a bad year for products made in China. A New Jersey tyre importer asked for federal help in recalling 450,000 tyres made by China’s Hangzhou Zhongce Rubber Co. after they were deemed to have problems with the now notorious tread separation.

In South Korea, cholocate sweets made in China were found to have worm and moth larvae in them by appalled consumers. The discovery of worm larvae caused concern among Chinese exporters about their reputation, which was exacerbated when US toy manufaturer Mattel recalled 9 million toys, which included Barbie dolls, because of dangers from lead paint and magnets.

Dec 2009 – Roman blinds
The US Consumer Product Safety Commission recalled every roman blind – a total of 50m across the United States, made by different manufacturers – after press reports that five children had died and another 16 had suffered near strangulation from the blinds’ pull cords.

2010 – Toyota recall
The full extent of Toyota’s recall of at least 8m cars so far because of various problems with accelerator pedals, break pedals and floor mats is yet to be felt. On February 15, the crisis began to translate into job losses as experts speculated that the Toyota plant in Burnaston, Derbyshire may be forced to cut much more than the 750 jobs already anticipated because of the downturn.

Earlier, Akio Toyoda, chief executive of Toyota Motor and the grandson of the company’s founder, issued a general apology for the defects on February 5 after months of criticism since the first recalls were announced in November 2009. Already the company’s estimate of the cost of the recall had spiralled past $2bn and set to rise after adding in the recall of the Prius, which has reported brake problems.

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Leyla Boulton is an editor on the FT's main newsdesk
Andrew Edgecliffe-Johnson is the FT's media editor
Robin Harding is an FT correspondent in Tokyo
George Parker is the FT's political editor
Sean Smith is an editor on the FT's international companies desk

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