Lessons That Manufacturers Can Learn From Automotive Recall Issues

09 September 2015 Manufacturing Industry Advisor Blog

 

By now, anyone not living under a rock for the last 18 months is no doubt aware of the high-profile recalls that have been roiling the automotive industry. Although the long-running GM ignition switch recall may be the most well-known example, the automotive industry in general is recalling vehicles at rates much higher than in the past and other automakers also are facing scrutiny for perceived slow responses. Many manufacturers outside of the automotive industry may breathe a sigh of relief that they are not the ones under the gun. However, recalls are not limited to the automotive industry and manufacturers in other sectors would do well to heed the lessons that can be learned from watching current events.

Although manufacturers outside of the automotive sector may not be subject to regulation by the National Highway Traffic Safety Administration (“NHTSA”), most manufacturers (particularly those manufacturing goods for the consumer market) are subject to some form of regulation. Not all regulatory authorities have the power to force a recall of goods, but those that do are no doubt aware of the criticism directed at NHTSA for its perceived inaction or delay. Such agencies likely will step up their own enforcement actions in the future. Even those manufacturers who are not subject to involuntary recalls can find themselves facing a “voluntary” recall where they might otherwise be faced with product liability claims.

With all of this in mind, manufacturers should consider carefully what lessons can be learned from the ongoing automotive recalls, including:

  1. Do not wait for a molehill to turn into a mountain – It should go without saying but, early detection and correction can greatly reduce the cost of a problem. All too often, companies do not realize/admit they have a problem until after they have received so many returns or complaints that the issue no longer can be dismissed as coincidence. Companies should look to implement procedures that are designed to identify potentially problematic trends as early as possible.
  2. Do not allow even the appearance of a cover up – It often is said that the cover up is worse than the original offense. The same holds true when addressing product issues. Recalls are by no means uncommon in the automotive industry. However, much of what set the GM ignition switch recall apart stems from the widespread perception that GM employees tried to sweep the problem under the rug. GM’s reputation certainly was not helped by revelations such as a GM presentation training engineers to avoid using certain words or phrases when describing a problem.
  3. Learn from your own mistakes – In large companies, it is an unfortunate reality that, the lessons learned from a problem often are not disseminated beyond those immediately involved in the issue. No company is perfect. The manufacturing industry today, and the goods that it produces, are more complex than ever. It is impossible to anticipate and prevent every potential issue. However, companies should ensure that they have policies and procedures in place to make sure that potential issues, and the solutions, become part of the wider company knowledge base.
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services