The BMW and Fisher Price recalls are making me think - who pays for these? I assume the company so how do they account for them in the balance sheet?
If you look at this BMW reecall, or even the Toyota ones, that must cost millions or more in Toyota case. The recent BP "quality control problem" resulted in them I believe withdrawing dividends etc. Billions that has cost them but slightly different, they couldn't just ignore it!
Would you like to be the head of Quality Control or whatever who makes the call to to the CEO to say "eh boss, I think we have a problem".
In Financial terms , and taking the morality side out the equation, would it not be cheaper for them to ignore and just pay out when any deaths / injuries occur?
Is this a reflection of modern H&S in that once it is brought to someone's attention, they are not going to put their name to a document saying that there is no need for recall?
At work we regularly have food donated from a local bakery who donates surplus stock to several charities. This has gone on for a while but because someone asked our H&S rep whether everything complied, and she looked at it and saw that it didn't, we can no longer accept these donations. Simply put, since she had been asked in her professional capacity, she was not going to put her name to something that she knew was wrong. But had been happy to turn a blind eye to it in the past.
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You cant afford to ignore, cover up or bribe any more.
Toyota Brakes, Exploding Pintos and Rollover Explorers on Firestones has proven that.
Yes the companies suffer. - The Iphone antena-gate had to be notified to wall street, as it knocked 100 million off the projected profits and kicked a 10% drop in the share price.
>>In Financial terms , and taking the morality side out the equation, would it not be cheaper >>for them to ignore and just pay out when any deaths / injuries occur?
Ford got caught doing just this, they calculated the cost of each death.
Last edited by: Zero on Fri 1 Oct 10 at 21:46
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The truth is that the general public don't like it when corporations try and sweep safety critical issues under the carpet.
Bobby, your example with the bakery is going a bit far IMO. The HS Officer could no more guarantee that food bought from that bakery is safe over the donations you were receiving, so I don't understand the issue there. Traceability and all that....
However in the real world, a company who lets its customers die needlessly is guilty of corporate manslaughter, and for very good reason. Even leaving out the human cost factor in this arguement, the cost to the company if they got caught not facing up to their responsibilities could make the recall option look like a walk in the park.
On a lesser note, as an example, Land Rover had an issue with the oil pump bolts fitted to the TD5 engines. As I understand a number of them weren't dipped in thread locking compound and the normal operation of the engine can work them loose, leading to oil pump then total engine failure. Apparently they decided to just deal with warranty claims etc on a case by case basis. I see reports of some people with 4 or 5 year old D2s that they've had since new have the engine replaced by LR out of goodwill, whereas other D2 owners in simliar positions have been cold shouldered. I guess it depends who you know......
However, this wasn't a safety critical issue, which ironically I think was a shame as LR would have most likely sorted it
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I worked on a laptop battery recall for a major computer manufacturer (assembler, I suppose, as all teh components come from elsewhere). The cost of the recall were picked up by the battery manufacturer. it wasn't cheap either!
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If the recall is because of a supplied component and that component was not made correctly then the manufacturer will pursue the supplier for damages. This happened following the common rail diesel pump problem suffered by Mercedes around 5 years ago. A sealing ring on the pump did not meet the specification agreed by Mercedes and the supplier of the pump (Bosch) was faced with a very large bill for the warranty and recall work incurred by Mercedes.
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Product recalls - Zero
