“He never ‘saved’ auto industry” … “Johnson’s ads inflate his own role” … “Didn’t invent statistical process control” … “On the wrong side of ethics” … “Violat[ed] conflict-of-interest rules” … “Walked a fine legal line” … “Prolific junk faxer”
Yesterday, Bridge Michigan reported that “prolific junk faxer” and gubernatorial candidate Perry Johnson has been spamming the airwaves with ads that “inflate his own role” within the auto industry – a bizarre claim even he had to concede was “a bit much.”
Bridge’s investigation into Johnson’s companies revealed a number of shady, unethical, and illegal business practices that the off-kilter millionaire exploited to maximize his bottom line.
He notably manipulated both ends of quality control, “creat[ing] one company that taught businesses how to pass certification audits, and another that actually conducted those audits,” a conflict of interest mill that put him squarely “on the wrong side of ethics.” This double-dealing led to Johnson’s companies being suspended by both domestic and international quality accreditation boards alike.
Additionally, Johnson’s company relied on state prisoners to make telemarketing calls, touting that the incarcerated were secured “for half the price” of outsourcing to India.
Johnson also sent so many unsolicited fax ads for his companies – nearly 12 million over a nine-year period – that he made history as “one of the first in his industry sued for violating rules designed to stop them.”
Bridge Michigan: Perry Johnson Built An Empire On ‘Quality.’ But He Never ‘Saved’ Auto Industry
By Jonathan Oosting
Michigan GOP gubernatorial hopeful Perry Johnson is touting his business chops in television ads claiming he “saved the American automobile industry using statistics and standards” — and he can do the same for state government.
But even Johnson admits the claim is “a bit much.” […]
Johnson sent millions of “junk faxes” to would-be customers in the 1990s in violation of federal rules, according to lawsuits reviewed by Bridge. Before that, he was known for mailing out VHS videotapes. He used cheap prison labor for telemarketing, wrote books and technical manuals and delivered seminars as a motivational speaker.
To critics, Johnson’s aggressive marketing extended to an early business model that upended the rigid quality control field: He created one company that taught businesses how to pass certification audits, and another that actually conducted those audits, an arrangement which led to at least one industry suspension for violating conflict-of-interest rules.
“Perry Johnson was the pioneer in what we call the certification mill industry,” said Christopher Paris, a consulting competitor and watchdog who runs the ISO Whistleblower Program.
He said Johnson’s strategies “have been on the wrong side of ethics.” […]
Johnson’s companies, which bear his name, have denied any institutional wrongdoing, and experts say their reputation has improved since Johnson spun off and sold his consulting firm nearly two decades ago.
“Perry has walked a fine legal line over the years,” said Roderick Munro, a certification auditor and fellow with the American Society for Quality. […]
Johnson is perhaps best known as the owner of Perry Johnson Registrars, Inc., a Troy-based firm he founded in the early 1990s that is accredited by industry groups to audit and issue standards certifications to auto, aerospace, food safety, cybersecurity and marijuana companies, among others. […]
Johnson started a separate firm, Perry Johnson Inc., out of his home a decade earlier, in the 1980s. It’s through that company, he said, that he persuaded auto suppliers to begin adopting “statistical process control,” a mathematical method for determining variance in order to manufacture precision parts.
“When your car door closes just right, thank Perry Johnson,” a narrator says in his Super Bowl ad. “When you even have a job in the American auto industry, thank Perry Johnson.”
Johnson didn’t invent statistical process control. It dates to the 1920s and was popularized by W. Edwards Deming, who is considered the godfather of the quality control industry.
But Johnson told Bridge he “promulgated it” at a time when U.S. automakers were besieged by reliability concerns and losing market share to Japanese companies making more dependable vehicles. […]
“But really,” he acknowledged, “it was the people on the line that saved the industry.” […]
“There are many heroes in the transformation of the domestic auto industry,” but “there is no one party that can say, ‘We were responsible,’” said Joel Cutcher-Gershenfeld, a Brandeis University management professor and author of “Inside the Ford-UAW Transformation.” […]
Experts say Johnson’s ads inflate his own role in that transformation, and industry insiders told Bridge Michigan that his quality control company was not always known for the highest quality work when it first began.
While the reputation has improved, early conflict of interest concerns “gave him a real bad taste by a lot of companies initially,” said Roderick Munro, a certification auditor and fellow with the American Society for Quality.
Court records show the U.S. Registrar Accreditation Board suspended Perry Johnson Registrars in the early 2000s, preventing the firm issuing aerospace certifications because of allegations it was auditing suppliers that Johnson’s consulting firm had taught them how to pass.
Board rules prohibited Johnson’s consulting and registrar firms from working for the same company within two years.
“That’s a big taboo,” said Paris of the ISO Whistleblower Program. “You can’t audit your own work, and you can’t certify your own work.”
The suspension was prompted by a complaint from Boeing, the aerospace giant, which alleged it had caught Johnson’s companies violating conflict of interest rules twice in six months. In one case, a Perry Johnson Inc. consultant had attended a Perry Johnson Registrar audit, according to Boeing. […]
Court filings show Johnson’s firm was also suspended by the Japan Accreditation Board of Conformity Assessment, although the documents do not explain why. Johnson’s firm sued over the suspension in 2004, but the Japanese board never responded in court. […]
Experts attribute some of the early reputational struggles of Johnson’s firms to marketing campaigns that relied on unsolicited fax ads.
Before the explosion of email spam and robocalls that flood smartphones, there were junk faxes. Court records indicate Johnson was a prolific junk faxer — one the first in his industry sued for violating rules designed to stop them.
Unsolicited fax ads exploded in the 1990s as companies and individuals began adopting the communications technology. The junk faxes were considered especially annoying because they cost the recipient, who had to pay for paper, ink and machine maintenance.
Congress passed multiple laws to ban the practice, but Johnson’s consulting firm was cited by the Federal Communications Commission for violating fax rules in 2000, according to one of several lawsuits filed by recipients.
One complaint alleged Johnson’s company sent 1.3 million junk faxes between 1994 and 2003, a total of 11.7 million unsolicited ads over the course of nine years. […]
Perry Johnson Inc. agreed to provide up to $424.75 in products or services to any company or individual who had received an unsolicited fax. The firm was also ordered to pay for a notice in USA Today and create a website inviting fax recipients to join the class action case.
The settlement was tied up in court for years, however, amid a fight over how to contact fax recipients for a potential claim. Plaintiffs accused Johnson’s company of destroying its database of fax numbers, along with information on recipients who had asked to be on a “do not fax” list. […]
Johnson’s companies are also known for telemarketing to reach potential customers, and in 2004 reportedly signed an agreement to employ Oregon state prisoners for the calls. […]
News articles from the time said Johnson’s company had intended to move telemarketing operations to India in a cost-cutting move but was able to open its call center in an Oregon prison “for half the price.” […]
Kevin Rinke, a fellow Republican businessman also running for governor, criticized Johnson earlier this month, calling him an impersonal “consultant that came in and pushed people through a funnel.” […]