Toyota recall gives Elkhart-based supplier unwanted notice

Like most companies that make thousands of parts in automobiles, Elkhart-based CTS Corp. was virtually unknown to the average
car buyer. That was until its gas pedal was blamed for big problems with some very popular cars.

The company found
itself the focus of intense scrutiny Wednesday after Toyota halted sales of eight of its car and truck models over problems
with gas pedals made by CTS.

The move followed Toyota’s recall of 2.3 million vehicles such as late-model Camrys
and Corolla sedans, RAV4 crossovers and Tundra trucks last week over fears that gas pedals could get stuck and cause unwanted
acceleration. CTS made the accelerators at a plant outside of Toronto.

The parts supplier tried to tamp down concerns
over its accelerators, saying it knew of fewer than a dozen cases of problems in Toyota vehicles. It also said there were
no reports of pedals getting stuck, though Toyota warned federal safety officials last week that could occur in "the
worst case."

CTS said it is working with Toyota on a new pedal design. The new equipment has been tested and
is being shipped to some Toyota factories, according to the parts company. Separately, Toyota said that a redesigned pedal
is in full production at CTS.

The Toyota recall hit one of CTS’s bigger automotive supply businesses. The company
makes gas pedal systems for a variety of automakers, including Toyota, Honda and Nissan.

But the problems are limited
to Toyota models, and spokesmen for Nissan and Honda said their CTS-produced pedals are based on different designs. CTS said
the Toyota business comprises only about 3 percent of its overall sales. The pedals were made to Toyota’s design specifications,
the company said.

Employees at the CTS plant in Mississauga, Ontario, where the Toyota accelerators are manufactured,
would not comment Wednesday. Inside the building lobby was a 2005 trophy that read "Toyota Excellence." CTS was
also recognized by Toyota in 2007 for "outstanding quality performance" in the prior year at the Canadian plant,
according to a company press release.

CTS manufactures auto parts in Elkhart, Canada, Scotland, the Czech Republic,
Mexico, Taiwan and China.

Only part of the company’s 2008 sales came from automotive work, with the rest split
between equipment for sectors like communication, aerospace, medical and defense.

CTS on Wednesday reported lower
fourth-quarter earnings of $4.1 million, or 12 cents per share. While its automotive unit, which includes the gas pedal business,
saw sales grow 44 percent in the quarter, total sales fell 19 percent to $133 million.

The safety recall also includes
the Pontiac Vibe, a General Motors Co. compact car that was outfitted with the same CTS gas pedal and made at a California
plant jointly run by CTS and GM.

GM spokesman Tom Wilkinson said about 99,000 Vibes were subject to the recall.
GM had already begun closing down the Pontiac brand, and only two Vibes remain unsold, Wilkinson said.

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