You have to have a little sympathy for CTS Corp. these days as it struggles with the public relations nightmare that has engulfed Toyota. This week’s press release titled “CTS Not a Supplier of Pedals for Prius or Lexus Models” is evidence of an effort to limit the damage in the court of public opinion and its shareholders. CTS has said it built its parts to Toyota’s specifications but other sources say it was an RDDP program (Request for Design and Development Process). RDDPs are functional parts that are separable and are designed fundamentally by the suppliers (as opposed to either a ‘design-in’ which takes place interactively at the Toyota Technical Center, or a build-to-print part). With RDDP, Toyota provides only basic specs and relies on the supplier’s expertise in its field to complete the design and development for a specific vehicle program. Eventually, blame for unintended acceleration will undoubtedly be affixed and apportioned, but right now, the attention of the parties is appropriately focused on the fix. What’s ahead for CTS in this storm?

In its investor presentations from last year, CTS shows as a great example of a healthy, strategically sound company that is positioned to benefit from external trends. At 28% automotive, it has desirable market diversification as well as customer diversification – no single customer accounts for more than 10% of sales, and the Detroit 3 combined are 5% of sales. Through the course of 2009, the company reported at least $200 million worth of new contracts for its electronic throttle control accelerator pedal modules and other automotive applications. Regulatory initiatives driving tougher emissions standards and better fuel economy were expected to yield double-digit sales growth for the company’s sensors and actuators business over the next 3-5 years.

The imperative for CTS now is to limit the damage from spreading to other customers or other products. What happens to its projected $82 million in sales of accelerator pedal modules, sold to 10 major customers in North America, Europe and Asia? Toyota issued a statement supporting CTS and citing shared responsibility as the pedals were designed jointly, but the fact remains that the problems appear to be limited to vehicles with CTS pedals and not those with Denso-built pedals. We hope that rational inquiry and effective communications will serve the participants well, but in these days of the dramatic 24-hour news cycle, it’s hard to be optimistic.