Perry Johnson built an empire on ‘quality.’ But he never ‘saved’ auto industry

June 6: Perry Johnson takes ballot case to federal court after losing in Michigan
June 3: Michigan Supreme Court upholds disqualification of GOP candidates
June 2: James Craig loses ballot access suit; Johnson appeals to Michigan Supreme Court
June 1: Perry Johnson loses appeal in fight to make Michigan’s GOP ballot
May 25: Michigan board to decide if Craig, Johnson, others make ballot: What to expect

LANSING—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.”

“The ad is an ad,” the Bloomfield Hills businessman told Bridge Michigan last week after a campaign event, defending his work to promote statistical analysis and international standards during a crucial period for automakers.

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The self-described “quality guru,” who launched his gubernatorial campaign with an expensive Super Bowl commercial, is no stranger to self promotion. 

While he is championing the technical aspects of the business certification, training and consulting empire he built in metro Detroit, industry insiders say Johnson is known first-and-foremost as a relentless salesman. 

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.”

“He's just that guy. He's wired differently,” Paris said.

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.

But “he got through his initial issues, and he's done very well for himself.”

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.

The company has offices in Michigan, Texas, Los Angeles, Japan, Mexico, Italy, Thailand, India, Canada, China and the United Kingdom. 

“We are fortunate enough to be the biggest quality registrar in the United States and employ hundreds of people in Michigan and across the country,” company President Terry Boboige said in a statement through Johnson’s campaign.

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.

“I’m the guy that went out there and promoted (statistical process control), and did it endlessly,” Johnson said. “I gave (auto companies) a tool to use their experience in order to make the quality constantly get better until it was the best in the world. 

“But really,” he acknowledged, “it was the people on the line that saved the industry.”

The transformation

Johnson is one of 12 Republicans who have filed paperwork to compete in the August primary, which will decide who takes on Democratic incumbent Gov. Gretchen Whitmer in the general election. 

He was one of the last to join the race, but he made a splash by pumping $2.5 million of his own money into the race. That has allowed him to pay for a statewide ad blitz and begin holding “interactive” campaign events around the state focused on education and election security.

Johnson is framing himself as a pragmatic problem solver, like Michigan’s last Republican governor, Rick Snyder. 

But Johnson also veered to the political right in the primary, backing a partisan petition drive to tighten voter ID laws, declaring himself a follower of former President Donald Trump and endorsing an attorney general candidate, Matthew DePerno, who tried to overturn the 2020 election. 

Statistical process control "became a way of life” for the auto industry and it could improve state government too, Johnson said in a recent campaign speech, suggesting Michigan could have detected pandemic-era unemployment fraud earlier, improved roads and done more to turn around struggling schools. 

The lanky 74-year-old built his empire decades ago amid a sea change as companies around the world began adopting statistical controls and what are known as ISO 9000 standards, an international quality system that tasks managers with putting procedures in place to improve performance.

In 1994, Detroit automakers agreed to replace their independent standards with a collective version of ISO 9000. At the time, Wards Auto called it “the most sweeping standardization system to hit the automotive industry since Henry Ford introduced mass production.”

Johnson’s firm was among the first registrars accredited to audit and issue QS-9000 certifications, which the Big Three required all its suppliers to obtain. Soon, many Tier 1 suppliers began requiring their own suppliers to obtain standards certification as well. 

Those standards, along with the advent of precision robotics in domestic manufacturing, played an important role in fighting back the "Japanese invasion” of inexpensive and reliable cars, said Carla Bailo, CEO of the Center for Automotive Research. "We learned an entirely different way to work."

Domestic auto quality has improved over subsequent decades, but experts say consultants and registrars like Johnson are only one part of a larger story that included a culture shift embraced throughout 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.”

“Anybody who's been involved in the certification process is part of the transformation story but cannot claim to be the sole reason for the transformation to have occurred,” he said. “I would give equal weight to the frontline team,  to the middle managers, to the union leaders, to the senior executives, both in production and in support functions, HR, finance, quality and others.”

‘Wink and nod’

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. 

“The potential for (and benefit of) ‘wink and nod’ arrangements between customer, consultant and registrar was obvious,” attorneys for the Registrar Accreditation Board wrote in court filings at the time. 

The temporary suspension only became public because Johnson’s company sued the board, arguing the suspension was “illegal” because Perry Johnson Registrars was not given a hearing to refute claims.

“Any potential publication or disclosure of the suspension will irreparably harm PJR's ability to maintain its reputation, goodwill and business in the aerospace industry,” attorneys for Johnson’s company wrote in an Oakland County Circuit Court filing. 

The accreditation board initially fought the suit, calling the apparent conflict of interest by Johnson’s companies a pressing concern because it jeopardized the credibility of “the quality management system created by the aerospace industry to promote airplane safety.”

However, the two sides eventually reached a settlement to dismiss the lawsuit. The accreditation board agreed to lift the suspension pending a more thorough review. Johnson, meanwhile, spun off and sold his consulting company. 

Boboige, president of the registrars company, said Johnson sold the consulting company because “it was perceived at the time that we became too dominant.”

Perry Johnson Registrars now has a “great relationship” with the accreditation board and is “in good standing,” he said. 

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. 

At the time, Johnson’s registrars firm included a disclaimer on its website, saying it takes “great measure to ensure no conflict of interests occur” with Perry Johnson Inc. Perry Johnson himself, “is not involved in day-to-day operations” of the registrars firm, the company said.

The relationship between his companies turned heads in the industry at the time, but it has since been emulated by others, said Paris, who told Bridge he remains concerned and is advocating for Congress to require reforms.

“In all fairness, they improved,” Paris said of the Troy-based firm. “So now, Perry Johnson Registrars is one of the ones I get the least amount of complaints with. So they’re not that bad.”

‘Blast faxer’

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. But a federal judge dismissed the suit because plaintiffs had sued Johnson personally, rather than his company.

Johnson did not solicit any facsimile numbers or send any facsimiles himself," his attorneys had argued in court filings, denying his consulting company was a "blast faxer."

But Johnson’s consulting firm settled a similar case in California state court, where a local company led a class action lawsuit over the alleged junk faxes. 

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.

Asked about the lawsuits, Bogobie told Bridge simply that “fax machines were a fairly common method of advertising in previous eras.”

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. 

His firms no longer use prison labor, but Johnson ”fundamentally believes in criminal justice reform and allowing people to find a skill for a second chance in life,” Boboige said.

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."

Johnson is an “absolutely excellent salesman,” said Munro, the American Society for Quality fellow. “‘Aggressive marketer’ is a nice, polite way to say it.”

A ‘major break’

While Johnson has employed controversial business techniques, even critics acknowledge that he has been successful, building an empire that now includes more than a dozen Michigan-based companies.

Private firms do not need to disclose profits. But Perry Johnson & Associates, a firm that specializes in health care consulting and medical transcription, boasted in a 2018 legal filing that it was the largest privately held transcription company in the U.S. with $43 million revenues. 

State business records show Johnson has also incorporated a foreign profit corporation called Pathway Holdings, Perry Johnson Consulting of Japan, Perry Johnson Environmental, Perry Johnson II Inc, Perry Johnson International Holding, Perry Johnson Mortgage Company, Perry Johnson Seminars Inc and the Perry Johnson Charitable Foundation, among others. 

In 2020 and 2021, Perry Johnson Inc. applied for and qualified for $3.6 million in forgivable loans through the federal Paycheck Protection Program, which the company said allowed it to keep 142 employees and 290 employees on the payroll during the COVID-19 pandemic. 

“We were proud to keep our employees working as COVID had a dramatic impact on our company as it did most of our customers in the manufacturing and automotive industries,” Boboige told Bridge. 

Johnson describes himself as a self-made man who grew up middle class and was "getting eviction notices on a regular basis" in grad school, where he subsisted on a steady diet of "sub sandwiches." Johnson has a bachelor’s in math from University of Illinois Urbana-Champaign and pursued a graduate program from the University of Detroit.

His "first major break" came when he landed a job as a sales engineer at Borg Warner, an auto supplier based in Auburn Hills, where he saw first-hand the impact that Japanese vehicles were having on the domestic industry, he said at a recent campaign event.

In 1993, Johnson wrote a book on ISO 9000 international standards for quality management systems. It’s a dense technical manual sprinkled with real-life examples from companies that had improved their internal controls. 

And it "sold like hotcakes — beyond my wildest dreams," Johnson said.

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.”

“He’s an expert at doing mathematical equations and making everybody the same, with the hopes of having higher quality,” Rinke said. “Everybody is not the same.”

But Johnson, who is married with three children, says he’ll bring a new approach to state government that he honed decades ago as an auto supplier consultant. 

"I am the quality guru, and I intend to bring it to Michigan,” Johnson said. “I'm running for governor because I'm at a point in my life where I want to give something back to this great state and to this great country.”