Airbag Recall

There has been a growing news story about an airbag recall involving Takata, a Japanese auto parts manufacturer with plants worldwide.

Takata was founded in 1933 in Japan and have always made safety equipment of some sorts. Their first product was a lifeline for parachutes and after the war they started to research improvements in seat belts for vehicles. Nash and Ford had offered them as options in the early 50s and SAAB made them standard fit from 1958 so Takada could see a growing market.

In 1995, the National Highway Traffic Safety Administration (NHTSA) launched a recall against Honda cars fitted with the Takata seat belt system for faulty buckles that could unlock during an accident or not latch properly. 8.5M vehicles were affected. Ultimately the recall spread to 11 manufacturers, mostly Japanese however several US company who had vehicles made in Japan were also affected. The NHTSA found that the buckles were made of plastic and that ultra-violet light caused them to become brittle over time. Takata and Honda were fined $50,000 each for failing to report the issue in a timely manner.

Nearly 20 years later and Takata are at the core of another major recall. This one started over a year ago – although it is now front of the newspapers. Back in April 2013, Honda (again) and other manufacturers recalled over 3.5M vehicles to replace the airbags. They were all made in a factory owned by Takata in Mexico and the company admitted that the workers had mis-handled the explosives contained in the airbag deployment system thus rendering them useless. To make the situation worse, this admission not only took 1 year to come, it also involved an admission that the factory had kept incomplete records so the authorities could not determine what other vehicles were at risk! It transpires that the engineers knew for at least 10 years that the chemical mix was incorrect – what sort of quality control systems were in place to suppress that kind of information? Surely someone would feel guilt and report it up the chain or to a media outlet for investigation.

When you stop to think, the company was really only settling down after the major seat belt recall that took a few years to resolve and they didn’t appear to make any changes to their quality systems and this allowed them to create a fresh (and damaging) problem.

In May of this year, GM complained that several of their models built a few years earlier had issues with the electrical systems in the airbags of Cruze, Sonic and Camaro models plus the Buick Verano. In June, other manufacturers (Ford, BMW, Chrysler, Mazda, Nissan and Toyota) joined Honda in recalling a further 3M vehicles that had airbags made in the Mexican plant, this time because when the bags inflated they showered the occupants with sharp objects! This was blamed on moisture getting in to the bags (which should have been sealed). In addition, GM advised dealers to stop selling the Cruze because of airbags with an incorrect part fitted.

By November the number of manufacturers seeking a recall had risen to 10 and the NHTSA wanted a full national recall. Meanwhile BMW had figured out that the Mexican plant was not up to the standard it should have been and transferred its contract to a Takata facility in Germany. Several manufacturers also had localised recalls in other countries where they suspected that vehicles were shipped to.

On the 24th December, the Wall Street Journal reported that the President and COO (or Cee-Uh-Oh), Stefan Stocker, would step down due to the recall but will still retain an executive director role! Stocker will have his pay cut by 30% for the next 4 months. Shigehisa Takada the Chairman and CEO will take over his duties and will be “fined” 50% of his pay over the same period. Takada-san is the grandson of the company’s founder. CNN was quoted as saying that three other directors would receive a 20% pay cut as well. Surely some of them should also lose their executive director roles – this is a major oversight and cover-up and shows very poor directorship. A director should be guiding the management and this clearly didn’t happen.

The company stock is down over 50% this year alone and could drop further. News like this will make the manufacturers wary of contracting them again – unless they have a near monopoly on airbag systems.