Takata Poised for Clash After Snubbing U.S. Recall

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NHTSA Deputy Administrator David Friedman
National Highway Traffic Safety Administration Deputy Administrator David Friedman, seen here, said, “NHTSA received Takata’s disappointing response to our demand for a national recall of certain driver’s side airbags. Takata shares responsibility for keeping drivers safe and we believe anything short of a national recall does not live up to that responsibility.” Photographer: Pete Marovich/Bloomberg

The top U.S. auto-safety regulator told lawmakers there is no way Takata Corp. can justify limiting an air-bag recall to only high-humidity states.

David Friedman, the deputy administrator for the National Highway Traffic Safety Administration, cited data that shows humidity is less of factor than first thought in the malfunction risk for driver’s side air bags. He said NHTSA will hire within a week an independent expert to conduct more air-bag tests.

“While it’s true the automakers implement the actual recall, Takata is making the defective products and Takata should be declaring nationwide a defect in their products,” Friedman told reporters today after testifying to Congress. “That will lead to a recall from all the automakers.”

Takata snubbed NHTSA yesterday in refusing to expand recalls beyond about 8 million cars in high-humidity areas, where four motorists have died. The company has said that widening the safety campaigns would aggravate the shortage of replacement air bags and prolong the wait for repairs.

There is no reliable evidence that a nationwide recall is necessary, and it would be more useful to focus repairs on high-humidity areas where the potential for air-bag malfunctions is higher, Takata said in a Dec. 2 letter to NHTSA. It also said regulators didn’t provide enough notice and the company is already taking measures to improve safety.

“I find the letter unhelpful and extremely tendentious,” said Representative Leonard Lance, a New Jersey Republican and vice chairman of the House subcommittee that held the hearing today. “You are dramatically and diametrically in opposition to the view of NHTSA.”

Honda Recall

As Takata made its case at the hearing, an executive from Honda Motor Co. said his company is ready to expand regional recalls on Takata inflators to make them national.

An expansion to areas where the risk of malfunction is lower may challenge Takata, which is only able to produce about 350,000 replacement kits a month now. Even with plans to increase output to as many as 450,000 in January, it would take more than a year to get dealers enough parts to repair every car affected by the recall.

“We believe a part shortage may occur,” Rick Schostek, executive vice president of Honda North America, said at the hearing. Honda has been in discussions with Takata competitors Autoliv Inc. and Daicel Corp. about expanding supply, he said.

Autoliv later issued a statement saying it had reached an agreement to begin supplying an unspecified number of air bags to Honda in about six months. Financial terms weren’t disclosed.

Potential Fine

Fiat Chrysler Automobiles NV said it would expand its recall of older model Dodge Ram pickup trucks in more U.S. states in response to NHTSA. The agency said it was not enough, however.

“Chrysler’s latest recall is insufficient, doesn’t meet our demands, and fails to include all inflators covered by Takata’s defect information report,” David Friedman, the deputy administrator for the National Highway Traffic Safety Administration, said in a statement by e-mail. “NHTSA will determine next steps and take appropriate actions to ensure Chrysler acts to protect its customers.”

Manufacturer Responsibility

NHTSA had asked Takata to conduct a nationwide recall for driver’s side air bags in models made by Honda, Ford Motor Co., BMW, Chrysler Group LLC and Mazda Motor Corp. The regulator had told Takata that failure to comply may lead the agency to force a call back and impose fines of $7,000 per violation.

The fact that NHTSA asked Takata to expand the recall, rather than individual automakers, shows the agency believes the air-bag manufacturer has the responsibility to ask for a recall, Friedman said.

NHTSA is reviewing its next steps toward forcing a recall, which include a public hearing and a review of the record as the agency builds a solid legal case that will hold up in court, Friedman told the subcommittee. That may happen in a matter of several weeks or months, he said, without committing to a specific timetable.

“If Takata continues to stonewall on this recall, NHTSA is going to take them to court and their customers are going to leave them in droves,” said Clarence Ditlow, executive director of the Center for Auto Safety, a Washington research group. “I don’t see a winning scenario in this for Takata to fight a national recall.”

Senators React

Two U.S. senators urged NHTSA to force Takata to comply with the nationwide recall of driver’s side air bags and expand it to include passenger-side devices as well.

“Takata is right now risking more lives by rejecting this nationwide recall, and the company must be held to account,” U.S. Senators Edward Markey, a Massachusetts Democrat, and Richard Blumenthal, a Connecticut Democrat, said in an e-mailed statement.

Mark Rosekind, who last month was nominated by the White House to fill the vacant top administrator position at NHTSA, vowed today at a separate Senate hearing to use “every one of the legal tools that are available” to enforce highway safety laws and recalls.

Rosekind, when asked specifically about the Takata case, said as the nominee he had to be cautious.

Driver, Passenger

“On the other hand, I’m a driver and a passenger and a pedestrian and I can tell you I not only agree, but am very concerned like all of you have been with the slowness across all of the recalls,” he told the Senate’s commerce committee.

Rosekind said he didn’t agree with Takata’s plan to recall air bags only in regions with high humidity.

NHTSA has said Takata’s air-bag inflators may malfunction if exposed to consistently high humidity by deploying with too much force, breaking apart metal pieces and striking passengers. After four related deaths in Honda models in the U.S., one fatal accident in Malaysia that killed a pregnant woman and reports of inflator ruptures in areas with lower humidity, NHTSA gave Takata an ultimatum last month.

In response, Takata said its air-bag testing has found no problems with inflators outside high-humidity areas, according to Hitoshi Sano, head of investor relations for the Tokyo-based company.

Toyota Testing

Toyota Motor Corp. and other customers have already called for independent testing to supplement Takata’s investigation, and a Mexican regulator urged the air-bag maker to take additional safety measures at its lone factory making replacement kits for the U.S.

Takata yesterday said former U.S. Transportation Secretary Samuel Skinner will run a new independent panel that will audit production and provide recommendations for safer air-bag inflators. The company also hired two other former U.S. transportation secretaries as advisers to help overhaul operations.

In Mexico, Takata was told to take 171 measures to improve health and safety at its Monclova plant after an Aug. 13 inspection, the nation’s labor ministry said in a document dated Dec. 1 and e-mailed to Bloomberg News yesterday. The ministry didn’t elaborate on what measures the company was told to take.

Takata has identified flaws in manufacturing and quality control at the Mexico plant and two U.S. factories that have contributed to its air-bag problems. At the Monclova facility, the chemical propellant wafers that lead its devices to deploy were exposed to moisture, raising risk of combustions that break up metal and plastic air-bag parts.

“The Takata air bag issues are complex,” Representative Fred Upton, a Michigan Republican, said at the hearing. “But complexity is not an excuse for incompetence.”

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