Total recall.

Photographer: Kazuhiro Nogi/AFP/Getty Images

Takata Is the Real Safety Hazard

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The dubious honor of triggering the largest consumer recall in U.S. history -- once held by Johnson & Johnson's Tylenol -- now belongs to the Japanese auto parts supplier Takata. Thirty-four million of the company's airbags, having been determined to have caused at least six deaths and injured more than 100, will have to be replaced. But it's not too late to hope some good can come from this misfortune. Ideally, it will serve as a wakeup call for the Japanese government and the global auto industry.

It's fair to wonder what exactly Takata knew about its defective products and when. The company, however, has never felt compelled to divulge itself. Since revelations began trickling out in 2008, Takata has resorted to Japan's standard playbook for corporate scandals. Ignore, deny, delay -- then bow deeply, apologize and get back to business as usual.

The Japanese government and media have enabled the company's obfuscations. Takata Chairman Shigehisa Takada and his team weren't ever hauled in for a parliamentary grilling. And Japan's notoriously docile media consistently soft-pedaled stories that threatened to shame the national brand. Fortunately, foreign media -- and U.S. lawmakers, who initiated their own investigation of the airbags -- weren't so quick to let Takata off the hook.

Even so, eight years on, Takata has yet to offer a satisfying explanation for its defective products. Preliminary findings from a German firm the company hired to supplement its investigation haven't been very illuminating.  

And that should raise troubling questions about the company's competence. If it can't locate the flaw that's linked to the deaths of consumers, perhaps it shouldn't be in the business of supplying automakers around the world. (In the absence of further information from Takata, even the U.S. National Highway Traffic Safety Administration has had to admit it's unsure if the company's replacement airbags will be any safer over the long run.)

The Takata debacle is a microcosm of all that's wrong with Japan's insular corporate culture -- and, to that extent, it's an opportunity for Prime Minister Shinzo Abe. The prime minister has argued that stronger corporate governance will revive Japan's economic fortunes, but his efforts to that end have so far been half-hearted. Abe has passed new stewardship and corporate-conduct codes into law, but it's no secret that those measures lacked the teeth to bring an 82 year-old behemoth like Takata to heel.

Now Abe has a chance to use his bully pulpit as a way to rally support for stronger laws. He shouldn't hesitate to deliver a public scolding of Takata, urge investigations of the company, and force some accountability on its executives.

That might increase pressure on Japanese CEOs to publicly break ranks with Takata. We already saw hints of that in February, when Honda said it had "no interest" in offering Takata a financial lifeline. But now that Takata's mess is threatening to drag down other major Japanese companies (Toyota has said it is now setting aside money to cover the costs of Takata-related recalls), they may feel more inclined to offer such chastisements.

Takata, for its part, would be wise take note of how Toyota responded to its own mass recall. When faced with a crisis related to defective accelerator pedals in 2010, Toyota didn't hesitate to immediately recall several million cars. Toyota's forthright acceptance of responsibility turned plenty of heads in corporate Japan. But the company's subsequent success showed that, in the long run, it's not the scandal that matters, but how you handle it.

Of course, the question of whether Takata can survive probably misses the point. The better question is, should it? It would certainly be costly for automakers to stop buying from the market-leading Takata; and alternative suppliers like Sweden’s Autoliv and Japan’s Daicel may not be able to immediately meet demand. But it's time for the auto industry to take a stand for safety.

BMW, General Motors and Toyota shouldn't just recall their vehicles, they should recall their loyalty to Takata. The company hasn’t earned those automakers' business. It also hasn't earned the continued patience of the Japanese government.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Willie Pesek at wpesek@bloomberg.net

To contact the editor on this story:
Cameron Abadi at cabadi2@bloomberg.net