Five painful lessons from the Takata airbag recall
So, what can we learn from the biggest consumer-product recall in history, affecting millions of vehicles on Canadian and U.S. roads?
On Thursday, the U.S. highway-safety regulator decided that airbags made by Japanese auto-parts giant Takata Corp. are so dangerous that the regulator wants to take over the job of managing — and speeding up — the massive process of recalling and replacing a staggering 34 million vehicles to replace faulty airbags.
The malfunctioning Takata airbags have so far been linked to six fatalities and more than 100 injuries worldwide. Because of potentially defective airbag inflators, Takata airbags have exploded with tremendous force, shooting metal shards into the bodies of drivers and passengers. So what are the lessons? 1. The vaunted supply-chain systems employed in the private sector can go awry. In taking its unprecedented action of commandeering the recall and replacement process, the U.S. National Highway Traffic Safety Administration (NHTSA) cited a “patchwork” of Takata, its dozen or so automaker customers, and the automakers’ thousands of dealerships as explanation for the dreadfully slow pace at which these ostensible safety devices that turn out to be lethal have been replaced.
“The number of impacted vehicles and manufacturers in combination with the supply issues related to these airbag recalls adds a previously unprecedented level of complexity to this recall,” Mark Rosekind, the NHTSA administrator, explained on Thursday.
2. Business lies. It lies like cheap broadloom. It lies until an energetic regulator, media exposé or classaction lawsuit forces the truth out of a recalcitrant company.
Toyota Motor Corp. lied about its faulty accelerator pedals, which caused abrupt, dangerous acceler- ation. Toyota eventually agreed to pay a $1.7-billion fine for concealing information vital to public safety.
General Motors Co. lied for about a decade about the faulty ignition devices in its vehicles. Honda Motor Co. Ltd. lied about the safety record of its vehicles, failing to report to U.S. regulators more than 1,700 death and injury claims it had received linked to Takata’s airbags. The U.S. government fined Honda $86 million for concealing the truth about a danger to the public, the largest civil penalty ever imposed on an automaker.
Do a cursory Internet search on the ill-fated Vioxx, a miracle compound marketed by a then-esteemed Merck & Co.; or on the listeria outbreaks at Maple Leaf Foods Inc., for the Kubler-Ross stages of corporate reaction to malfeasance: denial, anger, lame excuses, half-hearted contrition.
3. One assumes the myth of Japan Inc.’s world-beating quality and innovation has been exposed by now. Toyota, Honda and Takata, among the biggest firms in the world, make their share of shoddy goods. Japanese banks once occupied all 10 of the top slots in the annual rankings of the world’s biggest banks. That was before Japan’s epic stock-market and real-estate bubble burst in 1990, and Japan’s economy — eclipsed by China as the world’s second-largest — and its banks have yet to recover. And Sony Corp. has long ago ceded its leadership in innovative consumer electronics to South Korea’s Samsung.
4. Fines, even large ones, are no deterrent to corporate malfeasance that threatens public safety. Toyota’s $1.7-billion fine noted above was a fraction of its 2014 profits of $22.2 billion. The Honda fine of $86 million was pocket change, amounting to less than a sliver of Honda’s 2014 profits of $7 billion. The class-action suits brought against Takata have not sobered it. In response to Takata’s yearlong efforts to thwart NHTSA’s airbag probe, Anthony Foxx, the U.S. transportation secretary, finally imposed a $17,000-a-day fine on the company in February.
“This is silly,” Foxx said of Takata’s intransigence. “We have a very serious defect issue. We’re working as hard as we can to get defective cars off our roads. We will not tolerate this.”
5. Ottawa will tolerate this, however, which won’t surprise you. A spokesperson for Lisa Raitt, the federal transport minister, told the Star on Thursday that because there have been no reports from automakers about safety defects or recalls, Raitt won’t be looking up from her Sudoku. Actually, Honda Canada’s recall of 700,000 vehicles means Raitt was informed of “safety defects.” But as a Canadian litigator also told the Star, “Our whole product safety world in Canada is pedestrian, inactive, and not nearly as effective as similar bodies in the United States . . . The airbags explode like a grenade and you have shrapnel exploding into your face.”
Raitt is a revolving-door minister (three portfolios since she was first elected to Parliament in 2008) whose chief qualification for a cabinet post was her tenure as CEO of the Toronto Port Authority (TPA). The TPA presides — with traditionbound arrogance and lack of transparency — over one of the least active “ports” on Earth. With its claim as a perch-fishing capital, Port Dover (pop. 6,387) on Lake Erie is far busier.
Perhaps a $17,000-a-day fine might stir the minister to action. dolive@thestar.ca