Takata must change culture to prevent another safety crisis, panel says

WASHINGTON (Bloomberg) — Takata Corp. must make quality a part of company culture if it hopes to prevent future safety defects like the exploding airbags at the center of the largest automotive recall in U.S. history, a panel appointed by the Tokyo-based manufacturer to review its manufacturing process concluded.

The auto parts maker needs to improve its monitoring of potential safety defects in its products, including establishing teams to track data from incident reports and giving quality-control personnel the ability to halt production when necessary, the independent panel of former government regulators and engineering experts said in a report issued today.

“It is unlikely that even the most Herculean isolated efforts to improve quality at Takata will succeed unless there’s an accompanying shift in Takata’s culture,” the report said.

The panel was assembled by Takata last year to get to the bottom of what went wrong at its factories. Manufacturing flaws are one of the theories for why some airbags have exploded, spraying metal shrapnel at passengers. The airbag defect has been linked to a least nine fatalities in the U.S. and one in Asia, blamed for 100 injuries and forced the recall of 19 million vehicles.

In addition to forming review panels, Takata has hired new public relations representatives and reorganized management amid a defect crisis that sent its shares plunging 51 percent last year. U.S. regulators are investigating the airbag inflators that have deployed with so much force that the part breaks and hurls metal shrapnel at the car’s occupants. Sixteen carmakers are now recalling vehicles.

‘Improvement necessary’

Takata needs to establish a system for recording and analyzing performance tests. Takata had relied primarily on safety incident reports from automakers, with no stand-alone program of its own, and the report concluded the company needs to start doing its own research as well.

“This is an area where substantial improvement is necessary,” the report said.

The panel was headed by Samuel Skinner, who served under President George Bush as transportation secretary and later as White House chief of staff.

Skinner said his panel was designed to not duplicate other efforts seeking to determine the cause of the airbag failures, like Takata’s internal investigation, a U.S. regulatory probe and another private-industry effort set up by such customers as Toyota Motor Corp. and other automakers.

No determined cause

The group instead focused on reviewing design, testing and quality of materials. It’s also looking at how potential defects are communicated to the highest levels of the company when found, he said. It was not asked to pass judgment on the design of the airbag inflators and their use of a propellant some suspect may be to blame.

The panel is split between former government officials and business executives. It includes two former heads of NHTSA, Marion Blakey and Jeffrey Runge. The other members of the panel are Nelda Connors, a former executive with Ford Motor Co. and Eaton Corp.; John Landgraf, an executive vice president with Abbott Laboratories; and Julio Ottino, dean of Northwestern University’s school of engineering and applied science.

Skinner ran the U.S. Transportation Department from 1989 through 1991. He was assigned in December 2014 to spearhead a review of Takata’s policies, procedures, structure and personnel since December.

Toyota model

Skinner patterned the Takata panel on one set up by Toyota in 2010, following reports of sudden unintended acceleration. The panel’s work was intended to be completely independent of the company and wouldn’t be approved by Takata before publication, Skinner said.

Toyota and other automakers formed an independent testing group to supplement Takata’s investigation.

Takata said last month it’s continuing to conduct tests and ramp up production of replacement kits, as well as trying to raise awareness among consumers about the need to take their vehicles in for recall repairs.

$200 million fine

The U.S. National Highway Transportation Safety Administration has said it will take years to complete all of the recalls, and it is prioritizing repairs in areas with high humidity levels, like the states around the Gulf of Mexico and Puerto Rico. Older vehicles and those needing new drivers-side airbags are also higher risk.

In November, Takata was fined a record $200 million by the U.S. agency over the company’s missteps in handling the airbag crisis. NHTSA found that Takata had been slow to report the defect and hid critical information from regulators and its automaker partners. Takata agreed to appoint an independent monitor to oversee its recalls and operate under the terms of a five-year consent decree.

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