Auto Air-Bag Maker Takata Reports Huge Losses But U.S. Recall Continues
The urgent need to replace more than 65 million potentially deadly air bags won't be stalled by dire financial reports out of Tokyo on Wednesday about the company that has recalled them, according to U.S. Transportation Secretary Anthony Foxx.
Takata, the world's largest air-bag maker and supplier for 17 automakers, on Wednesday announced a net loss of $120.5 million for its financial year ending in March. After foreshadowing the losses earlier this week, the company's stock fell by 11 percent before regaining 2.5 percent on Wednesday.
"If, for some reason, Takata falls out of the equation, the manufacturers of the cars are still on the hook to make sure that the recalls happen," Foxx said in a meeting with reporters Tuesday.
The car makers facing recall of some models is a virtual laundry list of the industry, with Jaguar/Land Rover, Tesla and Fisker recently added. Many car owners who have received recall notices say dealers tell them it will take weeks or months before their air bags can be replaced.
The National Highway Traffic Safety Administration says the recall will be carried out in phases, based on the age of the inflaters and the degree to which they have been exposed to the high humidity and fluctuating high temperatures that accelerate the degradation of their chemical propellant.
NHTSA has notified Takata it could face a fine of up to $200 million: $70 million for mishandling the recall of the air-bag inflaters; and $130 million more if it further violates a settlement agreement with NHTSA.
Takata has been overwhelmed by the recall demand, and smaller air bag manufacturers are reluctant to ramp up production dramatically with assurance from the auto industry that new factories and employees won't be idled once that demand is met.
NHTSA says those competitors currently are supplying about two-thirds of the replacement inflators for Takata air bags.
"The information I have is that there is capability to meet the demand," Foxx said.
The latest things to know about the Takata air-bag recall
He said his department would continue to put pressure on Takata and the automakers, regardless of the financial trauma it might cause them.
"Frankly, if that went into our calculations, I don't think we would deserve to be called a safety agency," Foxx said. "I think progress is being made, but we've got to keep our finger on it."
The precise number of vehicles facing recall is uncertain because most cars have two or more air bags.
The issue is the small metal canisters that trigger the air bag inflation with a car collides with something. Unlike most air-bag makers, Takata uses ammonium nitrate in those inflators. Three independent studies have shown that when Takata inflators are degraded by age and hot, humid weather they are prone to explode, spraying the driver or passengers with shards of metal from the canister.
Eleven people in the U.S. have died, and more than 100 have been injured by the flying metal.
Takata says it will phase out the use of ammonium nitrate in its air-bag systems by 2018. That means that some drivers may have to have their air bags replaced twice, once with a newer ammonium nitrate bag and a second time when air bags that don't use the problematic chemical become available.
Takata agreed to a consent order late last year that required it to recall all of its ammonium nitrate air bags unless they are proved safe.
If the company fails to provide that proof, that could lead to recall of an additional 53 million air bags.
Those air bags have a moisture-absorbing desiccant in their ammonium nitrate cannisters, akin to the postage-stamp-size white packets found in many over-the-counter medicine containers or household items.
Foxx said those air bags don't appear to degrade as quickly when exposed to humidity and heat.
"At present, we don't believe that the science and the evidence dictates moving toward [the need to recall] those other ones, but if it does, we will obviously not hesitate to move that way," Foxx said.
This article originally appeared on AZ Central.