Business

Takata to pay $14K a day for dragging its feet on airbag recall

The U.S. government will fine Japanese air bag maker Takata Corp. $14,000 US per day for failing to fully co-operate in a long-running investigation of faulty and potentially dangerous airbag inflators.

Takata 'a bad actor' says transportation secretary Anthony Foxx

Takata has ignored pleas by U.S. regulators to recall all vehicles with its airbags nationwide. (Duane Burleson/Associated Press)

The U.S. government will fine Japanese air bag maker Takata Corp. $14,000 US per day for failing to fully co-operate in a long-running investigation of faulty and potentially dangerous airbag inflators.

The inflators, which are in cars made by 10 auto companies, can explode with too much force, spewing shrapnel into drivers and passengers. At least six people have been killed and 64 injured worldwide due to problem.

Transportation Secretary Anthony Foxx announced the fines on Friday in Richmond, Virginia, on a bus tour to promote a major transportation bill. He called Takata a "bad actor" and said the fines will grow each day that it fails to comply with two special orders issued last year by the department's National Highway Traffic Safety Administration.

Takata has resisted demands to recall its driver's side air bags nationwide, although automakers have done recalls themselves. The agency also has demanded data from the company, but said in a letter to Takata that it has failed to explain a "deluge" of 2.4 million pages of documents that were turned over. Federal law requires Takata to provide a catalogue or index with the documents so investigators know what to look for.

Takata officials have said publicly that they are co-operating, but that's not the case, Foxx said at a news conference at the Richmond airport.

Not cooperative

"This is silly," he said. "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."

Fines will continue to accrue until Takata "fully and substantively" explains the documents, according to a letter NHTSA sent to Takata.

Messages left for Takata spokesmen were not immediately returned on Friday.

The letter also threatens Takata with depositions of employees and court action from the U.S. Justice Department, which already is investigating the company.

NHTSA has said that Takata's inflator propellant, ammonium nitrate, can burn faster than designed if exposed to prolonged moisture in the air. That can cause it to blow apart a metal canister meant to contain the explosion. So far, automakers have recalled about 15 million vehicles in the U.S. and about 22 million globally due to problems with Takata inflators. There could be as many as 30 million vehicles with the airbags nationwide.

Fines from NHTSA are capped at $35 million per infraction. Since Takata is alleged to have violated two orders, it could be fined a maximum of $70 million. But at $14,000 per day, it would take nearly 1 1/2 years to reach the cap.

'Another cost of doing business'

Takata may keep paying the relatively small fines rather than guiding NHTSA to documents that could result in bigger penalties, said Kelley Blue Book Senior Analyst Karl Brauer. "It's kind of probably another cost of doing business that they can roll into some budget line and not really even notice it," Brauer said.

Takata, founded in 1933, controls about 20 per cent of the world air-bag and seat-belt markets. It reported a $278 million loss in its most recent fiscal quarter, a reversal from a $74 million profit a year earlier. Quarterly sales rose 16 per cent from a year earlier to $4 billion.

The transportation bill, called the Grow America Act, was unveiled by the administration last year. It would raise the maximum fine against automakers to $300 million, would triple NHTSA's investigations budget to $31.3 million and give the agency new authority to stop the sales of defective autos on the grounds that they are an "imminent hazard" before the agency's defect investigation is complete.

Also in the bill are provisions requiring used-car dealers and rental-car companies to get recall repairs made before they can rent or sell cars.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.