Japanese air-bag maker Takata in crisis with recalls

The emerging crisis over air bags traces back to a little-known Japanese company that for over 20 years has supplied the safety devices to automakers including Toyota Motor Corp., Honda Motor Co. and General Motors Co.

Air bags made by Takata Corp. are linked to at least four deaths and more than 30 injuries in the U.S. after the safety devices deployed with too much force, spraying metal shrapnel at occupants. U.S. authorities have begun an investigation and almost 8 million cars made by 10 automakers have been recalled to fix the hazard.

Though the probes are ongoing, one focus is likely to be Takata's choice of an unusual explosive chemical to inflate its air bags in milliseconds, according to auto industry executives. The Japanese parts maker four years older than Toyota also has said it dealt with lapses in quality control at its plant in Mexico.

"No other supplier other than Takata has used this ammonium nitrate," said Jochen Siebert, Shanghai-based managing director of JSC Automotive Consulting, which advises automakers and parts suppliers. "You could build air bags that were smaller and lighter. It was all about technology; it wasn't even about price. But it all went wrong."

The unfolding crisis marks a fall from grace for a Tokyo- based company that rode Japan's postwar industrialization to became a global powerhouse in seat belts that saved lives. Having now been responsible for making some vehicles more dangerous, Takata's failures add to growing doubts about auto safety and how well motorists are protected by regulators.

Takata's recent woes are rooted in air-bag inflators, a component it started making in 1991 in Moses Lake, Washington.

While parachutes deploy by the relatively simple act of pulling a ripcord, the inflators that set off air bags are more complex. Chemical compounds are used to form propellant, which is compressed into aspirin-like tablets.

In less time than it takes to blink, an igniter heats up the tablet inside a high-strength steel tube after a crash. The ensuing chemical reaction fills the air bag with gas, inflating it at more than 200 miles per hour.

In the late 1990s, Takata made ammonium nitrate the chemical-of-choice for its air-bag inflator design, said Siebert, who was advising for the air bag market in Europe at the time.

The compound went into the earliest model-year cars that have been recalled in the past two years, including Bayerische Motoren Werke AG's 2000 BMW 3 Series, Honda Motor Co.'s 2001 Accord and Civic and Nissan Motor Co.'s 2001 Maxima and Pathfinder.

Ammonium nitrate's weakness lies in its sensitivity to moisture, which makes the propellant unstable, said Scott Upham, president of Valient Market Research, who has followed air bags since they were first going into cars a quarter-century ago.

When ignited, too much force can be created, effectively turning the air-bag system into a pipe bomb, he said.

Takata spokesman Alby Berman didn't respond to two e-mailed requests sent outside normal business hours to discuss the company's choice of chemical for its air bags.

The company improperly stored chemicals and mishandled explosive propellants used in its air bags at its plant in Monclova, Mexico, Hitoshi Sano, the company's vice president of investor relations, said during an interview in August.

In 2005, Takata closed a Georgia plant that made inflators and shifted production to the Mexico factory, about 300 miles southwest of San Antonio, Texas.

In March the following year, a series of explosions rocked the factory and led authorities to evacuate houses nearby, according to an Associated Press report at the time.

The factory resumed full operations within a month, and Takata's customers managed to avoid production disruptions, a feat that Automotive News called "remarkable" in August 2006.

Takata was used to getting praise around this time. Then- President Juichiro "Jim" Takada was halfway through a decade- long period in which his company made air bags for now-recalled cars when the top U.S. auto-safety regulator presented him with an award in 2005 for improving auto safety.

"We cannot speak to a recognition provided a decade ago," Brian Farber, a Transportation Department spokesman, said of the award in an e-mail. "Today we continue to aggressively investigate this faulty airbag and will leave no stone unturned in the name of public safety."

While Takata may not be a household name outside of Japan, it shares roots with Toyota, the world's largest automaker. Both started in the 1930s as part of the country's textile weaving industry and were among the companies that produced equipment for the Imperial Army during World War II.

After the war, founder Takezo Takada visited the U.S. and returned home impressed by the research he saw on early- generation seat belts. Japan's car industry was still in its infancy then, with fewer than 40,000 autos produced in 1952.

Takata developed their own seat belts using methods inspired by parachutes, which it made for the military years earlier. Its first two-point belt sold in 1960. Within three years, they were in mass production and started becoming a standard option in cars.

In 1973, Takata was the lone company whose seat belts passed a National Highway Traffic Safety Administration crash test standard at 32 miles per hour, according to the company's website.

Takata began research into air bags in 1976.

Juichiro Takada, the son of Takezo who had taken over the business, was reluctant to enter a fledgling air-bag market he viewed as risky, according to Saburo Kobayashi, a former Honda engineer who spearheaded the automaker's use of the safety devices.

Takada had reasons for reservations. Air bag deploy through contained, controlled explosions. Their designs are drawn from rocket propellant and munitions industries.

At a New Year's party thrown by Honda in 1985, Takada said he wanted his company to stay out of air bags, Kobayashi wrote in his memoirs published in 2012.

"If anything happens to the air bags, Takata will go bankrupt," Takada said, according to Kobayashi's book. "We can't cross a bridge as dangerous as this."

Already in the midst of battling internal resistance to air bags within Honda, Kobayashi kept pressing. Takata had a unique position as the only supplier at the time who'd mastered the four cornerstones of the necessary production techniques: weaving, coating, sewing and folding, he wrote.

Covert Production

In secret, Kobayashi reached out to Takata's lead engineer on air-bag development, who moved forward with covert production of samples.

The go-ahead within Honda came in 1986, when Kobayashi convinced then-President Tadashi Kume that air bags, with their "one-in-a-million" defect rates, would enhance the automaker's reliability, Kobayashi wrote.

Takata moved past its initial reservations and plowed ahead. By the late 1980s, it had set up a production base for air bags and other components in North Carolina.

Kobayashi, now a guest professor at Japan's Chuo University, declined to be interviewed, writing in an e-mail that he's not in a position to comment on the current crisis after being out of the industry for more than 10 years.

Honda spokeswoman Akemi Ando said she would check on Kobayashi's account of the company's history and said the automaker doesn't approve new technology unless it's safe.

Kobayashi's description of Takada's remarks are "out of context," said Takata's spokesman Berman, without elaborating. If the comments were made, they must have been at the "very beginning of airbag development," he said.

Air bags today save "tens of thousands of lives a year" and Takada's dream of zero fatalities caused by car accidents still drives the company and its employees each day, Berman said in an e-mail. He reiterated the company's interest in supporting NHTSA's investigation and the vehicle recalls.

Going forward, the task of protecting the legacy of his family's 81-year-old dynasty falls to Shigehisa Takada, grandson of Takezo and son of Juichiro, who died in Tokyo in February 2011 at the age of 74.

Shigehisa, 48, ceded the role of president last April after six years on the job, a month after Toyota, Honda and Nissan called back a combined 3 million vehicles because of defective Takata air bags.

The position went to Swiss-born Stefan Stocker, the first non-family member to steer the company. Stocker, 60, had joined Takata just three months earlier from Robert Bosch GmbH's Japan unit.

"That was a nod to the fact that the grandson was maybe not as experienced or as seasoned as the automakers would have liked to see for someone in charge of a major supplier," Scott Upham, president of Valient Market Research, said by phone. "They brought him in to right the ship and show there's somebody with gray around their temples running the organization."

Takata has declined multiple requests to make executives including its chairman and president available to discuss its air-bag woes.

Automakers including Honda and Toyota are standing by Takata, for now, though Upham predicts the company may lose out on air-bag inflator contracts to suppliers including Autoliv Inc. and Daicel Corp.

"This is definitely the biggest crisis for Takata in its history," said Shintaro Niimura, a credit analyst at Nomura Holdings Inc. in Tokyo. "Human lives are being put at risk and reactions have been fierce, especially in the U.S. I think Takata's management may have underestimated the fallout."

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