Takata: How to turn a manageable product recall into a disaster

The Takata airbag crisis is a case study of how mishandled communications can transform a serious, but still manageable, product recall into what may very well become an ultimate catastrophe for the company. No one can say at this point if Takata will ever fully recover after damaging its relationships, seemingly voluntarily, with pretty much every one of its constituents — car manufacturer customers, the US Congress, the National Highway Traffic Safety Administration (NHTSA), shareholders, and the general public around the world. The company currently faces a potential U.S. criminal investigation, more than 20 class action lawsuits, a U.S. Congressional investigation and probes by Japan’s industry ministry.

The problems the company faces are now on daily display in all news and social media: Airbags made by Takata have been shown to have had serious problems with their inflator propellant chemicals since the 1990s. In some cases the inflator mechanisms exploded when the airbags deployed, shooting metal debris into vehicles, killing at least five people and injuring more. More than 20 million vehicles around the world from 11 automakers have been recalled since 2008.

Still, Takata continues to state that its airbags are safe. That statement is belied by the troubling trail of patent applications. Takata filed over the past 20 years, one as recent as last year, indicating company concerns over its propellant chemicals. The applications show that the propellants in the inflator mechanisms can become unstable and could even explode when exposed to moisture and temperature changes. Furthermore, former Takata employees involved in the company’s airbag tests have come forward to confirm the concerns documented in the patent applications. Some also claim that some of the company’s test data were purposely destroyed.

Perhaps most damaging to the company is its refusal to comply with NTHSA’s order to expand its airbag recalls in the U.S. beyond geographical areas of high heat and humidity, such as Florida and Puerto Rico.

The company’s decision defies common sense. In effect Takata is arguing that people who live, say, in the northeast and drive every year to spend the winter with their car in Florida wouldn’t need to have their cars recalled. Takata customers, including its largest customer, Honda, disagree and have nationwide recalls underway for their cars equipped with Takata airbags.

Overall, Takata’s communications relating to its airbag problem just don’t jibe with either its actions or its own previous branding messages and declared values. The statement by Takata’s chairman and CEO, Shigehisa Takada, that was issued as a press release on December 3rd, is a case in point.

The first half of the chairman’s statement is in line with best crisis communications practices. For example, he voices deep regret and tries to confirm the company’s humane values. He declares four steps the company is taking to “demonstrate our commitment to public safety,” including hiring well-credentialed, highly respected third parties to investigate the company’s manufacturing procedures and others to advise the company. Well and good so far.

But then comes a glaring problem. The statement reads:

We recognize that NHTSA has urged Takata and our customers to support expansions of the current regional campaigns in the United States. Takata remains committed to cooperating closely with our customers and NHTSA to address the potential for inflator rupturing.

But the fact is Takata is simply not going to comply with the NHTSA’s order, and nothing in the statement addresses this truth. Takata’s non-cooperation now tarnishes what could have been a far more manageable recall, doing perhaps irreparable harm to the company’s reputation and bottom line.

The geographically limited recall directly conflicts with Takata’s often-stated commitment to safety and transparency. Takata has single-handedly given reason to every one of its constituents, from car manufacturers to governments to the general public, to doubt its credibility and the safety of its airbags. As NHTSA Deputy Administrator David Friedman scathingly put it, “We cannot simply trust the information Takata gives us.”

And, as is sometimes the case with very serious crises, Takata’s self-inflicted damage may spread to affect an entire industry. Keith Crain, editor-in-chief of leading trade pub Automotive News, wrote in an editorial, “You wonder if Takata’s reluctance to be transparent is hurting the entire category of suppliers as well as general public faith in airbags. … Takata has become a prime example of how not to handle a serious recall.”

On December 16, Takata announced it has hired PR firm Sard Verbinnen and Co., ostensibly to help it regain its communications footing. Time will tell how well this works, but as any child can attest, after a great fall, even all the kings horses and all the king’s men…

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