Exclusive: Up to 90 million more Takata airbag inflators may face U.S. recalls

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Takata Air Bag Recall Could Take Years

U.S. auto safety regulators are examining whether an additional 70 million to 90 million Takata Corp (7312.T) airbag inflators should be recalled because they may endanger drivers, according to a person with knowledge of the matter.

That would nearly quadruple the 29 million inflators recalled so far and linked to nine deaths in the United States.

In all, as many as 120 million Takata inflators in U.S. vehicles contain the same volatile chemical - ammonium nitrate - used in inflators that automakers have recalled, according to company documents reviewed by Reuters and verified by two former Takata managers. The total number has not been previously reported.

The Japanese supplier, one of the world's largest airbag manufacturers, has said some inflators can rupture and explode with excessive force, spraying metal shards at vehicle occupants.

The number of vehicles affected remains unclear because many have more than one inflator, and not always from the same manufacturer. Before recent recalls of 5.4 million inflators, federal regulators said about 24 million defective Takata inflators were used in about 19 million vehicles that have been recalled since 2004.

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Exclusive: Up to 90 million more Takata airbag inflators may face U.S. recalls
Transportation Secretary Anthony Foxx speaks about the Takata air bag inflator recall, Tuesday, May 19, 2015, at the Transportation Department in Washington. Air bag maker Takata Corp. has agreed to declare 33.8 million of its inflator mechanisms defective, effectively doubling the number of cars and trucks that have been recalled in the U.S. so far. (AP Photo/Jacquelyn Martin)
WASHINGTON, DC - MAY 19: NHTSA Administrator Mark Rosekind (L) and U.S. Transportation Secretary Anthony Foxx (R) speak about the Takata air bag recall during a news conference at the Department of Transportation May 19, 2015 in Washington, DC. It was announced that the Takata Corp. has agreed to declare 33.8 million of its inflator mechanisms defective which will bring the number up to about 34 million autos, making it one of the largest consumer product recalls ever. (Photo by Mark Wilson/Getty Images)
FILE - In this Nov. 20, 2014 file photo, Senate Commerce Committee member Sen. Bill Nelson, D-Fla. displays the parts and function of a defective airbag made by Takata of Japan that has been linked to multiple deaths and injuries in cars driven in the U.S., during the committee's hearing on Capitol Hill in Washington. Government statistics released Thursday, Feb. 12, 2015 show that automakers issued 803 recalls totaling almost 64 million vehicles in the U.S. last year, more than double the old record set a decade earlier. (AP Photo/J. Scott Applewhite, File)
In this Dec. 22, 2014 photo, a woman checks out a new Honda City at a Honda showroom in Petaling Jaya, Malaysia. Six years ago, Honda began recalling Takata driver’s side air bags in the U.S. because they could inflate with too much force and spew shrapnel into the vehicle. But it wasn’t until last month after a crash in Malaysia that killed a woman and her unborn child that Honda recalled driver’s side air bags in small cars from Asia and Europe. (AP Photo)
In this photo taken Monday, Dec. 22, 2014, Honda cars are worked on at the service center in Petaling Jaya, Malaysia. Six years ago, Honda began recalling Takata driver’s side air bags in the U.S. because they could inflate with too much force and spew shrapnel into the vehicle. But it wasn’t until last month after a crash in Malaysia that killed a woman and her unborn child that Honda recalled driver’s side air bags in small cars from Asia and Europe. (AP Photo)
FILE - In this Nov. 20, 2014 file photo, Senate Commerce Committee member Sen. Bill Nelson, D-Fla. displays the parts and function of a defective airbag made by Takata of Japan that has been linked to multiple deaths and injuries in cars driven in the US, during the committee's hearing on Capitol Hill in Washington. The top Japanese auto safety official acknowledged Friday, Dec. 5 that Japan's recall system needs an overhaul to better respond to global problems highlighted by the debacle over Takata air bags that can explode. "The framework in place now doesn't allow for that," Masato Sahashi, director of the recall office at the transport ministry, said in a telephone interview. "Japanese people are very worried about the safety of their cars." (AP Photo/J. Scott Applewhite, File)
Child seats, manufactured by Takata Corp. are displayed at a Toyota Motor Corp.'s showroom in Tokyo Thursday, Nov. 6, 2014. Takata, the Japanese air bag maker embroiled in a massive recall totaling some 12 million vehicles globally, says it's taking more special losses for new recalls and will sink deeper into the red for the fiscal year. Takata said Thursday it will record a 25 billion yen ($218 million) loss for the fiscal year through March 2015. It previously forecast a 24 million yen ($210 million) forecast. (AP Photo/Shizuo Kambayashi)
Parts of pyro-electric airbag initiators lie in a production line at the international automotive supplier Takata Ignition Systems GmbH in Schoenebeck, Germany, Thursday, April 17, 2014. The Takata Corporation is a leading global supplier of automotive safety systems such as seat belts, airbags and child seats. The company has 46 plants in 17 countries around the world. (AP Photo/Jens Meyer)
The logo of the Toyota automobile company is seen on the window of a company showroom in the Indian capital New Delhi on May 13, 2015. Japanese auto giants Toyota and Nissan on May 13, 2015, said they were recalling 6.5 million vehicles globally in the latest chapter of an exploding airbag crisis linked to several deaths. The world's biggest automaker said its recall of five million vehicles affected 35 models globally produced between 2003 and 2007, while Nissan said it was calling back 1.56 million vehicles also due to faulty airbags made by embattled supplier Takata. AFP PHOTO / Chandan KHANNA (Photo credit should read Chandan Khanna/AFP/Getty Images)
Japanese auto parts maker Takata's child car seats are displayed at a showroom in Tokyo on May 20, 2015. Takata is doubling a recall of US cars with potentially deadly airbags to a record nearly 34 million vehicles, sending the firm's shares plunging in Tokyo. AFP PHOTO / Yoshikazu TSUNO (Photo credit should read YOSHIKAZU TSUNO/AFP/Getty Images)
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For a graphic on how inflators work, see tmsnrt.rs/1JDZ4vq

The former managers described "chronic" quality failures at Takata's North American inflator plants, an assessment reflected in dozens of company emails and documents dating back to 2001. Those problems, the former managers said, make it difficult for the company and regulators to pinpoint which inflators – among tens of millions – pose a danger.

"You have no way of knowing," said one of the former Takata managers, who has direct knowledge of the company's history of manufacturing problems.

The former Takata managers, who still work in the industry, spoke on condition of anonymity.

Takata declined to comment when asked about the possibility of massive additional recalls and whether another 70 million to 90 million inflators still in vehicles could endanger drivers. A torrent of new recalls could cost the company billions of dollars and add years to the replacement process.

The company said in a statement that it is "cooperating fully with regulators and our automotive customers and continues to take aggressive action to advance vehicle safety."

Takata cited its agreement with regulators in November to pay a $70 million penalty to NHTSA in a settlement that included its commitment to stop making inflators that use ammonium nitrate by 2018. It also pledged to declare all remaining ammonium nitrate inflators defective by 2019 unless it can demonstrate they are safe.

The National Highway Transportation Safety Administration continues to investigate all Takata inflators using ammonium nitrate, but it has not yet found sufficient evidence to direct automakers to recall the remaining inflators, said spokesman Gordon Trowbridge.

"This issue will take years to resolve," Trowbridge said.

MANUFACTURING FAILURES

Takata produced between 260 million and 285 million ammonium nitrate-based inflators worldwide between 2000 and 2015, of which nearly half wound up in U.S. vehicles, one of the former Takata managers told Reuters, citing the company's production records.

Takata supplied those inflators to more than a dozen automakers, according to company documents reviewed by Reuters. Its single largest client was Honda Motor Co (7267.T), which still owns a minority stake in Takata and has recalled more than 8 million defective Takata inflators in the U.S.

Takata produced most of the inflators that regulators are now investigating at its main inflator plant in Monclova, Mexico or at plants in Georgia and Washington state, according to company documents. The documents noted persistent quality failures at those plants, which a former Takata official said contributed to inflator ruptures.

Last month, Takata told NHTSA in a filing that "manufacturing variability" may have contributed to the ruptures.

The manufacturing problems are detailed in dozens of internal Takata emails, spreadsheets and presentations reviewed by Reuters. The records show the problems are more pervasive and continued for a longer period than those previously reported. They extended beyond the Mexican plant to the factories in Georgia and Washington state, and they continued until at least 2014, company records show.

Among the issues: metal shavings inside some inflator parts; improperly welded inflator casings; bad propellant wafers, and bent or damaged parts.

Those problems eventually could allow moisture to contaminate the ammonium nitrate propellant, which in turn could lead to an inflator rupture, one of the former Takata managers told Reuters.

A 2006 internal log of quality issues noted problems with inflators sold to Mazda Motor Corp (7261.T), Ford Motor Co (F.N), BMW AG (BMWG.DE), Honda Motor Co (7267.T), Daimler AG's (7267.T) Mercedes-Benz, and Toyota Motor Corp (7203.T). The log listed problems including metal shavings and contamination, broken or missing clips, and deformed or misaligned parts.

In a 2010 memo, a Takata manager expressed concern about "how to control moisture" in some inflators and worried that the company would not be able to assure the safety of the devices.

In an email the same year about pre-production quality testing of inflators built at the Monclova factory, a Takata manager expressed confusion to colleague about the causes of pervasive defects.

"I do not understand why we are failing every lot," he wrote.

In company documents, Takata engineers referred to the failures – when exploding inflators ruptured into metal fragments – as "ED," for "energetic disassembly."

RECALL TRIAGE

The long-running scandal has overwhelmed the company's ability to furnish replacement parts as fast as automakers are forced to recall vehicles. A Takata competitor, airbag supplier Autoliv Inc (ALV.N), is also making replacements for recalled Takata inflators and recently told investors it expects to continue making those parts through 2017, one year longer than originally planned. More recalls would add more delays.

Regulators have so far tried to direct replacement inflators to older vehicles that were operated in hot, humid parts of the country, because ammonium nitrate becomes unstable when contaminated by moisture and can cause the inflators to rupture.

NHTSA officials have said the agency prioritizes recalls for the inflators it believes are most dangerous because the company has limited capacity to replace them. Customers often wait months to get the vehicles fixed after a recall notice.

The inflators already recalled are considered among the most dangerous because they do not contain a drying agent, NHTSA officials have said. All nine U.S. deaths linked to Takata airbag failures so far have involved those highest risk airbags, according to NHTSA records.

Takata Chief Executive Shigehisa Takada last year apologized to victims and claimed responsibility for the dangerous defects.

The most recent death report came on Dec. 22, when Joel Knight, 52, drove his 2006 Ford Ranger pickup into a cow on a rural road near his home in Kershaw, South Carolina. He died after shrapnel from a ruptured airbag inflator pierced his neck, the family's attorney wrote in a filing with NHTSA.

In a regulatory filing, Takata confirmed the inflator ruptured in the crash and that it was made in Monclova in 2005, but the company did not specifically link the failure to Knight's death.

Shortly after the crash, the company declared 5.4 million more inflators defective.

(Reporting by Paul Lienert in Detroit and David Shepardson in Washington; editing by Joseph White and Brian Thevenot)

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