Delay in reporting defects should bring big, fat fine
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In the wake of Toyota's humiliating failure to report potential safety defects involving unintended acceleration expeditiously, automakers and suppliers are keenly aware of the need to inform regulators about problems.
As a result of Toyota's failure to report two separate safety problems within the required five days, the National Highway Traffic Safety Administration in 2010 fined the automaker $32.4 million, very nearly the maximum penalties allowed for the two offenses.
Even so, it was chump change. The maximum fine per offense -- nearly $17 million -- is a drop in the bucket for an automaker posting billion-dollar profits. The Obama administration wants to do something about that.
And the Democrat-controlled Senate complied, passing transportation legislation that would raise the maximum fine to $250 million for each offense, a more significant amount that is sure to get a company's attention -- like being whacked in the head with a two-by-four.
The bill went to the House, where Republicans, who have the majority, seem less willing to up the ante for failing to report safety defects on time. In fact, some Republicans seem to prefer finding ways to incentivize safety rather than to penalize failure. But incentives may be insufficient to get automakers' attention.
You can argue about the amount of the fine and whether it should be the same for all automakers regardless of size. But the need to report potential safety defects that could kill or maim consumers must remain forefront in the corporate culture of the industry, from automakers to suppliers.
Sometimes a carrot works. But sometimes you need a stick.
