Senator calls for compensation fund for Takata airbag injury victims

WASHINGTON -- An influential U.S. senator today called for troubled airbag supplier Takata Corp. to establish a fund to compensate victims injured or killed by its ruptured airbags.

U.S. Sen. Richard Blumenthal, D-Conn., pressed Kevin Kennedy, executive vice president for Takata’s North American affiliate, to establish a fund similar to that created by General Motors in the wake of its ignition switch crisis. Kennedy said he was unable to commit to the fund without first consulting his superiors, but he said he would give the senator an answer in two weeks.

Eight people have died and more than 100 have been injured after their Takata airbag exploded following a crash. After GM initially linked 13 deaths to its defective ignition switches, GM’s death count has since ballooned to at least 117 after it established its fund to compensate crash victims overseen by compensation attorney Kenneth Feinberg.

“My view is that Takata is every bit as responsible for the eight deaths found so far as GM is for the 117 deaths and counting,” Blumenthal said, adding he expected the number of confirmed deaths tied to Takata’s exploding airbags to grow should a fund be created.

Kennedy also agreed that the eight confirmed deaths would likely grow larger should a fund be created “as many of these parts are still in the field."

A day before the hearing, committee Democrats released a report saying the Japanese company may have put profits over safety by halting global safety audits for financial reasons.

"This is deadly serious business," said U.S. Sen. Bill Nelson, D-Fla., as he held up a piece of shrapnel from a Takata airbag that injured a Florida woman whose bloody, gauze-wrapped face was displayed in a photograph at the hearing. "For years, it's obvious that Takata did not put safety first."

During the hearing, senators from both parties also blasted the National Highway Traffic Safety Administration after the U.S. Department of Transportation’s Office of Inspector General on Monday released a scathing audit of NHTSA that found the agency to be hobbled by a series of systemic problems.

“This audit report is one of the worst I’ve ever seen in terms of a government agency -- this is about blatant, incompetent mismanagement," Sen. Claire McCaskill, D-Mo., told NHTSA Administrator Mark Rosekind during the hearing, noting she was "shocked when she read the inspector general’s report."

McCaskill and other senators said additional funding for NHTSA, which its officials have repeatedly asked for, is not an option until they see evidence that major reforms have taken hold.

Sen. Gary Peters, D-Mich., says securing additional funding will be tough as long as members of Congress lack confidence that NHTSA’s resources will be used effectively.

“Right now, the burden is on the administrator,” said Calvin Scovel III, inspector general of the Transportation Department.

TRW takes over

Meanwhile, Fiat Chrysler has pushed Takata to the sidelines to tap rival TRW Automotive as the automaker’s sole supplier of driver-side airbag inflators used to replace Takata-made inflators in more than 4 million FCA vehicles currently under recall.

The automaker has used an “alternative and permanent design” of TRW-made driver-side replacement inflators exclusively since June 8, FCA U.S. safety and regulatory compliance head Scott Kunselman said in written testimony prepared for today's hearing on the Takata recalls before the U.S. Senate Commerce, Science and Transportation Committee.

Takata-made driver-side inflators at FCA dealers are being “quarantined” and returned to Takata, Kunselman said.

FCA’s move is the clearest sign yet of an automaker distancing itself from a troubled part made by the embattled supplier. It also highlights difficult choices facing automakers as they wrestle with the Takata recalls: continue with Takata as a supplier of replacement parts that may need to be recalled again, or secure replacements from competitors that are racing to install additional manufacturing capacity to supply the recalls.

FCA is doing both. Kunselman said in his written testimony that FCA will continue to use Takata-made passenger-side replacement inflators in recall repairs. FCA is working with the supplier on an updated inflator design with “an improved igniter material” and a desiccant to prevent the ammonium nitrate explosive propellant inside the inflator canister from absorbing moisture.

Years of exposure to moisture has been named as a leading factor behind the violent airbag deployments at the heart of the Takata recalls. The improved inflators will start flowing to dealers in November following validation testing in August, Kunselman said.

It’s unknown how many Takata inflators supplied as replacements will ultimately need to be replaced themselves. Indeed, some 50,000 FCA customers who already received a Takata driver’s-side replacement inflator must return to dealerships for a TRW-made inflator, Kunselman said in his prepared remarks. TRW inflators “will require no further action,” Kunselman said.

TRW was recently acquired by Germany's ZF Friedrichshafen.

About 4.8 million Takata inflators in 4.5 million FCA vehicles are under recall, Kunselman said, part of the nearly 32 million Takata inflators that regulators currently estimate are in U.S. vehicles under recall by 11 automakers.

Honda apologizes 

Despite investigations that began last year, neither Takata, automakers nor NHTSA have pinpointed the root cause of defective Takata airbags that can deploy with too much force in a crash and cause the metal inflator canister to rupture and spray vehicle occupants with metal shards.

Takata inflator ruptures have been linked to at least eight deaths -- including two more fatalities confirmed in the last two weeks -- and more than 100 injuries. The deaths have all involved driver-side airbag inflator ruptures in Honda vehicles.

In remarks prepared for the Senate panel, Rick Schostek, executive vice president of Honda North America, acknowledged the two additional deaths recently confirmed by Honda -- a Louisiana woman, Kylan Langlinais, whose 2005 Honda Civic was in an April 5 crash, and Jewel Brangman, who died following a Sept. 7, 2014 crash in the 2001 Honda Civic she was driving in Los Angeles.

“This is heartbreaking, and a painful reminder to us of the reason we continue to urgently accelerate our actions to repair the affected vehicles. But of course the real pain is experienced by the families of the victims. We sincerely apologize to them and extend our deepest and heartfelt sympathies,” Schostek said in prepared remarks.

Schostek said Honda has accelerated Takata repair efforts to “a level unprecedented in the history of our company.” The company is repairing more than 50,000 recalled vehicles in an average week, sending out English- and Spanish-language recall notices, using digital media tools such as targeted ads on Facebook to alert customers to the recalls, and other outreach steps.

Takata's Kennedy reiterated in his prepared remarks for the panel that Takata would stop producing the driver-side inflator design implicated in all eight deaths and most of the injuries.

The inflators in question use “batwing shaped” propellant wafers and are of an older design, Kennedy said, noting Takata supports the recall of all batwing driver-side inflators from the start to end of production in all vehicles registered anywhere in the U.S.

Kennedy said about 70 of these inflators have ruptured in vehicles in the U.S. fleet, which he said equates to roughly nine ruptures out of every 100,000 deployments.

Profits over safety? 

The hearing comes after a report released by the Democratic minority members of the Senate Commerce Committee said that Takata “may have prioritized profit over safety by halting global safety audits for financial reasons.”

The charge stems from a 2011 email chain included in the 90,000 pages of documents provided by Takata that were reviewed by committee Democratic staffers. In the email chain, according to the report, a Takata senior vice president in charge of inflators at TK Holdings was discussing plans for an upcoming audit of the operations at Takata’s plants in Monclova, Mexico, and Moses Lake, Wash. The executive, whose name was redacted, pleaded with a TK Holdings global director of inflator and propellant safety for “support” with the audit, saying, “We need your help.”

The senior vice president, in the last email of the chain released by the committee, also wrote, “Global safety audits had stopped for financial reasons for last two years. Good to start at least locally.”

In a statement in response, Takata said the report had “a number of inaccuracies based largely on old media articles that Takata has previously refuted” and that the emails referenced were taken out of context and characterized in ways that created a false impression.

“The global audits referenced in the emails relate to the safe handling by employees of pyrotechnic materials -- they were not, as the report implies, related to product quality or safety,” Takata said in a statement. “Takata conducts regular reviews of product quality and safety at Moses Lake and Monclova, and at no time were those halted.”

Ammonium nitrate 

Kennedy was grilled in his last Capitol Hill appearance earlier this month over Takata’s continued use of ammonium nitrate as the principal propellant in its airbag inflators, a compound experts have said is a risky choice for airbags because it can degrade when exposed to moisture and temperature, which in turn makes it prone to violent explosions.

In his remarks for today’s hearing, Kennedy said Takata has “full confidence in the safety” of its inflators that use phase-stabilized ammonium nitrate. He said replacing recalled inflators with units using the compound is “absolutely the right response to the public safety concerns raised by the inflator ruptures.”

Because exposure to hot and muggy conditions over several years is believed to be a factor in the ruptures, Kennedy said new inflators “will provide an ample margin of safety” over older units.

Reuters contributed to this report.

Click here for links to all of today's testimony.