For a global airbag producer, it’s hard to imagine worse news: A few defective airbag inflators from Takata Corp. malfunctioned during accidents, rupturing the airbags.
U.S. safety regulators said on June 11 that they are probing reports that defective Takata inflators ruptured airbags in six vehicles. Toyota subsequently announced it will recall 2.3 million vehicles worldwide, and other automakers may follow suit.
Those investigations follow the worldwide recall last year by Toyota, Honda, Nissan, BMW and Mazda of 3.6 million vehicles with potentially defective Takata airbags, according to Reuters.
Those are eye-popping numbers, and automakers and regulators are taking those recalls seriously. In 2009, two motorists died after similarly defective inflators sprayed shrapnel into their vehicles’ cockpits, Reuters reported in January. Others have been seriously injured.
Also on June 11, the National Highway Traffic Safety Administration said high humidity in Florida and Puerto Rico may have played a role in the six incidents of ruptured frontal airbags
The NHTSA probe will cover 2002-06 vehicles produced by Honda, Nissan, Mazda, Chrysler and Toyota.
On Friday, June 20, Takata’s CEO said the company is looking at moisture as a possible cause of inflator malfunctions of vehicles on the road, echoing the suspicions of U.S. safety regulators.
With all the bad news, one might ask whether Takata will lose a significant number of airbag orders. The answer is probably not. Takata is simply too big — one of just three key suppliers, along with TRW and Autoliv, that dominate the global airbag market.
“The barriers to entry are ungodly high,” said Scott Upham, principal of Valient Market Research, a Rochester, N.Y., consulting firm that specializes in the airbag industry.
Suppliers must have deep-pocket expertise in electronics, explosives, metals and crash tests, Upham noted. Moreover, inflator factories require robots to handle key operations, and those facilities must be equipped with blast walls to cope with occasional blow-ups.
“That combination really keeps everybody out,” Upham said. “Some of the big German suppliers thought about getting into this sector but decided not to because of these issues.”
The airbag industry’s Big Three have located their inflator plants in arid regions. TRW makes inflators in Mesa, Ariz., while Autoliv has a plant in Brigham City, Utah. Takata’s inflator plants are in Moses Lake, Wash., and Monclova, Mexico.
The desert is ideal for an inflator plant because its remote location limits the damage in case of explosions. Equally important, the dry air makes it easier to shield the inflator’s propellant from moisture.
A Reuters story in January had pointed to moisture as causing some of Takata’s inflators to malfunction.
Ammonium nitrate, the propellant used in Takata’s inflators, is sensitive to moisture, according to Reuters. The moisture can cause the wafers of propellant to crumble, so that it will burn too fast when ignited. When the airbag deploys, that can trigger an explosion.
From 2000 to 2002, Takata’s plants in Washington and Mexico used some propellant that had been exposed to moisture. Takata fixed the problem, but faulty record-keeping hampered it from identifying those batches. So the automakers issued huge recalls to track down all defective airbags — 7 million over the last five years, Reuters has reported.
On Friday, Takata CEO Shigehisa Takada said the inflators may have been damaged by moisture. The company noted that the six malfunctions under investigation by NHTSA occurred in Puerto Rico and Florida.
“We currently believe the high levels of absolute humidity in those states are important factors; and as a result our engineers are analyzing the impact that humidity may have on the potential for an inflator malfunction,” Takada said in a written statement.
The recalls have been a significant burden for Takata, which took a $307 million write-off last year. And they promise to get even more costly. In addition to the 2.3 million Toyota recalls, Honda reportedly may recall a million more, according to Reuters.
As if that weren’t bad enough, the recalls follow an announcement last October that Takata would pay a $71.3 million fine to settle charges by U.S. regulators that it had fixed the price of seatbelts sold to automakers.
Upham of Valient Market Research believes automakers will continue doing business with Takata, so that Autoliv and TRW won’t dominate the market. But there may be some opportunities for Tier 2 suppliers that specialize in inflators.
ARC Automotive of Knoxville, Tenn., has two inflator plants in Mexico and China. And in 2005, Daicel Safety Systems of Japan began producing inflators for the Detroit 3.
Upham said Tier 2 inflator manufacturers such as Daicel “stand to gain the most” if Honda, Nissan and Toyota seek an alternative supply source.