Takata whistle-blower willing to testify on deadly air bag flaws

[TOKYO] A former Takata Corp. engineer has told a US congressional committee he's willing to testify that he warned of deadly consequences before the company chose a design for air bags that were later recalled due to lethal flaws.

Mark Lillie, who left the Japanese auto-parts maker in 1999, said his departure was tied to Takata's disregard of his warnings against using the chemical compound ammonium nitrate to inflate its air bags.

More than 20 million cars with Takata inflators have since been recalled worldwide because the devices can deploy with too much force, causing them to rupture and shoot metal fragments at motorists.

"I knew that ultimately there were going to be catastrophic failures," Mr Lillie said in a phone interview. "I didn't want my name associated with it."

Takata has formed an independent review panel to investigate manufacturing weaknesses that thrust the company into the center of a global recall crisis, while defending its decision to use ammonium nitrate propellant. Its air bags have been linked to six deaths in Honda Motor Co. cars.

Takata, in an e-mailed response to questions from Bloomberg News, didn't directly address Mr Lillie's account of discussions within the company about ammonium nitrate or the circumstances of his departure.

The company's review panel will "conduct a comprehensive review to ensure Takata's current manufacturing procedures meet best practices in the production of safe inflators," Takata said in the e-mail. "We look forward to their findings and recommendations, which will be shared publicly at the culmination of their review."

RISKS, BENEFITS

US lawmakers have criticized Takata for continuing to use ammonium nitrate in replacement air bags for recalled vehicles. A Bloomberg News review of the company's patents in December showed Takata researchers have been aware of the instability of ammonium nitrate since at least 1985.

Takata said in December that air-bag inflator manufacturers have to balance the potential risks and benefits of different types of propellant and that the company uses methods to stabilize ammonium nitrate.

Mr Lillie left the company before it began making inflators with ammonium nitrate-based propellant.

Takata will expand on the toll of its air-bag problems when it releases earnings results for the third quarter of its fiscal year today. The company will probably widen its annual loss forecast to 30 billion yen (S$345.4 million) from 25 billion yen due to recall-related costs, the Nikkei newspaper said last week, without saying where it got the information. Takata wasn't the source of the report, Toyohiro Hishikawa, a spokesman for the parts maker, said by phone.

The Takata unit that makes air-bag inflators in Moses Lake, Washington, held a meeting in the spring of 1999 to review a proposed design of the devices that included use of ammonium nitrate as a propellant, Mr Lillie said. He said the design originated from Automotive Systems Laboratories, Takata's research-and-development unit in Livonia, Michigan.

"We went to the design review saying this is not an appropriate propellant," Lillie said. "I literally said that if we go forward with this, somebody will be killed." Hiroshi Shimizu, Takata's senior vice president of global quality assurance, called ammonium nitrate "safe and stable" during a Dec. 3 hearing before a U.S. House subcommittee. He told a Senate committee on Nov. 20 that the company continues to use the compound in its air bags, drawing criticism from Senator Claire McCaskill, a Missouri Democrat.

Senate Committee Takata has told regulators it found shortcomings in air bag inflator plants, including their controls for moisture, which can change the combustion characteristics of ammonium nitrate. The company uses the chemical in pellets that ignite, creating the gas that fills air bags when the devices are deployed.

Lillie said he spoke with the Senate's Commerce Committee before its Nov. 20 hearing on Takata air bags. He wasn't asked to testify but would do so if asked, he said.

The Automotive Systems Laboratories R&D group was under pressure by management at Takata's Tokyo headquarters to reduce costs compared with a previous-generation chemical propellant that used a compound called tetrazole, Lillie said.

A shortage of high-quality, low-cost tetrazole resulted in Takata losing about $10 per passenger-side air bag inflator and earning a small margin on driver-side inflators, Lillie said. By moving to ammonium nitrate, Takata's raw materials would be about one-tenth the cost, he said.

'Going Forward' The trouble with the inflators that used tetrazole resulted in "immense pressure" on Paresh Khandhadia, a top executive within Automotive Systems Laboratories, Mr Lillie said. He said it also resulted in friction between Khandhadia's R&D group and the manufacturing unit in Moses Lake.

"The two organisations collided because we had mission overlap," Mr Lillie said. "They were not anxious to give us the opportunity to, in their mind, tear apart their design. Some of it was their attempt to just steamroll this through." Mr Lille said he met privately with Hideo Nakajima, an engineer who served as the liaison between the Moses Lake unit and Takata management in Japan, following the design review meeting in the spring of 1999.

"What I gathered from the conversation was, 'Yes, I'll pass on your concerns, but don't expect it to do any good because the decision has already been made,'" Mr Lillie said. "We're doing this review just to check off the box and say we did the review. We really don't want your input; we're going forward with this." Takata declined requests from Bloomberg News to speak with Khandhadia and Nakajima.

Reuters reported on the comments Mr Lillie said he made during the 1999 design review meeting, in a story published Jan 29. He spoke with the New York Times for stories published in December and November.

Takata was founded in the 1930s as part of Japan's textile weaving industry and was among the companies that produced parachutes for the Imperial Army during World War II. It later rose to prominence as one of the world's largest makers of seat belts.

"Since our founding in 1933, we have worked tirelessly to develop innovative and high-quality products that exceed our customers' expectations, save lives and prevent injuries," Takata said in its e-mailed response to questions about Lillie's comments.

ENGINEERING EXPERTISE

Juichiro Takada, the second-generation leader from the company's founding family, entered the air-bag industry reluctantly because he viewed it as risky, according to a 2012 memoir published by Saburo Kobayashi, a former Honda engineer who spearheaded the automaker's use of the safety devices.

While Takata employed mechanical engineers who were concerned with inflator design, the Moses Lake unit lacked sufficient chemical engineering expertise, Mr Lillie said. He said the plant struggled with setting proper specifications for raw materials or for handling them properly, failing to control humidity or seal containers that guard the chemicals against moisture.

"They were trying to treat manufacturing explosives as though they were stamping out a piece of sheet metal," Mr Lillie said. "If you're making propellant, it's more of an art." -With assistance from Margaret Cronin Fisk in Detroit.

BLOOMBERG