Regulators losing patience with auto industry deception
When the massive auto industry airbag recalls were first announced we were critical of the airbags’ manufacturer Takata and the way it chose to handle crisis management. Now, months down the road, Takata’s failure to come clean is resulting in serious monetary loss.
At $200 million, the fine handed down by the National Highway Traffic Safety Administration is the largest civil penalty in that organization’s history. In a scathing statement, the NHTSA took Takata to task for failing to issue a timely recall and allegedly cherry picking test data to deceive regulators among other faults.
“For years, Takata has built and sold defective products, refused to acknowledge the defect, and failed to provide full information to NHTSA, its customers, or the public,” said Transportation Secretary Anthony Foxx. “The result of that delay and denial has harmed scores of consumers and caused the largest, most complex safety recall in history. Today’s actions represent aggressive use of NHTSA’s authority to clean up these problems and protect public safety.”
In the wake of this announcement Honda, Takata’s single largest client, dropped the manufacturer, stating that, “Honda expects its suppliers to act with integrity at all times and we are deeply troubled by this apparent behavior by one of our suppliers.”
The past couple years have seen hefty fines laid on several major auto-industry players as a result of what very much appears to be deliberate deception regarding everything from faulty parts to reporting on deaths and injuries. While the massive size of the organizations involved means paying out millions isn’t always as painful as those doling out the penalties may hope, lawmakers are beginning to agitate for those responsible to face time behind bars, a situation that has the industry panicking (and spending millions on lobbying to stop it from happening).
The time to sweep things under the rug is clearly coming to an end. If the auto industry wants to avoid seeing even higher fines and, eventually, executives jailed for their actions, a change must come.
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For more resources, see the Free Management Library topic: Crisis Management
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[Jonathan Bernstein is president of Bernstein Crisis Management, Inc., an international crisis management consultancy, author of Manager’s Guide to Crisis Management and Keeping the Wolves at Bay – Media Training. Erik Bernstein is vice president for the firm, and also editor of its newsletter, Crisis Manager]
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Jonathan L. Bernstein, president of Bernstein Crisis Management, Inc. has more than 25 years of experience in all aspects of crisis management – crisis response, vulnerability assessment, planning, training and simulations.
Erik Bernstein is vice president of Bernstein Crisis Management. Erik started with BCM in 2009 as a writer and subsequently became social media manager for the consultancy itself as well as for a number of BCM clients before moving to the VP position.
