3 lessons from Takata’s airbag crisis

More than 29 million vehicles have been recalled due to the faulty product, making it the largest in United States history. Recently, the company’s executives were criminally charged.


Takata’s airbag crisis is far from over.

On Friday, U.S. federal prosecutors brought criminal charges against three Takata executives—Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi—alleging that the three deceived automakers about defects in its airbags that they knew failed safety tests.

Bloomberg reported:

Takata is accused of engaging in a 15-year scheme to cheat its customers by getting them to buy defective air bags. There are 46 million recalled Takata inflators in 29 million vehicles in the U.S., the National Highway Traffic Safety Administration said. More recalls are coming over the next three years, affecting as many as 69 million inflators in 42 million vehicles, the agency said.

The indictments aren’t the only bad news to hit the company that was, in 2015, the world’s second-largest airbag provider.

The Washington Post reported:

On Friday, the Justice Department announced that Takata would plead guilty to one count of fraud and pay $25 million to settle the criminal charge. The company will also pay $850 million to automakers and $125 million to those injured as a result of the defect, according to a plea agreement.

The recalls aren’t finished. On Jan. 12, Ford added more than 816,000 vehicles in North America to the list. CNBC reported that the recalls include roughly 100 million inflators worldwide.

Here’s what PR pros can take from the situation, so they can avoid a similar fate:

1. Don’t hide the truth.

 

Recalls linked to Takata airbags have been announced—and expanded—for a while, but the most recent news of charges against company executives are perhaps the most damaging.

The New York Times reported:

The guilty plea and fine had been widely expected, but the charges against the executives intensified a scandal that has roiled regulators, led to congressional hearings and brought the Japanese manufacturer to the brink of bankruptcy. The airbags, which can rupture violently when they deploy, have been linked to at least 11 deaths and more than 180 injuries in the United States.

“They falsified and manipulated data because they wanted to make profits on their airbags, knowing they were creating risk for the end-users, who are soccer moms like me,” Barbara L. McQuade, a United States attorney for the Eastern District of Michigan, said at a news conference in Detroit.

Communicators should note that the truth will come out, and it’s best to be in front of it.

If you or your organization has done something requiring an apology, make a sincere one. Do it sooner, rather than later, and in your apology, describe what you will do to fix the situation—and then follow through on your plan.

Delaying the truth or burying it in hopes that it won’t come to light not only can put your organization at risk of criminal and civil lawsuits, but it also can irreparably damage your brand’s reputation.

2. Your organization’s leaders are extensions of your brand.

The lawsuit against Takata’s executives alleges that they withheld information from manufacturers as early as 2008, when repeated problems first arose in the air bags.

Bloomberg reported:

The three executives are Japanese citizens and not in U.S. custody. According to prosecutors, they knew that the inflators had experienced ruptures and other failures during testing from about 2000, and routinely discussed fabricating test results, removing unfavorable information — known as “XX-ing” the data — and manipulating the reports, according to the indictment.

However, your executives don’t have to be in the center of a criminal indictment to tarnish your brand.

Organizations’ leaders who don’t think before they speak (or tweet) can bring on a PR headache, as well as leaders who take a stand on controversial issues—even if they think those stances aren’t tied with the organization.

Remember that what your executives do matter, both in and out of the office. PR pros can alleviate strain by working with internal communicators to establish proper social media behaviors among staff, as well as enrolling higher-ups in media training classes.

3. Trust requires more than a PR pro’s song and dance.

 

After news broke of Takata’s fine and indictment of its former executives, the company released a statement, which read, in part:

“Reaching this agreement is a major step towards resolving the airbag inflator issue and a key milestone in the ongoing process to secure investment in Takata,” said Shigehisa Takada, Chairman & CEO of Takata. “Takata deeply regrets the circumstances that have led to this situation and remains fully committed to being part of the solution. We have taken aggressive actions to address past reporting lapses and will continue to work closely with regulators and our automotive customers to address the ongoing recalls and implement new technologies that advance vehicle safety, prevent injuries and save lives.”

PR pros should note that in times of crisis—especially when handling large firestorms—a well-crafted statement can do little to stop consumer backlash.

Instead, audiences want to see what your organization is doing to fix the problem and keep it from recurring. This could include firing staff involved in the crisis, implementing a new process to correct deficits or a plan for restitution, including consumer rebates and giving back to the community.

In its press release, Takata included a list of actions it took after the recalls started and included a website consumers can visit for further safety information:

To address the inflator issues, Takata has increased investment in data integrity and product safety and quality. Key actions taken by Takata to-date include:

· Strengthened compliance processes, including an improved global Whistle Blower Hotline program, and implemented a dedicated Safety Assurance & Accountability Office and a dedicated Product Safety Office to oversee all product safety issues and concerns for TKH;

· Implemented improvements to testing protocols and data security, including the creation of a Data Vault to ensure inflator testing results are reliable and accurate;

· Established an independent Quality Assurance Panel led by former Secretary of Transportation Samuel K. Skinner and acted on the Panel’s recommendations;

· Added more than 100 staff in the TKH quality organization and invested more than $160 million in the Inflator Group and TKH Safety organization; and

· Invested significant resources to maximize recall completion rates, including launching a targeted digital advertising campaign in the U.S. – the first ever campaign of its type by an automotive supplier – to reach owners of vehicles that have been recalled.

Takata remains committed to taking all the necessary steps to advance driver safety, and strongly urges all consumers to check NHTSA’s www.safercar.gov website and contact their dealers immediately if they discover their vehicle is subject to a recall.

Statements such as these can go much further toward rebuilding consumer trust than eloquent sentences delivered by an organization’s spokesperson.

PR pros should also remember that isn’t regained immediately, so it’s crucial to continue implementing the plan(s) to repair reputation and prevent future crises.

 

(Image by Moto “Club4AG” Miwa, via)

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