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OM in the News: Saving Money and the Takata Airbag Crisis

September 5, 2016
 A Takata airbag inflater.

A Takata airbag inflater.

The crisis over exploding Takata airbags does not seem to abate. Even in my own family, three of our cars have been recalled, but we have been waiting for months for replacement parts to become available. (And here in humid Orlando, the tricky properties of the ammonium nitrate propellants, or explosives, which can break down in moisture and warm temperatures, makes many people with these airbags nervous).

The New York Times’ (Aug. 27, 2016) historical article provides a case study of quality, supply chains, and reliability (the topics of Chapters 6, 11, and 17) worth sharing with your students. The Times writes:”In the late 1990s, General Motors got an unexpected and enticing offer. A little-known Japanese supplier, Takata, had designed a much cheaper automotive airbag. So G.M. turned to its airbag supplier, Autoliv, and asked it to match the cheaper design or risk losing the automaker’s business. But when Autoliv’s scientists studied the Takata airbag, they found that it relied on a dangerously volatile compound in its inflater, a critical part that causes the airbag to expand.”

Today, that compound is at the heart of the largest automotive safety recall in history. At least 14 people have been killed and more than 100 have been injured by Takata inflaters that exploded into shrapnel. More than 100 million of its airbags have been installed in cars in the U.S. by G.M. and 16 other automakers. New details of G.M.’s decision-making process almost 20 years ago suggest that a quest for savings of just a few dollars per airbag compromised a critical safety device, resulting in these deaths. (It turns out that workers at the Takata plant in Georgia manipulated tests meant to measure whether inflaters were airtight). Even with the record recall, deadly accidents and research critical of ammonium nitrate, Takata continues to manufacture airbags with the compound — and automakers continue to buy them. The airbags appear in the 2016 models of 7 automakers, and they are also being installed in cars as replacement airbags for those being recalled.

Classroom discussion questions:

  1. Are automakers also to blame ethically in this supply chain issue?
  2. Why is this a continuing problem?
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