Takata to boost production of replacement air bag inflators

By Ben Klayman

DETROIT (Reuters) - Takata Corp (7312.T) said on Wednesday it plans to boost production of parts needed to replace potentially deadly air bag inflators that could spray vehicle occupants with metal shards.

On Tuesday, the Japanese supplier doubled its recall of the defective air bags to nearly 34 million vehicles, making it the largest automotive recall in U.S. history.

Takata shares fell 10.2 percent to 1,353 yen in Tokyo on Wednesday.

The air bag inflators have been found to explode with too much force, spraying metal fragment inside cars and forcing automakers to recall more than 53 million vehicles worldwide since 2008. The component has been linked to six deaths, all in cars made by the supplier's top customer, Honda Motor Co .

A Takata spokesman said the company will boost output of the replacement parts to 1 million inflators a month by September, an increase of 100,000 parts from the previous forecast and up from the current monthly level of 500,000. He did not specify if all the additional production would be added at Takata's inflator plant in Monclova, Mexico.

The spokesman added Takata had just passed 3.8 million replacement kits made in total.

Takata has faced pressure from U.S. safety regulators, lawmakers and its automaker customers to increase production of the replacement parts. Several automakers have turned to other suppliers in the sector to meet the demand.

On Tuesday, Mark Rosekind, administrator for the U.S. National Highway Traffic Safety Administration, said he did not know how long it would take to complete the recall. "There is no question, it could be some years," he said.

Takata and NHTSA, which has hired independent research group Battelle to uncover the technical cause of the problem, said the priority for the replacement parts will be older vehicles and those in higher-humidity regions.

Takata and its customers will determine who receives the replacement parts, but NHTSA is overseeing the process and could issue orders to the companies involved.

But Kevin Pollack, vice president for Stericycle ExpertSolutions, which is helping some of the affected automakers, said the complexity of the recall could play out over at least two years. "There weren't 30 million extra air bag inflators sitting around."

Jack Gillis of consumer advocacy group Consumer Federation of America believes the recall could take up to five years to resolve.

CONTINGENCY PLANS

General Motors (GM.N) said last December it had developed contingency plans to deal with a potential shortage of replacement parts, directing Takata to share inflator specifications with rivals Autoliv(ALV.N) and TRW. A GM spokesman said Wednesday there was no update to those plans.

Autoliv said Wednesday it was ready to boost production capacity to meet increased demand for replacement inflators.

The Swedish company said in January it was targeting additional production capacity of up to 25 million air bag inflators for delivery in 2015 and 2016.

Autoliv spokesman Thomas Jonsson said Wednesday the company is building replacement inflators for Honda and several other unidentified automakers, but he had no time frame for when the industry would meet the demand.

Honda spokesman Chris Martin said the company is also using Japan's Daicel Corp and TRW for replacement inflators. TRW was recently acquired by Germany's ZF Friedrichshafen.[ZFF.UL]

"We absolutely have back orders on inflators," he said. "Some people may wait a couple days, some people may wait a few weeks."

Daicel said in February it would build a second U.S. plant for air bag inflators in early 2016, bringing forward plans partly to meet demand for alternatives to Takata's inflators. It said the previous month it would boost output of replacement inflators in Japan.

A Toyota Motor Corp spokeswoman said Wednesday the company is working with Takata for most replacement inflators, but will use Daicel for some parts.

Nissan Motor Co Ltd said it would not comment on supplier selection or potential negotiations. Ford Motor Co (F.N) has previously said it has spoken with Takata rivals about buying replacement parts.

Not everyone is disappointed with the expanded recall, however, as consumer advocate Gillis said dealers will see a "gold mine" with increased visits to their repair bays and a possible boost in new-car sales as a result.

(Additional reporting by David Morgan in Washington; Editing by Matthew Lewis)