February 2017

In this issue ...

Takata Agrees To Plead Guilty And Pay $1 Billion In Criminal Penalties For Air Bag Scheme

Tokyo-based Takata Corporation, one of the world’s largest suppliers of automotive safety-related equipment, agreed to plead guilty to wire fraud and pay a total of $1 billion in criminal penalties stemming from the company’s fraudulent conduct in relation to sales of defective airbag inflators, according to the U.S. Department of Justice. An indictment was also unsealed charging three Takata executives with wire fraud and conspiracy in relation to the same conduct.

“Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits,” said U.S. Attorney McQuade. “If they choose instead to engage in fraud, we will hold accountable the individuals and business entities who are responsible.”

“For more than a decade, Takata repeatedly and systematically falsified critical test data related to the safety of its products, putting profits and production schedules ahead of safety,” said Fraud Section Chief Weissmann. “This announcement is the latest in the automotive industry enforcement actions the Fraud Section has taken to protect U.S. consumers against fraud.”

The U.S. Department of Justice released that according to the company’s admissions, in the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant. From at least in or around 2000, Takata knew that certain ammonium nitrate-based inflators were not performing to the specifications required by the auto manufacturers. Takata also knew that certain inflators had sustained failures, including ruptures, during testing. Nevertheless, Takata induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators. This fraudulent data made the performance of the company’s airbag inflators appear better than it actually was, including by omitting that, in some instances, inflators ruptured during testing. Takata employees - including a number of key executives - routinely discussed the falsification of test reports being provided to Takata’s customers in email and in verbal communications. Even after the inflators began to experience repeated problems in the field - including ruptures causing injuries and deaths - Takata executives continued to withhold the true and accurate inflator test information and data from their customers.

In addition, Takata took no disciplinary actions against those involved in the falsification of test data until 2015, despite the fact that senior executives had been made aware of the fraudulent conduct years earlier.

Takata has agreed to plead guilty to a one-count criminal information filed on January 13, 2017 in the Eastern District of Michigan and assigned to U.S. District Judge George Caram Steeh, charging the company with one count of wire fraud. Under the terms of the agreement, Takata will pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine. Two restitution funds will be established: a $125 million fund for individuals who have been physically injured by Takata’s airbags and who have not already reached a settlement with the company, and a $850 million fund for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme. A court-appointed special master will oversee administration of the restitution funds. Takata has also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.

The three Takata executives - Shinichi Tanaka, 59; Hideo Nakajima, 65; and Tsuneo Chikaraishi, 61, all Japanese citizens - were each charged in an indictment filed on Dec. 7, 2016, in the Eastern District of Michigan with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in connection with the above-described fraud scheme.

The department reached this resolution based on a number of factors, including Takata’s extensive cooperation with the government’s investigation. However, the company did not receive more significant mitigation credit, either in the penalty or the form of resolution, because of the nature of the conduct to which the company is pleading guilty, including the approximate 15-year duration of the fraud, the pervasiveness of the scheme into the executive level of management and the potential risk the fraud posed to drivers and passengers.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Schnitzer’s Recycling Division Releases Best Financial Results Since 2012

Schnitzer Steel Industries, Inc. released its first quarter 2017 results. While the company reported a loss per share from continuing operations of $0.05 for the fiscal 2017 first quarter, which ended November 30, 2016, and an adjusted loss per share from continuing operations of $0.03, its Auto and Metals Recycling division (AMR) delivered its best first quarter performance since fiscal 2012. The AMR’s total first quarter revenues up 11 percent from 2016. The company stated the improvement is due to higher benefits achieved from the successful execution of cost reduction and productivity initiatives and improved market conditions.

In the Steel Manufacturing Business (SMB), continued pressure from low-priced imports on finished steel selling prices and volumes, combined with the higher operating costs associated with a major equipment upgrade and maintenance downtime, adversely impacted results as compared to the prior year and the fourth quarter of fiscal 2016, according to the company.

Schnitzer Steel Industries currently expects AMR’s operating income for the second quarter to increase sequentially and year-over-year driven by the continued improvements in market conditions for recycled metals. AMR’s second quarter performance is expected to reflect higher ferrous average selling prices and sales volumes and an anticipated favorable impact from average inventory accounting, as well as continued benefits from previously announced cost reduction and productivity initiatives. The company currently anticipates SMB’s second quarter performance to be slightly improved from the first quarter due to higher selling prices, with the elimination of the expenses associated with the equipment upgrade expected to be offset by higher raw material costs and higher inventory costs associated with low production volumes resulting from the downtime.

“In the first quarter, AMR delivered a substantial increase in operating income compared to the prior year quarter, largely due to the increased contributions from the successful implementation of our cost savings and productivity initiatives. In the second quarter, our expectations for improved performance are underpinned by the stronger market environment that we are experiencing as well as continued progress on our strategic initiatives to reduce costs, deliver internally-generated synergies and drive further productivity initiatives,” commented Tamara Lundgren, President and Chief Executive Officer.

Sellick Equipment Founder Dies

Walter Sellick, founder of Sellick Equipment in Harrow, Ontario died on January 10, 2017, the company stated.

Walter was 98. He is survived by sons Howard and David, daughter Heather, and many grandchildren and great grandchildren.

Born in 1918, Walter was raised on a farm in Harrow, Ontario. He served in the Royal Canadian Air Force from 1941 - 1945 and was a life member of Royal Canadian Legion Branch #338.

Walter managed a Ford tractor dealership for many years until 1968 when at the age of 50 embarked on a new career with sons Howard and David, establishing Sellick Equipment Limited, manufacturers of rough terrain forklifts, on January 1, 1969.

Walter was an avid pilot and a member of several flying organizations, a member of the Harrow Rotary, former mayor of Harrow, former member of the Harrow and Colchester South Fire Dept., former chairman and board trustee of the Harrow and Colchester South School Board.

Walter was also on the board of directors of the Equipment Manufacturers Institute (EMI), now the Association of Equipment Manufacturers (AEM), and helped pioneer the EMI rough terrain forklift council.

“He will be missed by many - most importantly of all, his family,” stated the company.

Top 10 Parts Searched At PartsLocator.com

Used engines, wheels and transmissions are still the top parts searched online at PartsLocator.com. While body panels, like fenders, bumpers and hoods, are in the top 10, mechanical parts remain in the top three spots on the list. More than 17,000 users visit PartsLocator.com every month, on average.

Here are the top 10 parts searched for the first week of January 2017.

  1. Engine Assembly
  2. Wheel
  3. Transmission / Transaxle Assembly
  4. Fender
  5. Bumper Assembly, Front
  6. Hood
  7. Axle Assembly, Front (4WD)
  8. Side View Mirror
  9. Seat, Front
  10. Bumper Cover, Front

Go to PartsLocator.com/Parts-Search/.

GMARE, URG And OARA To Hold Events In March

The Automotive Recycling Industry of Nebraska (ARIN) will hold the 2017 Greater Midwest Automotive Recyclers Exposition (GMARE) in Grand Island, Neb. March 10 - 11. This is the 24th annual exposition.

The United Recyclers Group (URG) will hold its annual training conference in San Antonio, Texas on March 23 - 25 at the Hyatt Hill Country Resort and Spa.

And the Ontario Automotive Recyclers Association’s (OARA) annual event will be on March 30 - April 1 at the Hilton Toronto / Markham Suites Conference Center in Markham, Ontario. Paul D’Adamo from Recycling Growth will be the keynote speaker.

More details and links to the associations' websites can be found at www.partslocator.com/Events/.

March Deadlines

  • January 25, 2017: Listings for The Locator Magazine.

  • January 30, 2017: Display ads for The Locator Magazine.

  • February 2, 2017: The Locator Magazine goes to press.

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Recycled Parts Buying Trends

The Locator's commitment to buyers and sellers of recycled parts has been the driving force for the company for more than 50 years. For the past several months, the data has shows a clear trend for purchasing smaller, easy-to-install parts. Headlights, tail lamps and side view mirrors have been popular among buyers. But buyers also continue to purchase the larger, more expensive parts including engines and transmissions.

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Most Popular Parts Searches

PartsLocator's new late-model parts search allows users to find the parts they need, purchase them and have them shipped directly. The site is user friendly and completely responsive so access from any device - desktop, laptop, tablet or mobile device - is seamless.

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