Auto parts suppliers taking in the costs of greater safety image

Most likely, 2014 will go down in history as the year of the recall, with over 60 million autos called back into service for safety campaigns in the United States alone.

While General Motors and later on Japan’s Takata Corp. were the primary drivers of the unprecedented surge in recalls, the truth is that every automaker’s executive had many sleepless nights trying to reform the company’s safety strategy. And that shows up as pressure going down to their auto-parts suppliers to also implement higher quality standards. In Japan, for example, parts makers that supply automakers worldwide report taking costly measures to reach the new, raised international quality standards – with extra safety features in their component designs and the purchase of more sophisticated inspection equipment. The auto parts executives say the moves are expensive but could pay off in the long-run and “ if we’re forced to compensate for losses later on, we’ll all be finished,” comments Shigenobu Nagamori, the president of Nidec Corp. – a small company that seeks to expand its business with the automakers.

According to Fumio Fujimori, president of Aisin Seiki Co., auto parts makers from now on will incur higher costs as they go after higher product safety standards, which could then divest into raised prices for their prices. But they also have no other option, as – for example – being in compliance with the ISO standards is not a matter of “honor” now, but of survival.

Via Bloomberg