04.02.2021

Environmental penalty for Tadano

Tadano has revealed that it has been holding discussions with the US Environmental Protection Agency (EPA) since 2018, regarding possible errors in the self-reporting of engines under the ‘Transition Program for Equipment Manufacturers’ and faces a $40.5 million civil penalty.

The company discovered possible the issues in 2017 company and appointed a third party firm to look into it, and when confirmed reported the information to the EPA. Japanese shareholders were also informed of a possible issue at the time. Tadano has been working with the EPA under a confidentiality agreement with the US Government since then.

The Transition Program provided a temporary exemption allowing equipment manufacturers to delay installing the relevant Tier compliant engines in their products for up to seven years. Companies that did so were required to self-report the number of non-compliant engines installed which was then compared to the permitted level of exclusions for that company.

Tadano self-reported under the programme as Tadano Japan, Tadano America, Tadano Mantis and Tadano Faun between 2011 and 2017, when it became aware that certain requirements were likely not to have been met during that period. A law firm investigated the discrepancies and submitted a report on its findings. Tadano then took it to the EPA and the Department of Justice. It was then that it also notified Japanese investors through a Japanese press release.

The EPA and Department of Justice has now proposed a civil penalty of $40.5 million, to resolve the apparent violations of the transition programme requirements, in addition to certain other terms and conditions yet to be determined. Tadano said that it continues to fully cooperate with ongoing discussions with the two agencies and will make further disclosures once discussions have been finalised.

Tadano has also confirmed that since 2017 - if not before - it has only shipped cranes which meet or exceed the most demanding exhaust requirements in force.

As a result of the penalty the company will take a hit to its 2020/2021 fiscal year which will result in the net loss of ¥10.9 billion ($103.6 million) compared to a forecast loss of ¥7.9 billion ($75 million).

The company has also published its third quarter results which we will report on shortly.