Once-thriving brand hammered by scandal

Around 100 million Takata airbags, including about 70 million in the US, are subject to a massive recall. The airbags have been blamed for scores of injuries and at least 17 deaths.
Around 100 million Takata airbags, including about 70 million in the US, are subject to a massive recall. The airbags have been blamed for scores of injuries and at least 17 deaths.PHOTO: AGENCE FRANCE-PRESSE

HISTORY

Takata began life in 1933 as a family-owned textile factory. Its founder Takezo Takada is the grandfather of chief executive Shigehisa Takada, who said yesterday that he would resign over the airbag debacle that has bankrupted the firm.

The company's original products included woven fabrics and nautical ropes. Over the decades, Takata branched out, selling seat belts in the 1960s and, later, other car safety equipment such as airbags.

By the 1980s, the firm had ballooned into a top global auto parts player on the back of Japan's surging economic clout.

Takata employs about 46,000 people globally and has 56 factories in 20 countries, including the United States, Mexico and China, with about 663 billion yen (S$8.3 billion) in annual revenue.

Get The Straits Times
newsletters in your inbox

GROWING CRISIS

In 2000, the company started using a chemical - ammonium nitrate - as a propellant in its airbag inflators.

The problem is that the unstable chemical can degrade, especially in humid conditions.

That creates the risk that Takata's airbags will improperly inflate and rupture, firing metal and plastic shrapnel at the occupants of the car.

This has happened in numerous cases, resulting in scores of injuries and at least 17 deaths.

Takata has been accused of hiding the problem for years. Honda, a major Takata customer, first sounded the alarm in 2008 that there might be a problem.

But the crisis reached a peak only in 2014, when earlier deaths started getting more media attention and the US National Highway Traffic Safety Administration became involved in the ballooning recalls.

MASSIVE RECALL

Around 100 million airbags, including about 70 million in the US, are subject to a massive recall. It has affected almost every major automaker, including Toyota and General Motors.

The scandal has hammered Takata's once-thriving brand and put it in a tight spot as it faces probes, lawsuits and massive liabilities, estimated to exceed one trillion yen.

Takata has already agreed to pay a billion-dollar fine to settle with US safety regulators over its airbags. But that is not the end of the legal or financial problems the firm faces.

WHAT'S NEXT

Takata yesterday said it has agreed to be bought by American auto parts maker Key Safety Systems, owned by China's Ningbo Joyson Electronic, for about US$1.58 billion (S$2.2 billion). Its new owner said there were no immediate plans to reduce Takata's employee headcount or close factories, as it tries to keep the business stable for customers.

But Takata's name is not likely to survive in the long term. Operations linked to the airbags will not become part of the combined company. They will be run by the reorganised Takata and eventually wound down.

Takata's embattled shares, meanwhile, will be yanked off the Tokyo Stock Exchange next month.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on June 27, 2017, with the headline 'Once-thriving brand hammered by scandal'. Print Edition | Subscribe