Japan's airbag giant Takata files for bankruptcy
CEO Shigehisa Takada to resign after airbag crisis triggers 100 million safety recalls
TOKYO: Japan's crisis-hit car parts maker Takata filed for bankruptcy protection yesterday and said its chief executive would quit after a deadly airbag crisis that triggered the auto industry's biggest safety recall.
The company is facing lawsuits and huge costs over a defect blamed for at least 16 deaths and scores of injuries.
The scandal affected almost every major global automaker, including Toyota and General Motors.
United States-based auto parts maker Key Safety Systems (KSS) will buy Takata for an estimated US$1.58 billion (S$2.2 billion).
Takata's chief executive Shigehisa Takada, whose grandfather started the company in 1933 as a textile maker, said he would resign once the takeover was complete.
"I apologise from the bottom of my heart for causing trouble for everyone concerned," Mr Takada told a press briefing.
News reports have said Takata's liabilities would exceed one trillion yen (S$12.5 billion) in what is the biggest bankruptcy filing for a Japanese manufacturer.
Trading in Takata shares was suspended yesterday after a week of wild volatility. The stock will be delisted from the Tokyo bourse late next month.
Little-known outside Japan, Takata evolved from a small factory into an automotive parts giant in the 1980s.
It has dozens of plants and offices in 20 countries, including the US, China and Mexico. The airbag division has accounted for more than a third of total annual revenue of around 663 billion yen, with seatbelts and steering wheels among its other key products.
Mr Jason Luo, president and chief executive of KSS, which is owned by China's Ningbo Joyson Electronic, voiced confidence in Takata's rehabilitation.
"Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach and exceptional steering wheels, seat belts and other safety products have not diminished," he said in a statement.
There were no immediate plans to reduce Takata's 46,000-employee headcount or close factories as part of the deal, he added.
However, operations linked to the defective airbags will not become part of the combined company, and will later be wound down.
Takata shares soared more than 40 per cent on Friday after collapsing over the week as traders made bets on its likely bankruptcy.
Analysts attributed the upsurge on Friday to speculative trading among short-term investors hoping to profit from wild swings in the share price.
Some 100 million airbags produced for some of the largest automakers are being recalled, including about 70 million in the US.
The problem has been linked to a chemical, ammonium nitrate, which is used as a propellant in Takata's airbag inflator canisters.
The component can degrade, especially in humid conditions, creating the risk that an airbag will improperly inflate and rupture, firing metal shrapnel at the vehicle's occupants.
Takata, which had been accused of hiding the problem for years along with its major automaker customers, agreed this year to pay a US$1 billion fine to settle with US safety regulators.
Honda, a major Takata customer, first sounded the alarm that there might be a problem in 2008.
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.
Takata was heavily criticised for its handling of the public relations crisis, but some say its automaker clients also dragged their feet on dealing with the snowballing scandal. - REUTERS