Bloomberg calls it the biggest business failure in Japan's post-war manufacturing industry: Takata's bankruptcy filing. The company has gone under due to the millions of airbag recalls that have been linked to more than 10 fatal accidents.
Metal shards
The 84-year-old company has filed for protection from creditors in both the United States and Japan. There are more than $10 billion worth of liability claims outstanding, including from Honda (the airbags' biggest buyer), Toyota and individuals. In the US, Takata is filing for Chapter 11 bankruptcy protection, a type of controlled bankruptcy. Takata is expected to be split into a healthy branch, which makes child seats and seatbelts, and an airbag branch. US-based Key Safety Systems will take over the healthy arm of the company for $1.6 billion.
Airbag failures allegedly claimed the lives of at least 17 people. The airbags popped open so hard that a metal part broke and metal shards flew out. Besides several deaths, 180 people were also injured as a result. An American man and woman were blinded in one eye. Takata launched a major recall two years ago in response to these accidents. In the US, as many as 42 million cars had to go back to the factory. 1 in 7 vehicles in that country were fitted with faulty airbags. A third of these were said to have been replaced by now. In the Netherlands, 50,000 cars from Honda, Toyota and Nissan were recalled. The company plans to continue replacing airbags even after bankruptcy.
Claims
The problems with the airbags started some 14 years ago, but enough evidence was only found two years ago. After that, Takata confirmed knowing about the airbag problems. Takata has since lost a lot of money to debt claimants. In the US, the company settled for $1 billion with the Department of Justice. $850 million of that went to the car manufacturers who had fitted the dangerous airbags in their cars and $125 million served as compensation for victims. The remaining $25 million was a fine because the company continued production while knowing there were defects.
Financial experts think the total cost of replacing the airbags could eventually reach $24 billion.
A clear cause for the problems has never really been found. Takata eedrer stated that it may have been due to high humidity. Cars in the humid states of America were therefore targeted first.
By: Kelly Bakker
Source: Bloomberg
