As much as I hate to resuscitate old threads, I felt an update was in order. We now know that Takata is a family-owned low-rent, bastard-run company, but we haven't really assessed the implications resulting from this recall - including it's cost to auto makers and consumers. Below is a quick blurb to bring us all up to date on how this company's deception was discovered, why executives at Takata were indicted, and where we are today.
Takata has recalled, or expects to recall, by 2019 about 125 million vehicles worldwide, including more than 60 million in the United States. Its airbag inflators have been linked to at least 16 deaths and 180 injuries around the world because they can rupture and send metal fragments flying. Investigations and whistle-blower testimony revealed that as early as
1999, Takata knew that it's ammonium nitrate based propellant was not performing to specifications required for US auto makers so they falsified critical test data and continued selling sub-standard products to US auto makers. Takata employees – including a number of key executives – routinely discussed the falsification of test reports being provided to Takata’s customers in email and in verbal communications. Even after the inflation devices began to experience repeated problems in the field – including ruptures causing injuries and deaths – Takata executives continued to withhold the true test information and data from their customers for almost
15 years. This resulted in US Dept of Justice charges of fraud and conspiracy, ending in a plea agreement and payment of 1 billion dollars for criminal restitution. Many auto makers are looking elsewhere to obtain air bag components, decreasing sales at Takata and worsening it's financial health.
In June this year, Takata filed for bankruptcy protection in the US and Japan. Takata have also reached an agreement with it's rival called KSS (Key Safety Systems) headquartered in Michigan, US to restructure and purchase just about 100% of Takata's global assets. The deal will allow Takata to continue producing air bag inflators without interruption after re-organization. The costs of the air bag recall will remain with Takata. KSS will not be responsible for completion of the recall.
The new combined KSS/Takata will have about 60,000 employees in 23 countries. KSS says it plans to retain almost all of Takata’s employees and does not intend to close any of the company’s manufacturing facilities. The actual transaction is set to be completed in early 2018. However, there is no guarantee that these facilities will remain open in 2-3 years after the recall is completed, so no telling what might become of KSS/Takata employees down the road. Yet more fallout to come.
After the bankruptcy is finalized, the purchase of Takata assets by KSS is finalized, the Rehabilitation requirements in Japan have been met and approved, and the payment to the US Dept of Justice from it's plea agreement, it is estimated that only 2 billion dollars will remain to pay for the estimated 5 billion dollar cost to complete the air bag recalls. Because KSS is not responsible for any recalls, auto makers will have to absorb most of the cost of the recall. And we all know what corporations do when they are beset with an unexpected, added expense. Look to your left, look to your right. That is where the money always comes from.
On a scary side note, Takata also produces seat belts, child safety seats, sensors, electronics, and other 'safety' equipment to auto makers world-wide.
