Takata Files for Bankruptcy Protection Amid Airbag Recalls
Nearly a decade after the first of many airbag recalls, Japanese Auto parts maker Takata Corp. has filed for bankruptcy protection. The once massively successful company has fallen off since serious safety issues with their products have been revealed to the public. Takata is in at least $10 Billion in debt, mainly to automakers whose vehicles were recalled due to Takata’s faulty product. Before declaring bankruptcy, the company’s total assets were valued at $1.3 Billion, so it remains to be seen how Takata Corp. handles its remaining debt.
Takata Corp., a company used to bringing in over $5 Billion in yearly revenue, is now becoming accustomed to annual losses. In the meantime, it has lost three of its highest executives to work-related criminal charges. It will be difficult for Takata to cover all of its liabilities without making a profit, but will utilize the payment from its buyout to go towards paying off automakers. Key Safety Systems, a growing engineering safety company out of Sterling Heights, Michigan, has decided to buy out Takata’s remaining assets for a price of $1.59 Billion. The deal’s main purpose is to help eliminate disruptions in the supply chain of these airbags, but also to retain all of Takata’s employees and operations in Japan. The sponsorship seems to be a step in the right direction for both companies, giving Takata the opportunity to work under the wing of a thriving company while it attempts to get itself out of a rough situation. At the same time it allows KSS to extend its consumer base and exponentially increase production.
Scandals are nothing new to Takata, who has consistently been involved in major lawsuits and criminal accusations over the past decade. Takata’s airbags have become extremely dangerous, as the ammonium nitrate airbag inflator explodes with far too much force for a standard vehicle. As a result, shards of metal are sprayed all over the car’s cabin, and 16 deaths have been directly linked to Takata’s airbags. Earlier this year, Takata was found guilty of wire fraud, knowingly ignoring and then covering up the fatal defects in its airbags. Three Takata executives were convicted by a federal grand jury, and the company was subjected to a $1 Billion criminal payment.
There are only a few major producers of airbags and other car safety features in the world. Combining Takata’s market in Asia with Key Safety’s American consumer base could easily skyrocket KSS into the driver’s seat of the airbag industry. While there are many aspects of Takata that no business would want to replicate, there are certain parts of the company’s backbone that are indispensable to Key Safety’s future success. employs many extremely skilled workers that are well-versed in manufacturing airbags and other materials. Also, the quality of their products, aside from airbags, has long been considered top-notch, and should continue to be produced the same way.
The most disconcerting part of Takata’s downfall is that their faulty airbags are still on the road and have yet to be fixed. The company was extremely underprepared to deal with recalls and expects to be catching up on airbag reparations until at least 2020. That timeline is what pushed away potential Swedish buyer Autoliv Inc. and significantly dropped the price for KSS to purchase Takata. Hopefully, with the help of Key Safety Solutions, Takata will be able to repair all of their products and go back to producing high-quality, safe automobile materials.