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Takata Chairman and CEO Shigehisa Takada and other executives bow in apology at a June 26 press conference.
Business

Failure to learn Toyota lessons cost Takata big

Misjudgement of U.S. public opinion led to bankruptcy filing

TAKESHI SHIRAISHI, Nikkei staff writer | China

TOKYO -- Japanese air bag maker Takata filed for bankruptcy protection with the Tokyo District Court on Monday, more than 10 years after acknowledging a serious problem with defective products.

The scandal progressively worsened as the company failed to learn lessons from similar problems encountered in the U.S. by Toyota Motor and Bridgestone, and completely misjudged the public's reaction, not to mention that of the authorities.

Takata was first informed of an issue by its biggest customer Honda Motor in 2005. The manufacturer concluded the problem was caused by errors in the production process, such as humidity management, rather than a gas-forming agent that inflates the air bags.

Based on Takata's analysis, Honda recalled vehicles in the U.S. for the first time in 2008.

Analysis questioned

In 2009, however, a Takata air bag that had not been subject to the recall exploded, resulting in the first fatality of the scandal. Subsequent reports of defective products, which Takata's analysis had deemed fine, prompted Honda and other automakers to question the supplier's account.

The automakers began recalls in high-humidity areas in June 2014 to establish what was really causing the defects, rather than entrusting Takata with the work.

The issue then became the subject of increasing concern among U.S. consumers. Repeated broadcasts of footage showing parts of an exploded air bag scattered across a car in Florida in the autumn of 2014 made the name Takata -- and its "killer air bag" -- famous for all the wrong reasons.

Criticism grew stronger following a U.S. Congress hearing as the company, despite being urged by lawmakers to conduct a nationwide recall, insisted the decision to recall vehicles lay with the automakers. Takata was seen as being a passive bystander when it came to consumer protection.

The National Highway Traffic Safety Administration, which had on occasions faced criticism for not taking action on recalls, got tough with Takata. Seeing that many air bag inflaters appeared to become more volatile when exposed to humid conditions for long periods of time, the NHTSA told the company to agree in May 2016 to recall all air bags that could explode despite the exact cause still being unknown.

Delay in response

Takata is not the first Japanese company to have encountered quality and safety issues in the U.S. In August 2000, Bridgestone announced a decision to voluntarily recall 6.5 million tires following an accident involving a vehicle mounted with tires produced by American subsidiary Firestone Tire and Rubber. Bridgestone protected its brand by eliminating the concern before identifying what had caused the problem.

When Toyota saw "unintended acceleration" in certain vehicles -- caused by floor mats trapping the accelerator -- between 2009 and 2010, company President Akio Toyoda voluntarily attended a hearing in Congress and declared a customer-first policy. Pledging to fully accept responsibility helped bring public opinion back onside.

In contrast, it took until 2015 for Takata Chairman and CEO Shigehisa Takada to publicly address the air bag scandal for the first time. During the 10 years after being first informed of the problem, employees, including senior officials, were found to have repeatedly presented falsified test data, according to the U.S. Department of Justice.

Takata will transfer operations to a new company to be established by Key Safety Systems, a leading American auto parts maker belonging to China's Ningbo Joyson Electronic, in a bid to rehabilitate. New orders for Takata air bags have continued to decrease, although its plants are operating at full tilt to produce replacements.

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