June 16, 2017 4:45 pm JST

From air bag king to bankruptcy court: A Q&A on Takata's fall

Global recalls leave 84-year-old company with some $9bn in debt

MITSURU OBE, Nikkei staff writer

Takata will leave behind more than $9 billion in debt. © Reuters

TOKYO -- Japanese air bag maker Takata is expected to file for bankruptcy protection, possibly within this month, following massive global recalls of products linked to deadly accidents.

The company will leave behind more than 1 trillion yen ($9.02 billion) in debt, making it the largest bankruptcy in the nation's postwar history. Here is what you need to know about the manufacturer's rise and fall.

Q: How did Takata rack up so much debt?

A: Takata's air bags are widely used. Following the discovery of defective inflators, the company was forced to recall some 100 million units around the world. This process is expected to cost about 1.3 trillion yen -- more than enough to break the back of the 84-year-old manufacturer.

Q: How did Takata get into the air bag business in the first place?

A: It started out as a textile company and began producing seat belts for carmakers in the 1960s. It launched air bag production in Japan in 1987, and its sales grew as the components became standard in vehicles worldwide. 

Q: But how did its air bags become so ubiquitous?

A: Takata developed air bags with Honda Motor, its biggest client. It expanded overseas alongside the Japanese automaker in the 1980s. Today, Takata rings up nearly 80% of its sales abroad.

Q: How did the defects come to light?

A: The defects attracted the public eye after two people died in the U.S. due to exploding air bags in Honda Accords. The U.S. Congress eventually took charge of the issue, as lawmakers grew frustrated with Takata's slow reaction.

Q: Initially, how did Takata respond to the reports of serious problems?

A: The company insisted the problems were due to human error during manufacturing, and denied there were any fundamental defects. This delayed the recalls and sparked accusations that the company was attempting a cover-up.

Q: What will happen to Takata after the bankruptcy filing?

A: The company will continue to produce air bags and seat belts while undergoing a restructuring process. American autoparts maker Key Safety Systems, owned by China's Ningbo Joyson Electronic, is to sponsor Takata's turnaround efforts.

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