Family-run Takata at center of air bag recalls, When the late Juichiro "Jim" Takada was building his family business into one of the world's largest suppliers of auto-safety equipment, he often was seen on factory floors -- at home and abroad – with sleeves rolled up, hard-hat on, personally involved.
Takata Corp. could use the same hands-on approach now as it struggles with one of the worst safety recall crises in decades.
More than 16 million cars have been recalled worldwide due to defective air bags made by Takata. Five deaths have been linked so far to defective air bag inflators that can explode with too much force, shooting metal and plastic shrapnel at the vehicle occupants. More than 130 others have been injured.
Reports of exploding air bags first surfaced in the mid-2000s. Honda announced the first U.S. recall for faulty Takata bags in a nationwide action in 2008.
Honda is Takata's biggest U.S. customer; about 5 million of the 8 million U.S. vehicles being recalled are Honda products.
Tokyo-based Takata declined to meet a deadline Tuesday set by U.S. regulators to expand into a nationwide recall the ongoing regional recalls of the suspect air bag inflators by 10 of its automaker customers.The current recalls are limited to regions where high humidity is thought to increase the chances of degradation of the propellant used in the inflators.
Honda told a House of Representatives subcommittee Wednesday that -- prompted by Takata's refusal -- it would expand its own regional recall of possibly defective Takata driver-side bags to a nationwide recall.
The National Highway Traffic Safety Administration said it would continue to pursue the process to force a national recall by Takata.Takata is finding increasing trouble at home, as well, over the air bags.
No deaths or injuries have been reported in Japan, but a handful of inflator explosions since 2011 have led to a recall of 2.6 million vehicles there.
Japan's powerful Transport Ministry is considering whether to expand that recall and last week established a task force to meet daily with Takata officials to monitor progress. Transport Minister Akihiro Ohta warned that the crisis could damage the reputation of the country's entire auto industry.
"We need to solve it as soon as possible," he said. "The good reputation Japanese makers have enjoyed could be shaken."
Investors already have spoken. Takata's share prices have fallen almost 60% this year, and the company has been forced to set aside some 47 billion yen ($394 million) to cover recall costs so far -- a bill that is likely to climb far higher.
Through it all, Takata's third-generation chairman and chief executive has remained all but invisible.
Shigehisa Takada, 48, spoke at a shareholder's meeting in June, but has not made a public appearance since. The company's chief financial officer appeared at Tokyo's stock exchange last month to issue an apology, and filled in for Takada at a scheduled meeting with market analysts the following week.
That's a sharp contrast to General Motors CEO Mary Barra, who has been front-and-center during GM's recall of millions of vehicles this year for faulty ignition switches now linked to 36 deaths. She has fired 13 people, appeared several times on Capitol Hill, set up an indpendently administered victims' compensation fund and is using the issue to overhaul GM bureaucracy and speed action on other safety issues.Takada has avoided Washington. The company's global quality assurance chief, Hiroshi Shimizu, testified at a Senate hearing into the crisis last month – where the company's performance was sharply criticized – and represented the company again on Wednesday at a U.S. House committee hearing, where he said the company is working to increase production of air bag replacement kits
That's a bad call, says Nicholas Benes, a corporate governance specialist in Japan.
"As the president of the company, not appearing before Congress does not look good. It behooves the company to get the most senior guy out there, telling what the company knows, doesn't know, and what the strategy is, and responding to the critics as openly and honestly as possible. They (Takata) haven't done that," said Benes, representative director for the Board Training Institute of Japan, a non-profit, public interest organization.
Takata was founded in 1933 as a textile manufacturer. It branched out into safety belts and other auto products in the 1950s and by the late 1980s it had become Japan's largest manufacturer of auto-safety products. It is one of three major manufacturers of air bags worldwide and has a global market share of about 20%.
The company went public in 2006 and now operates 56 plants in 20 countries, with more than 46,000 employees worldwide. Annual revenue last year reached 557 billion yen ($4.66 billion).
But for all that, the company remains tightly controlled by the Takada family, and its inner workings remain something of a mystery.
"It is completely controlled by the Takada family so outsiders don't really know what's going on there," says Koji Endo, managing director of Advanced Research Japan, a Tokyo-based independent equity research firm.
Shigehisa Takada, 48, joined the company after graduating from college in Japan and became chairman in 2007 following the retirement of his father, Juichiro, who died in 2011.
His mother, Akiko Takada, is retired from the company but retains the title of senior corporate advisor and reportedly remains active in company affairs. She also is president of the Takata Foundation, a not-for-profit organization that funds auto-safety research.
The company has announced plans to boost production of replacement kits for defective air bags from 300,000 per month to 450,000 to supply parts for the recalls, but otherwise has said little about how it plans to respond.
Says Endo, "Regrettably, the Takada family have not really been that helpful in terms of disclosure. So we don't know how they are looking at the problem."
