In a dramatic press briefing in Tokyo following the company’s annual shareholders’ meeting, the president of embattled Japanese airbag manufacturer, Takata, Shigehisa Takada, made his first public apology for the faulty airbags responsible for at least 8 deaths and over 100 injuries. First bowing to the media, Takada said, “I apologize for not having been able to communicate directly earlier, and also apologize for people who died or were injured. I feel sorry our products hurt customers, despite the fact that we are a supplier of safety products.” It was the first ever public conference with the media for Takada, the grandson of the company’s founder who assumed the top spot last year. Takada also apologized for not providing clearer communication, saying “I felt that the priority of my job is to ensure our products are safe. I regret that I haven’t offered enough explanations.” Despite the apology, Takada said that he intended to remain as the company’s CEO. The apology comes mere hours after two major customers, Toyota and Nissan announced that they are recalling 3 million additional vehicles with Takata airbags.
Takada also told the media that the company is considering setting up a compensation fund for the victims of the faulty airbags. This comes following Tuesday’s Senate Commerce, Science, and Transportation Committee hearing, in which Takata North American vice-president, Kevin Kennedy, said that he could not commit to such a fund. Senator Richard Blumenthal (D-CT) ordered Kennedy to return to the committee in two weeks with a definitive answer. Takada did not directly commit to the idea of the compensation fund, saying instead that fund was one of several options that the company was considering. CFO Yoichiro Nomura said, “We will be discussing the costs with auto makers.” Some shareholders were critical of the executives at the meeting. Once such shareholder, Masahiro Yamazaki, lacks confidence in Takata’s handling of the recall, saying “this is going to drag on as the root cause hasn’t been found. Honestly, I’m worried they will go under, and they did nothing to ease my concern today.” Although the company has many public shareholders, nearly 60 percent of the shares are owned or administered by members of the founding family.
Adding to Takata’s mixed-message on safety, Senior Vice President Hiroshi Shimizu said that company will continue to use ammonium nitrate. This contradicts what Kennedy told the House Energy in Commerce Committee at another hearing earlier in the month. The chemical and its reaction upon deployment have long been cited as one of the possible causes of the dangerously rapid inflation that can shoot shrapnel into the vehicle’s cabin. Humidity and temperature have been listed as potential factors as to the accelerated reaction, with most defects occurring in warmer and more humid locations. At Tuesday’s hearing, Fiat-Chrysler’s North American head of vehicle safety, Scott Kunselman, announced that the company will be switching suppliers due to safety concerns over the inflators. Takata insists that the replacement components the company is currently manufacturing are safe. This comes even though Takata has already re-recalled 400,000 vehicles that had previously been repaired. It is estimated the recall involves at least 33.8 million airbags and affects roughly 20 million vehicles, not counting Thursday’s additions. Takata is the only major airbag manufacturer to use the chemical combination.
Bloomberg Business – Jie Ma and Masatsugu Horie
The Consumerist – Ashlee Kieler
Wall Street Journal – Yoko Kubota and Eric Pfanner