Takata Corp, one of the world's biggest automotive suppliers for airbags, is preparing to file for bankruptcy by next week. This news comes in as Takata is in need of financial backing, and has been in talks with U.S based automotive parts manufacturer - Key Safety Systems Inc.
Takata is facing billions in liabilities that have come up as a result of defective airbag inflators, and the component manufacturer also owes $850 million to major automobile manufacturers around the globe.
The major problem now faced by Takata is that, a deal with Key Safety Systems might not become reality until Takata files for bankruptcy, which is exactly what the company has decided to do. The proceedings for filing of bankruptcy is to begin shortly in the US and in Japan.
While Takata's filing for bankruptcy might help the company secure financial banking, it has also become a cause for concern to its clients, which are major global auto manufacturers. They feel, this step can cause a disruption in the production of the replacement airbag inflators Takata had agreed to supply.
Takata airbag inflators came under controversy when it was found that they explode with excessive force, causing metal and plastic shrapnel to go haywire inside the car, therefore injuring occupants. Takata airbag inflators have been found responsible for 16 deaths and and more than 180 injuries worldwide.
The Japanese component supplier has so far, paid $25 million as fine and $125 million to to a victim compensation fund, which includes vistims from any incidents that might occur in the future.
Takata plead guilty to criminal wrongdoing and agreed to pay $1 billion in order to resolve an investigation initiated by the U.S justice department. Takata's airbag inflator recalls began in 2008 and involves the replacement of around 100 million airbag inflators.
These airbag inflators can be found in cars from manufacturers like Honda, Ford, Volkswagen and even Tesla. Only around 35 percent of the 46.2 million recalled inflators have been replaced so far.
The situation faced by Takata now is unfortunate. However, Takata has done the right thing in agreeing to replace faulty inflators. Airbags are meant to protect and save lives, and not do the opposite.