Bankruptcy plan calls for Takata to stop making airbag inflators once recall done

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TOKYO — Japan’s Takata Corp., facing bankruptcy over the biggest recall in automotive history, would stop making airbag inflators after completing a global recall, under a restructuring plan under consideration by its steering committee, sources told Reuters on Friday.

The committee is discussing plans with rival Key Safety Systems Inc., which is negotiating to take control of the company. Any plan would require final approval from Takata’s board before the airbag maker submits them as part of expected bankruptcy filings in the U.S. and Japan.

The plan would also have Takata airbags and seatbelts rebranded as KSS products after Takata emerges from bankruptcy. Michigan-based KSS, owned by Chinese supplier Ningbo Joyson Electronic Corp., currently is a smaller competitor to Takata in airbags and seatbelts.

Takata declined to comment on the plans.

Takata is still building replacements required under a recall of around 100 million inflators that could detonate with excessive force after prolonged exposure to heat. 

Exploding Takata airbag inflators have been blamed for at least 16 deaths and more than 150 injuries worldwide.

Takata would stop producing airbag inflators after it completes production of replacement parts and fulfills existing supply contracts for them with automaker clients, the sources said.

One source said existing contracts would likely end around 2020.

Job cuts are also on the table, the sources said, including upper-level managers involved in manipulating inflator test results to conceal possible defects. Many plant managers would likely remain to ensure that production continues during the transition period.

The plan is critical for a bankruptcy restructuring that could be launched as early as next week. Takata is hoping to erase billions in liabilities and resolve the recall of airbag inflators.

Any bankruptcy would pose limited risk to Takata’s ability to supply the roughly 100 million replacement inflators required to complete the global recall, one of the sources familiar with the company’s plans said. U.S. vehicle safety regulators are putting pressure on Takata and automakers to speed up the replacement of defective inflators in the U.S.

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