Expert says Takata is ‘facing a crisis that may prove difficult to overcome’

One of the most persistent automotive news stories has been the massive number of recalls from dozens of car manufacturers due to defective Takata-made airbags. More specifically, the issue involves defective inflator and propellent devices that may deploy improperly in the event of a crash, shooting metal fragments into vehicle occupants. Approximately 34 million vehicles are potentially affected in the United States, and another 7 million have been recalled worldwide.

Anastasiya Zavyalova, assistant professor of strategic management at Rice University’s Jones Graduate School of Business, said three characteristics of the recalls contributed to this situation becoming a nightmare for Takata. Aside from the perception that Takata ships shoddy and potentially lethal products that undermine its vehicle manufactuer clients, the company seems to have done little to fix the situation.

 Zavyalova, whose research focuses on reputation management, explained the three characteristics:

* Severity of the consequences. "The consequences suffered by drivers and passengers of the vehicles with defective airbags are severe: 10 deaths and over 100 injuries. And, as many studies suggest, the more severe the consequences, the higher the market and customer penalties imposed on the company."

* Inability to identify the cause of the problem. "Years after the first recall involving Takata airbags, the company still has ‘little clue as to which cars used its defective inflators, or even what the root cause was.’ Without conducting an internal investigation and identifying the cause of the problem, the company cannot assure its buyers (for example, auto manufacturers) that it has dealt with the issue. Such inability to address the key safety issues may have led to withdrawal by its key customers, including Honda and Toyota."

* Pattern of unethical decisions. "Perhaps, the most important characteristic of the scandal is how Takata tackled the warning signs. A report by the Senate Committee on Commerce, Science and Transportation suggests that the company had been aware of the defects, ignored warnings by its employees and ‘manipulated test data’ to appear compliant with safety standards. As such, the scandal was not a result of one bad decision, but a consequence of a ‘pattern of deceit at Takata that continued long after the severity of the airbag defect came to light.’”

Bloomberg Business has reported that Takata’s key customers are switching their business to Autoliv Inc., Daicel Corp. and Nippon Kayaku Co., and Zavyalova said Takata is facing a crisis that may prove difficult to overcome. “Because of the severe consequences associated with the defective airbags, the company’s inability to pinpoint the underlying cause of the problem and the revelation of its unethical decision-making throughout the process, Takata may be facing a long road to recovery,” she said.