Leadership Changes At Takata, Recall Stance Does Not

Embattled Japanese airbag supplier Takata is shaking up its top management team – even as top managers take pay cuts of as much as fifty percent. But the company is so far maintaining its position that there is no need to expand the recall of airbags linked to a potentially deadly problem that can result in the devices spewing shrapnel into the passenger compartment after a crash.

As part of the shake-up, Takata Corp. President Stefan Stocker will step aside, his duties being assumed by Chairman Shigehisa Takada, heir to the founders of the company. Stocker will remain a member of the Takata board. The maker insisted the realignment is not meant as a demotion, but "to centralize and speed up the decision-making process, and to step up handling" of its airbag problems.

At least five American motorists have been killed due to faulty Takata airbags. The problem has been linked to a manufacturing defect and the supplier claims the issue is worsened when the bags are exposed to high humidity. Initially, recalls focused primarily on vehicles used in areas like Florida, Louisiana, and Puerto Rico.

The National Highway Traffic Safety Administration ordered a regional recall of 7.8 million vehicles in October, but was quickly criticized for not expanding it nationwide. Following the fifth death linked to Takata airbags, NHTSA called for an expanded recall. But the supplier has repeatedly rejected that approach, a senior executive recently telling a Senate committee Takata saw "no evidence" the action was justified.

Key customers have broken with the supplier, however, including its largest user, Honda. BMW this week became the latest of ten automakers using the suspect Takata airbags to expand its recall.

Takata’s problems aren’t limited to airbag defects, however. The maker has seen several key executives sentenced to prison time for their role in a bid-rigging scheme that has also snared a number of other key Japanese suppliers. The airbag maker has also been fined for its role in the scandal by the U.S. Justice Department. A number of industry analysts have questioned whether Takata can afford the cost of having its airbag recall expanded much further – though the company insists it has the necessary financial resources whatever the final outcome.

But Takata has been running up huge losses and has cut its stock dividend. It now plans to cut the pay of President Stocker, Chairman Takada, and three other senior executives by anywhere from twenty percent to fifty percent.

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