January 29, 2016 / 7:04 AM / in 2 years

Takata says CEO has no plans as of now to stand down

Takata Corp. Chief Executive and President Shigehisa Takada leaves a news conference in Tokyo November 4, 2015. REUTERS/Issei Kato - RTX1UNLN

TOKYO (Reuters) - Japanese air bag maker Takata Corp 7312.T, mired in a long-running safety recall crisis, said on Friday its Chairman and CEO Shigehisa Takada had no intention as of now to resign.

Citing two people close to Takata, Reuters earlier reported the company would tell its automaker customers at a meeting on Friday that Takada, grandson of the group’s founder, was willing to step down and take responsibility for the recalls.

“There are plans for management reforms,” said one of the individuals, adding this would involve expressing the willingness of Takada and other executives to resign. The sources said Takata has not taken any formal decision on Takada’s future and no successor has been designated.

In a brief statement to the stock market, Takata said it had not announced Takada’s resignation and “as of now he has no intention to resign.”

It confirmed the meeting to update its automaker customers, but said it had nothing to disclose following those talks. The company apologised to customers and investors for “inconveniences and uncertainties” from the recalls.

Pressure has been building on the Tokyo-based company for almost two years over defective air bags that can explode with excessive force and shoot shrapnel inside the car - a problem that has ballooned into a crisis affecting tens of millions of cars. Takata said on Tuesday that an 11th death could be linked to a faulty air bag.

After the Reuters article, Takata shares rose nearly 11 percent on Friday - their biggest one-day gain in 4 weeks - in a market .N225 that closed 2.8 percent higher.

At the meeting, Takata was expected to outline its plans for supplying replacement air bag parts to its customers, the sources said. As part of that, Takata is looking to team up with Daicel Corp 4202.T to make air bag inflators, people familiar with the matter have told Reuters previously.

Tetsuo Iwamura, executive vice president of Honda Motor (7267.T), which has been hardest hit by the air bag crisis, said he attended the meeting with Takata. He offered no further comment on those talks.

REPORT

Takata may come under renewed pressure when Germany-based Fraunhofer Institute reports on its investigation into the causes of air bag inflator failures. Japanese media have reported that the findings, commissioned by Takata, are due in the coming weeks.

Fraunhofer was not immediately available to comment on when the final results would be ready.

Partial results of its inquiry released last June showed that the air bag explosions appeared to result from damaged or improperly assembled inflators, and when ammonium nitrate, the chemical compound used to inflate the air bag, came into contact with moisture, a particular concern in humid regions.

Takata said then that it was still unclear what were the root causes of the air bag failures.

If the final report finds Takata liable for defective air bags, it could leave the company with a recall bill already estimated at more than $3 billion. Automakers, including Honda and Toyota Motor (7203.T), which have to date been paying for replacement air bags, could also take it as a cue to cut off financial lifelines to Takata.

FAMILY FIRM

Takada, 49, joined the family business straight from university in 1988 and has been CEO since 2013. He has been widely criticised for keeping a low profile even as the air bag crisis escalated, and automakers accused Takata of mishandling and manipulating safety data.

In his first media appearance in June 2015, more than a year after the recall crisis erupted, Takada apologised for the defective air bag inflators, saying that staying on to lead the company was the appropriate way for him to take responsibility.

Those who have worked with him describe Takada as quiet, thoughtful and analytical - in contrast to his ebullient father, Juichiro, who built Takata into Japan’s leading auto safety manufacturer. He died in 2011.

“If your dad was a legend and one of the founding fathers of the global auto safety industry, that’s a lot to live up to,” said Scott Upham, president of Valiant Market Research who worked at Takata in the 1990s.

Reporting by Naomi Tajitsu, Ritsuko Ando, Maki Shiraki and Taiga Uranaka; Editing by Clara Ferreira Marques and Ian Geoghegan

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