“I don’t intend to hold on to my position. Once I’ve delivered this company to a place where it’s not at risk of faltering, I want to pass the baton.” With those words, Shigehisa Takada announced his intent to resign as CEO of embattled airbag manufacturer Takata.
The resignation should come as no surprise. Widely criticized for leaving a vacuum of leadership when the airbag crisis struck, Mr. Takada left most of the task of dealing with auto manufacturers, as well as a very angry public, to others within the company. Executives were largely on their own when addressing regulators and lawmakers. In fact, in Mr. Takada’s vacuum, it would take close to a year for the company simply to address the airbag defect after it was discovered.
According to the New York Times, the Takada family has been in control of Takata for over 80 years. It is, however, a publicly traded corporation. This means that while the family may have run things until now, it has been with investors’ blessings. Executive leadership is ultimately at the mercy of the investors and the board of directors, and It looks like their mercy has run out.
Advanced Research Japan auto industry analyst Koji Endo says that “nobody wants to see anybody from the Takada family in charge at this point. The Takada family, practically speaking, is being kicked out.”
Shakeups at companies teetering on the brink of insolvency aren’t uncommon. In an effort to wipe the slate clean, restructurings often come with a mass eviction of “Mahogany Row,” the name sometimes given to the C-level suites occupied by a company’s top executives.
In the case of Takata, last year alone saw $127 million wiped from the company’s value. As of March it only had about $500 million in cash on hand. While that may sound impressive, optimistic estimates for the cost of recalling 34 million vehicles from roadways and replacing their airbags approaches $10 billion.
The search for new investors has been in full swing ever since. A number of investment firms are in the running to stake a claim, as is the Japanese government. One thing is, however, certain – while Mr. Takada ponders his resignation and executives frantically search for a bailout, Takata airbags still sit in millions of vehicles; waiting to be triggered and potentially waiting to kill more passengers.