Metals scandal rocks Japan’s Kobe Steel Ltd.

Falsified data on aluminum, copper products

• The industrial engulfing Kobe Steel Ltd. began to reverberate overseas as Japan’s third-biggest steelmaker said its staff falsified data about the strength and durability of some aluminum and copper products used in planes, trains and potentially a space rocket.

Shares in Japan’s thirdbiggest steelmaker plunged 22 per cent and bond risk jumped to a 19-month high as customers including Toyota Motor Corp., Honda Motor Co. and Subaru Corp. said they had used materials from Kobe Steel that were subject to falsification while Hitachi Ltd. said trains exported to the U.K. were affected. It could cost the company as much as 15 billion yen (US$133 million) to replace the parts, assuming five per cent of its aluminum product sales were affected, JPMorgan Securities Japan Co. estimated.

Kobe Steel’s admission raises fresh concern about the integrity of Japanese manufacturers. Nissan Motor Co. last week said it would recall more than 1 million cars after regulators discovered unauthorized inspectors approved vehicle quality, while Takata Corp. pleaded guilty this year of misleading automakers about the safety of its airbags. Kobe Steel said the products were delivered to more than 200 unidentified companies, with the falsification intended to make the metals look as if they met client quality standards.

Chief executive Hiroya Kawasaki is now leading a committee to probe quality issues. The fabrication of figures was found at all four of Kobe Steel’s local aluminum plants in conduct that was systematic, and for some items the practice dated back some 10 years, executive vice-president Naoto Umehara said on Sunday.

Kobe Steel was founded more than a century ago. Headquartered in the western port city, it made about 7 million tonnes of crude steel in the year to March, as well as aluminum and copper.

Toyota said it has found Kobe Steel materials, for which the supplier falsified data, in hoods, doors and peripheral areas. “We are rapidly working to identify which vehicle models might be subject to this situation and what components were used,” Toyota spokesman Takashi Ogawa said. would be huge. There’s a possibility that the company would have to shoulder the cost of a recall in addition to the cost for replacement.”

Kobe Steel materials were used in Hitachi trains exported to the U.K.’s Agility Trains, according to Hitachi spokesman Masataka Morita. The trains haven’t started operation yet. Materials were also used in East Japan Railway Co., Central Japan Railway Co. bullet trains in Japan, he said, adding that the trains were inspected after completion and there was no problems with their strength.

Subaru has produced training planes for Japan Self-Defence Forces and wings for Boeing Co. jets such as the Boeing Dreamliner, according to a spokesman, who added the company was checking which planes and parts used affected aluminum. “Nothing in our review to date leads us to conclude that this issue presents a safety concern, and we will continue to work diligently with our suppliers to complete our investigation,” Boeing said.

Honda said it used falsified material from Kobe Steel in car doors and hoods while Mazda Motor Corp. confirmed it uses aluminum from the company. Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they are checking whether their vehicles are affected.

Mitsubishi Heavy Industries Ltd. spokesman Genki Ono said Kobe Steel aluminum was used in the MRJ regional jet as well as the H-IIA rocket, which was launched by Japan Aerospace Exploration Agency on Tuesday for a satellite. “We perceive that there was no problem as the rocket launch was a success,” he said. “Checks are under way, but at this point no large effects have been found in the manufacture of the rocket or MRJ.”