Kobe Steel shares nosedive as quality scandal spreads
TOKYO (AFP) — Shares in Japan’s Kobe Steel dived Friday on a report that its widening quality scandal has spread to more than 30 foreign customers, including Boeing, General Motors, and French automaker PSA.
The Tokyo-listed firm fell almost nine percent to end the morning at 805 yen ($7.20), down about 40 percent since the start of the week after it admitted falsifying strength and quality data for an array of products, a practice that may have started a decade ago.
The embarrassing scandal for Kobe Steel — a venerable firm that once employed Prime Minister Shinzo Abe — has already hit wide sections of Japanese industry, including automakers Toyota, Nissan and Honda which used the affected materials in their vehicles.
But Japan’s leading Nikkei business daily reported Friday that those products were also used in planes built by Boeing and Airbus and vehicles made by General Motors, Tesla, and Daimler.
On Thursday, the CEO of Japan’s number-three steelmaker warned that the quality control crisis was likely to widen at home and abroad, as he acknowledged that trust in the steelmaker has “fallen to zero.”
The firm is expected to hold a news briefing later Friday.
Kobe Steel has admitted falsifying quality data for products sold to some 200 clients.
It is the latest in a string of quality control and governance scandals to hit major Japanese businesses in recent years, undermining the country’s reputation for quality.
The quality specifications were based on agreements between the firm and its clients. The affected products include steel wires used in car engines and tyres — a key company product — as well as aluminium found in Japan’s bullet trains as well as materials in high-speed trains in Britain, although it is not clear whether the scandal hit product safety.
“If it was found that there are safety problems (with steel wires) it could shake the foundation of Kobe Steel,” Takayuki Atake, manager of credit research at SMBC Nikko Securities, said in a report.