‘NOTHING’S CHANGED AT KOBE STEEL’
Steelmaker has ‘look the other way’ culture, claims ex-employee
THE fresh university graduate, eager to make a good impression on the job at one of Kobe Steel Ltd’s main plants in Japan, punched the wrong measurements into machines making steel pipes, causing a large batch to come out too short.
“I thought I was going to be fired,” recalled the former employee nearly 40 years later. But Shinzo Abe, now Japan’s prime minister, stayed on the job at Japan’s third-largest steelmaker for three years before entering politics in 1982.
Abe has called the steel industry the backbone of the nation. Kobe Steel, a 112-year-old company in Japan’s Hyogo prefecture, has risen from wartime devastation and natural disaster but its past is littered with examples of corporate misconduct.
Its admission last month that workers had tampered with product specifications for at least a decade is the latest in a string of scandals that has battered Japan’s reputation as a manufacturing powerhouse.
Workers, executives and shopowners here, a gritty, industrial city bordered by sloping hills where cattle are bred for the famed Kobe beef, said they were concerned but not surprised by the scandal.
“The corporate culture was to look the other way even while you saw what was going on,” said a retired employee who worked at the company’s flagship steel plant, Kobe Works.
“They were supposed to be instilling a culture that paid attention when improprieties were discovered,” said the former employee. “In the end, they didn’t create such a corporate culture. That’s management’s responsibility.”
In 2006, Kobe Steel admitted falsifying soot-emissions data from the blast furnaces at Kobe Works and Kakogawa Works.
The latest scandal reflects “exactly the same set-up”, said Shoichi Tarumoto, who was then mayor of Kakogawa. “It looks like nothing has changed at Kobe Steel.”
Kobe Steel has admitted taking part in bid-rigging for a bridge project in 2005, and failing to report income to tax authorities in 2008, 2011 and 2013. The company also exceeded established limits for ground and water pollution in 2006.
Illegal political funding to candidates in local assembly elections in 2009 prompted the resignations of the then chief executive and chairman. And last year, Kobe Steel admitted a subsidiary falsified data on stainlesssteel products.
A senior official in local government who has dealt with the company for years said: “Kobe Steel always scouts the backstreets for shortcuts. That’s their nature.”
Although its local dominance has waned, Kobe Steel remains one of only two Kobe-based companies, along with Kawasaki Heavy Industries Ltd, that have revenues over one trillion yen (RM38.12 billion) a year. Its Kakogawa Works is that city’s biggest company, vital as a local taxpayer and employer.
No safety issues have been found so far because of the tampering, but Kobe Steel has withdrawn its forecast for its first annual profit in three years.
Whatever the eventual economic impact, the scandal is already affecting morale in Kobe city.
“If Kobe Steel suffers a blow, this is the area that will be most affected,” said Tsuyoshi Matsuda of Teikoku Databank’s Kobe office. Reuters