Metals scandal rocks Japan Inc. to core
tokyo — The industrial scandal engulfing Kobe Steel began to reverberate overseas as Japan’s third-biggest steelmaker said its staff falsified data about the strength and durability of some aluminium and copper products used in planes, trains and potentially a space rocket.
Shares in Japan’s third-biggest 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 said they had used materials from Kobe Steel that were subject to falsification while Hitachi said trains exported to the UK were affected. It could cost the company as much as 15 billion yen ($133 million) to replace the parts, assuming five per cent of its aluminium product sales were affected, JPMorgan Securities Japan 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 one million cars after regulators discovered unauthorised inspectors approved vehicle quality, while Takata Corp pleaded guilty this year of misleading automakers about the safety of its air bags. 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.
CEO 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 aluminium 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. The comments were confirmed by a company spokesman.
Kobe Steel, one of Japan’s oldest industrial companies, was founded more than a century ago. Headquartered in the western port city, it made about seven million metric tonnes of crude steel in the year to March, as well as aluminium and copper. Its units include Kobelco Construction Machinery Co, which produces diggers.