Published: Wed, October 11, 2017
Economy | By Guillermo Lane

Japan's Kobe Steel tumbles after admitting to falsified data

Japan's Kobe Steel tumbles after admitting to falsified data

Will Kobe Steel become the next "Takata airbag" scandal to hit Japan?

Kobe Steel unleashed an industrial scandal that reverberated across Asia's second-largest economy after saying its staff falsified data related to strength and durability of some aluminium and copper products used in aircraft, cars and maybe even a space rocket. The Mitsubishi Heavy Industries Corporation, which produces the H-2A launches today, said it believed it safe to use Kobe Steel production.

Aluminum is widely used in cars, planes and high-speed trains in Japan which use the light-weight metal to increase fuel efficiency.

Kobe Steel's probe has so far found that data were falsified for about 19,300 tons of aluminium products, 2,200 tons of copper products and 19,400 units of aluminium castings and forgings shipped to clients between September 2016 through August 2017. Nissan has already said aluminum hoods that fail to meet specifications could pose a risk to pedestrians during front-end collisions, while Toyota said the metal could have been used in some of its hoods and rear doors.

The falsification was meant to make the metals look as though they met client quality standards.

Kobe Steel said data had been falsified to make the metals look as if they met quality standards.

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Kobe said that at present there was no evidence that the "nonconforming" products would compromise safety.

Other companies affected include automakers such as Nissan Motor Co., Subaru Corp., Mazda Motor Corp., Mitsubishi Motors Corp. and Honda Motor Co., which have also said they used the affected aluminum products in their cars.

"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. "We recognize that this breach of compliance principles on the part of a supplier is a grave issue".

- Mitsubishi Motors said it is confirming affected models as well as whether there's impact on vehicle safety.

JPMorgan Securities Japan Co. estimated that it could cost the company as much as 15 billion yen ($133 million) to replace the parts, assuming five percent of its aluminum product sales were affected. Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they are checking whether their vehicles are affected.

"We perceive that there was no problem as the rocket launch was a success", he said. And the Reuters news service quoted Japanese industry ministry officials who said some Subaru products sold to the military also used Kobe Steel. "If the aluminium business doesn't work out well, I question where the company can make money", given that profitability at the mainstay steel business remained low, he said.

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