Japan’s steelmaker, Kobe Steel, admission to faking data for metal used in cars, aircraft raises safety concerns

Japan’s steel maker, Kobe Steel, admission to faking data for metal used in cars and aircraft is raising concerns about safety, just as it has stunned Japanese manufacturers and global users of its products.

Kobe Steel Inc. had admitted to falsifying of inspection data of aluminum and copper products that may have gone to around 200 clients possibly including Toyota, Subaru and Honda.

After a probe done by the steelmaker on Sunday, it said that it had shipped aluminum and copper products that did not meet client specifications, including strength data.

According to the company, the fabrications might have started a decade ago and could have affected products sent to as many as 200 companies.

General apprehension greeted the news and investors reacted swiftly as shares in Kobe Steel dived by more than a fifth after the company’s admission to faking data about the quality of its products. Shares in the company fell 22 percent on Tuesday to 1,068 yen (£7.20; $9.50), wiping almost a billion dollars off its market value.

 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.

Naoto Umehara, vice president of Kobe Steel Inc. at a press conference on Sunday commented that after the in-house probe, it became obvious that their managers took part in this or that they knew about it but did nothing about it. He also apologized for the misconduct, stating that the company is deeply apologetic for this improper conduct.

Hiroya Kawasaki, chief executive officer at Kobe 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, Umehara said on Sunday.  However Kawasaki said there haven’t been any reports of safety issues.

Analysts say the development further tarnishes the reputation of Japan’s globe-trotting manufacturers, long celebrated for their high-quality products. It could also undermine confidence in Prime Minister Shinzo Abe’s moves to improve corporate governance as part of his program of Abenomics.

Clients including Toyota Motor Corp., Honda Motor Co. and Subaru Corp. said they had used materials from Kobe Steel that have now been adjudged to be subject to falsification. Also Boeing Co., which gets some parts from Subaru, said there’s nothing to date that raises any safety concerns.

Honda equally said it used the falsified material from Kobe Steel in car doors and hoods while Mazda Motor Corp. confirmed it uses aluminum from the company.

According to a spokesman for Subaru, which has produced training planes for Japan Self-Defense Forces and wings for Boeing jets such as the Boeing

Dreamliner, the company was checking which planes and parts used affected aluminum.

Boeing however in a different statement said nothing in its review has led them to conclude that no safety concerns for them right now but would continue its investigation.

Also Mitsubishi Heavy Industries Ltd., which is charge of the MRJ regional jet and the H-IIA rocket launched by Japan Aerospace Exploration Agency on Tuesday for a satellite, said the firm’s aluminum was used but no defects were found yet as the launch was a complete success according to a spokesperson, Genki Ono.

This is latest in a series of scandals that has besmirched the Japan manufacturing industry, with Shinko Wire Co. in 2016, an affiliate of Kobe saying it fabricated data on the strength of stainless wires for springs and alloy that failed to meet industrial standards.

Also, in February 2017, Takata pleaded guilty in the U.S. to one count of wire fraud for misleading automakers about the safety of its air bags. Automaker, Nissan also recalled more than 1 million cars last week.

Yasuji Komiyama, director at the metal industries division of Ministry of Economy, Trade and Industry said on Tuesday that it was tracking the Kobe Steel case and they urge the company to make efforts to recover the trust of society as a whole, not just its customers.