Japan trade ministry says Kobe Steel scandal harms trust in country's manufacturing

Gwen Vasquez
October 13, 2017

Kobe Steel President Hiroya Kawasaki will meet a senior official at the industry ministry on Thursday, the ministry said in a statement. The company said it had initiated an investigation going back 10 years. "The top priority is safety checks and confirmation of the safety of products already shipped, and we'll make all possible preparations to do that", he said.

Beyond automakers and trains, Kobe Steel has also been implicated in fabricating data for aerospace and defense-related products.

The stock dived 22% on Tuesday to finish at 1,068 yen ($9.50), its maximum daily loss limit-wiping nearly a billion dollars off the firm's market value. In addition to representing institutions and other investor plaintiffs in class action security litigation, the firm's expertise includes general corporate and commercial litigation, as well as securities arbitration.

Shares in Kobe Steel fell by almost 40% in two days, wiping more than $1.5bn (£1.1bn) off its market value after the firm admitted fabricating data about the strength and durability of products it delivered to more than 200 companies.

Car, train and aircraft makers are investigating whether they have used any sub-standard materials made by Kobe Steel.

Several vehicle manufacturers have launched investigations after supplier Kobe Steel admitted falsifying data for some of its aluminium and copper products.

The company had also revealed Wednesday that an internal probe found at least 140 tons of iron powder shipped in fiscal 2016 did not meet customer specifications.

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Kobe Steel reported the incident to the ministry on September 28.

Kawasaki, stating that no recalls on products will be made at the moment, said in his first public appearance since Sunday's revelations, that the results of safety inspections on shipped products would be made within two weeks and details of the firm's response to products undergoing false inspection data given.

The industry ministry has pressed Kobe Steel to work with its clients, spread over a wide range of industries, to conduct urgent safety analysis. Subaru and Mitsubishi are major suppliers to Boeing.

Kobe Steel told the BBC that dozens of employees were involved in the falsification of data on its products.

In a statement on Wednesday, Kobe Steel denied a Nikkei business daily report that it meant to put its real estate business up for sale to help shore up its finances.

"Aluminum from Kobe Steel is used in the hood of some models", Mazda operations spokeswoman Carley Hummel wrote in an email.

"I talked with management of JFE and I think they are very happy to buy Kobe Steel's steel businesses", Pham said Thursday on Bloomberg TV.

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