Kobe Steel's Dodgy Data Rattles Companies from Boeing to Toyota

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Japan's Kobe Steel yesterday lost one-fifth of its market value after it admitted falsifying quality data for aluminum and copper products shipped to about 200 clients, including auto giant Toyota Motor Co.

Kobe said that at present there was no evidence that the "nonconforming" products would compromise safety. From Boeing Inc.to Toyota Motor Corp., companies are scrambling to check any affected products. And the Reuters news service quoted Japanese industry ministry officials who said some Subaru products sold to the military also used Kobe Steel. In all, about 200 Japanese companies are impacted, including a number of vehicle manufacturers, as well as the Central Japan Railway, or JR Tokai.

Kobe Steel's admission raises fresh concern about the integrity of Japanese manufacturers.

Toshiba is still battling the fallout of a scandal involving reporting inflated profits. It warned at the weekend that the problems could stretch back 10 years.

"While they say they're strengthening corporate governance, improprieties focused on manufacturing have been popping up". Shares in rival Japanese aluminium producers rose.

"We are rapidly working to identify which vehicle models might be subject to this situation and what components were used, as well as what effect there might be on individual vehicles", it said in a statement.

Kobe Steel shares closed at the limit low after being untraded for the whole session, diving 22 per cent to 1068 yen.

- Subaru said "cars and planes including their parts made by Subaru used aluminum made by Kobe Steel that was subject to data falsification" and added it was checking to see if the use of Kobe Steel's aluminum parts affects safety.

Kobe said it would make another announcement when the impact of the incident on its business becomes clear and as the investigation progresses. It apologised and said it had appointed lawyers to investigate. The products account for 4% of shipments of aluminium and copper parts as well as castings and forgings.

"We want Kobe Steel to make the utmost effort to restore trust from society", he said. "To our knowledge it has not affected any customer's products at this stage", he said. There are so far no reported safety issues, it said. Kawasaki Heavy Industries and Mitsubishi Heavy Industries (MHI) supply parts to Boeing including for its 777 Dreamliner.

Mitsubishi Heavy Industries spokesman Genki Ono said Kobe Steel aluminium was used in the MRJ regional jet as well as the H-IIA rocket, which was launched by Japan Aerospace Exploration Agency on Tuesday for a satellite.

Toyota said it had found Kobe Steel materials, for which the supplier falsified data, in bonnets, doors and peripheral areas.

After conducting an in-house probe, Kobe Steel - which once employed Prime Minister Shinzo Abe - admitted Sunday it had shipped products that did not meet client specifications, including strength data.

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