October 12, 2017 1:10 pm JST  (Updated October 12, 2017 6:08 pm JST)

Kobe Steel says more malpractice could emerge

Scandal spreads to US as GM, Ford launch probes, trust 'reduced to zero'

Nikkei staff writers

Kobe Steel Chairman and President Hiroya Kawasaki, left, apologizes over the company's falsification of inspection data at the Ministry of Economy, Trade and Industry on Wednesday.

TOKYO -- There appears to be no end in sight to the data falsification scandal at Kobe Steel, with the company admitting it could not guarantee more evidence of malpractice would not emerge.

"I sincerely apologize for creating distrust and concern among many people," Kobe Steel Chairman and President Hiroya Kawasaki told reporters on Thursday at the Ministry of Economy, Trade and Industry, where he met with Akihiro Tada, director-general of the Manufacturing Industries Bureau.

"The highest priority is to check the safety of products already shipped. We will use all necessary means to do so," Kawasaki said. The company plans to publish the results of its safety checks in about two weeks and compile an analysis of the causes of the incident, along with planned countermeasures, within a month, he said. "Trust in Kobe Steel has been reduced to zero," he added.

Kawasaki said that, as long as the scale of the scandal does not widen further, there would be "no impact" on company earnings; shipment has been halted on products accounting for 4% of overall sales.  

Importantly, however, he said, "there is a possibility of more individual cases coming to light."

The economy ministry's Tada expressed his concern, saying that "the scandal has been seen by some as an incident that could undermine the trust in Japan's manufacturing industry as a whole."

Global impact

The scandal has also spread beyond Japan, with General Motors and Ford Motor launching investigations into the possible effects on their products.

General Motors said on Wednesday that it is investigating aluminum and copper products supplied by Kobe Steel but provided no further information.

Kobe Steel has a long history of supplying aluminum products to automakers in the U.S. In 2016, it announced plans to build a new plant in the state of Kentucky to produce the material for the industry.

Aluminum is used to make the chassis lighter to increase fuel efficiency. Demand for the metal has been expanding in the U.S., with Ford using it in large volumes for its trucks.

In Japan, the aluminum products for which product quality data has been falsified, are used in cars and shinkansen bullet trains. Central Japan Railway said part of the chassis of its shinkansen trains has been discovered to lack the strength required by Japanese Industrial Standards. But the overall strength of the framework has been confirmed and there is no impact on safety, the company said.

Kyushu Railway said on Thursday that the products are used in 12 of its local trains. An inspection by a train maker has confirmed the safety of the carriages, and operations will continue as usual, the company said. Kyushu Railway also said it has not found evidence that the aluminum products are used in its shinkansen trains.

Yuichiro Kanematsu in Palo Alto, U.S. contributed to this report.

Kobe Steel, Ltd.

Japan

Market(Ticker): TKS(5406)
Sector:
Industry:
Non-Energy Minerals
Steel
Market cap(USD): 2,844.47M
Shares: 364.36M

Central Japan Railway Co.

Japan

Market(Ticker): TKS(9022)
Sector:
Industry:
Transportation
Railroads
Market cap(USD): 37,733.84M
Shares: 206M

Kyushu Railway Co.

Japan

Market(Ticker): TKS(9142)
Sector:
Industry:
Transportation
Other Transportation
Market cap(USD): 5,126.57M
Shares: 160M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.