Published: Thu, October 12, 2017
Economy | By Annette Adams

Japan steel scandal grows as more carmakers hit

Japan steel scandal grows as more carmakers hit

Multinationals including Toyota Motor 7203.T , Ford Motor F.N and planemakers Boeing BA.N and Mitsubishi Heavy Industries 7011.T have said they are investigating the safety of products from Kobe Steel. A senior government official said managers at Kobe Steel were involved in fabricating data on products used in planes, trains and automobiles, but Kawasaki said his current priority is to deal with safety checks with its clients.

The crisis at Kobe Steel is the latest in a string of recent scandals at major Japanese companies.

On Wednesday, the Japanese government urged Kobe Steel to clarify the extent of the manipulation of inspection data. Japan's famous "Shinkansen" bullet trains also used Kobe Steel's aluminium, as did high-speed trains in Britain, according to engineering firm Hitachi. So far, the firm has not identified any cases in which a non-conforming product was used in a manner that poses a safety risk. Faced with the latest in a series of missteps that have undermined Japan's reputation for high-quality production, the industry ministry instructed Kobe Steel to assess the safety impact from the scandal.

The data tampering at its aluminum unit could also hit plans to expand the business as carmakers increasingly turn to the material, which is lighter than steel, to meet tighter environmental rules.

Kobe Steel revealed on Sunday that some aluminium and copper products shipped from September 2016 to August 2017 were falsely labelled as meeting the specifications requested by customers.

Investors, anxious about the financial impact and potential legal fallout, again dumped Kobe Steel stock, wiping about $1.6 billion off its market value in two days.

A spokesman for Inchcape, which distributes Toyota and Suzuki cars here, said: "Putting utmost priority on the safety of our customers, we are rapidly working to identify which auto models might be subject to this situation, its effect on individual vehicles, and precautionary measures that need to be put in place moving forward".

Toyota called the revelations a "grave issue", and said it was making checks on where the components were used and what effect they have on products using them. The company said the fabrications, which might have started a decade ago, could affect products sent to as many as 200 companies but it remained unclear whether the scandal affected product safety. Mitsubishi Motors last year admitted that it had been falsifying mileage tests for years. Takata declared bankruptcy in June. And electronics giant Toshiba has admitted that its executives had pressured underlings to cover up weak results for years after the 2008 global financial meltdown.

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