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Kobe Steel Scandal Grows to Include Subsidiaries, 500 Firms Hit by Cheating Scandal

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Kobe Steel’s chief executive, Hiroya Kawasaki, at a news conference in Tokyo on Friday. “We are trying to understand how this could possibly happen at so many subsidiaries, including overseas,” he said.

Kobe Steel Scandal Grows to Include Subsidiaries

 
TOKYO — A scandal about falsified quality data at Kobe Steel expanded on Friday, as the Japanese steel maker said nine subsidiaries, including several outside Japan, had either failed to carry out required product checks or lied about the results.
Including products sold by the subsidiaries, Kobe Steel said it now estimated that it had shipped substandard or potentially substandard materials to 500 customers, up from an initial estimate of 200.
“We are trying to understand how this could possibly happen at so many subsidiaries, including overseas,” Kobe Steel’s chief executive, Hiroya Kawasaki, said at a news conference.
Mr. Kawasaki repeated a promise to complete in two weeks an investigation into potential safety hazards related to the data falsification, and to deliver in a month the results of a broader examination of the company’s failings, which now look systemic and global.
Kobe Steel supplies metal components to industries where safety is vital, including car, train and aircraft producers, and makers of electronics and other equipment. The company says it is working with its customers to determine if any of the affected material, mostly aluminum and copper, poses a safety risk.
The subsidiaries named on Friday were three in China, one each in Thailand and Malaysia and four based in Japan. They make products like copper piping and aluminum and steel wire.
Employees at the companies are supposed to test the products to ensure that they meet design standards specified in customer contracts. Kobe Steel said that in some cases the tests had not been carried out, and that in other cases employees had recorded fake results to make it seem as though the products met customers’ standards when they did not.
Executives said the data manipulation had been deliberate.
Mr. Kawasaki said that Kobe Steel’s international investigation was continuing, and that more cases of data falsification could emerge. The revelations so far have reverberated through supply chains and cast a shadow over Japan’s reputation for precision manufacturing.
Ford Motor said late Thursday that the only use of Kobe Steel aluminum that it had established in its worldwide operations involved a hood for Ford Mondeo sedans produced in China. It said it did not know if the aluminum was substandard, but said it was not being used structurally, so safety was not at issue.
The scandal also touched Japan’s embattled nuclear industry. Tokyo Electric Power, owner of the Fukushima Daiichi nuclear power plant, which experienced meltdowns after a tsunami struck it in 2011, said Friday that it had sourced improperly certified copper piping from Kobe Steel.
Tokyo Electric said the piping, which it bought for use at its Fukushima Daini nuclear power station, near Fukushima Daiichi, had not been checked to ensure it met size requirements. But it said the piping had never been installed, and was in storage, and did not pose a safety threat.
Kobe Steel said on Sunday that employees had altered inspection certificates on aluminum and copper products from September 2016 to this past August, constituting about 4 percent of the company’s output of those items during the period, but that it was examining other possible episodes of data falsification going back 10 years.
On Wednesday, Kobe Steel added two more products to the list of affected materials: powdered steel, which is used to create molded steel products like gears, and “target material,” a specialty mix of metals used to produce DVDs, television screens and other electronics equipment.
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A contrite Mr Hiroya Kawasaki, CEO of Kobe Steel, has said the company plans to pay customers’ costs for any affected products

500 firms hit by cheating scandal: Kobe Steel CEO

 
Crisis ripples through global supply chains, dealing body blow to Japan’s reputation
TOKYO • The cheating crisis engulfing Kobe Steel just got bigger.
Chief executive Hiroya Kawasaki revealed yesterday that about 500 companies had received its falsely certified products, more than double its earlier count, confirming widespread wrongdoing at the steelmaker that has sent a chill throughout global supply chains.
The scale of the misconduct at Japan’s third-largest steelmaker pummelled its shares as investors, worried about the financial impact and legal fallout, wiped about US$1.8 billion (S$2.4 billion) off its market value this week.
As the company revealed tampering of more products, the crisis has rippled through supply chains across the world in a body blow to Japan’s reputation as a high-quality manufacturing destination.
A contrite Mr Kawasaki told a briefing the firm plans to pay customers’ costs for any affected products. “There has been no specific requests, but we are prepared to shoulder such costs after consultations,” he said, adding that products with tampered documentation account for about 4 per cent of the sales in the affected businesses.
Kobe Steel initially said 200 companies were affected when it admitted last weekend that it had falsified data about the quality of aluminium and copper products used in cars, aircraft, space rockets and defence equipment.
Asked if he plans to step down, Mr Kawasaki said: “My biggest task right now is to help our customers make safety checks and to craft prevention measures.”
​Boeing has some of the falsely certified products, a source with knowledge of the matter said, while stressing that the world’s biggest maker of passenger jets does not consider the issue a safety problem.
More than 30 non-Japanese customers had been affected by the firm’s data fabrication, the Nikkei newspaper reported yesterday. A Kobe Steel spokesman said the companies received its products but would not confirm they had any of the falsely certified components.
Nuclear power plant parts are the latest to join the list of affected equipment as Fukushima nuclear operator Tokyo Electric Power (Tepco) yesterday said it had taken delivery of pipes from Kobe Steel that were not checked properly.
The pipes were delivered to its Fukushima Daini station, located near the destroyed Fukushima Daiichi plant, but have not been used, Tepco said, adding that it was checking all its facilities.
Faulty parts have also been found in Japan’s famous bullet trains that run at speeds as high as 300kmh and a space rocket that was launched in the country earlier this week. One bullet train operator has already said it will seek compensation from Kobe Steel.
The government has ordered Kobe Steel to address safety concerns within about two weeks and report on how the misconduct occurred in a month. No safety issues have yet been identified in the unfolding imbroglio.
The company’s shares fell nearly 9 per cent yesterday and have fallen more than 40 per cent since the scandal broke.
Kobe Steel, founded in 1905, is a pillar of Japan’s manufacturing sector. Such are its establishment bona fides that Prime Minister Shinzo Abe, scion of a political dynasty, worked at the company decades ago, before entering politics.
But those credentials have now been shattered, a point amplified by Mr Kawasaki who earlier said the credibility of the firm “has plunged to zero”.
 
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October 14, 2017 - Posted by | Japan | ,

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