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Japan's Kobe Steel feels the heat for data falsification

Bloomberg Published on Tue, Oct 10, 2017 / 6:56 PM GMT+8

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(Oct 10): Kobe Steel unleashed an industrial scandal that reverberated across Asia’s second-largest economy after saying its staff falsified data related to strength and durability of some aluminum and copper products used in aircraft, cars and potentially a space rocket.

Shares in Japan’s third-biggest steelmaker plunged 22% and bond risk jumped to a 19-month high as customers including Toyota Motor Corp., Honda Motor Co. and Subaru Corp. said they had used materials from Kobe Steel that were subject to falsification. It could cost the company as much as 15 billion yen ($181 million) to replace the parts, assuming 5% of its aluminum product sales were affected, JPMorgan Securities Japan Co. estimated.

Kobe Steel’s admission raises fresh concern about the integrity of Japanese manufacturers. Nissan Motor Co. last week said it would recall more than 1 million cars after regulators discovered unauthorised inspectors approved vehicle quality, while Takata Corp. pleaded guilty this year of misleading automakers about the safety of its air bags. Kobe Steel said the products were delivered to more than 200 unidentified companies, with the falsification intended to make the metals look as if they met client quality standards.