Kobe Steel has admitted falsifying inspection certificates for over 40,000 mt of aluminum and copper products it supplied to customers such as Toyota Motor and Mitsubishi Heavy Industries, saying in a statement Sunday that "this serious matter has brought overwhelming shame" to the company.
Industry reaction to Kobe's revelations could not be obtained Monday as Japan was shut for a public holiday. But the country's steelmakers and end-users will be concerned that the scandal may prompt a government blitz on internal inspection procedures for all manufacturers, which could disrupt deliveries.
Though iron and steel account for a third of Kobe Steel's business, aluminum and copper products provide a substantial 18%. It was data on inspection certificates for aluminum flats, extrusions and castings, and copper strips and tubes, which the company's staff fabricated as having met customer specifications in areas such as tensile strength.
An internal audit uncovered the "improper conduct" on products shipped during the 12 months to August 31, Kobe Steel said. As many as 200 companies could be affected, the Nikkei newspaper reported.
Kobe Steel tried to alleviate the concerns of customers, saying that "verification and inspection to date have not recognized specific problems casting doubts on the safety of the nonconforming products."
However, the Nikkei reported that Japan's transport ministry would ask automakers to identify the models that use the affected parts from Kobe Steel and to conduct a safety check. Depending on the extent of the data fabrication, automakers may be forced to issue a recall, the Nikkei added.
Timing is bad for consumer confidence in the auto sector. Late last month, Nissan acknowledged that an internal audit had revealed pre-delivery inspections of new vehicles, including safety inspections, had been carried out by uncertified personnel.
Nissan subsequently announced it would recall 1.16 million passenger cars it sold in Japan over the past three years -- a move that will cost it some Yen 25 billion yen ($220 million).
For its part, Kobe Steel can expect harsh criticism. In June last year, a subsidiary of a Kobe Steel Group wire fabricator was found to have manipulated test data on stainless steel springs to make sure the springs continued to meet Japan Industrial Standards qualification for the product.
On that occasion, too, the company insisted that the performance of the items was not compromised by the tweaking of the data. But Japanese authorities will doubtless wonder how the "external experts" Kobe Steel promised to recruit to a panel to probe that scandal and prevent a recurrence missed the latest issue with fabricating data.
