Kobe Steel Quality Problems Could Affect Boeing Co (BA) Planes

Cornelia Mascio
Ottobre 13, 2017

Kobe Steel President and CEO Hiroya Kawasaki told reporters on Thursday that there may be other cases in which data has been fabricated.

The latest company to comment on its links to Kobe, Ford Motor Co., said Friday it used aluminum from the company in its Mondeo vehicle hoods in China, although it hasn't confirmed whether the parts were compromised.

A spokesman for Japan's third-biggest steelmaker added that the company had confirmed with its steel-wire customers that there were no problems with the function and safety of the supplied products.

The bombshell admissions by Japan's third-largest steel maker sent its shares plummeting again, with the scale of the misconduct dealing a body blow to the nation's reputation as a high-quality manufacturing destination.

The company also confirmed another Nikkei report that it found cases of data tampering in its steel wire products.

The deepening scandal "suggests that this is company culture, not just the actions of a few rogue employees", Alexander Robert Medd, managing director at Bucephalus Research Partnership Ltd.in Hong Kong, said by email.

Kobe Steel shares were down 8.7 percent by the morning break in trading, after stabilising on Thursday to close a touch higher. The affair has wiped $1.9 billion from the Japanese firm's market value and led to speculation it could be broken up.

"It will likely continue to be extremely hard to make judgments on creditworthiness and investment until the safety of the products and the extent of damages are clarified", SMBC Nikko Securities said in a note to clients.

Kobe Steel was founded in 1905 and has been a pillar of Japan's manufacturing sector.

The corrosive business practices have raised broader questions over corporate governance in Japan, and cast doubt on the integrity of a manufacturing industry once the envy of the world.

When it was uncovered that Kobe Steel had been falsifying data to make it look as if its metal met quality standards, automakers begun trying to identify which models were affected. Conglomerate Toshiba Corp (6502.T) is still battling the fallout of a scandal over reporting inflated profits.

Kawasaki, stating that no recalls on products will be made at the moment, said in his first public appearance since Sunday's revelations, that the results of safety inspections on shipped products would be made within two weeks and details of the firm's response to products undergoing false inspection data given.

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