Kobe Steel scandal sparks vehicle and train checks

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                                                            |By Yuka Obayashi

Image Zoom |By Yuka Obayashi

The company said in a statement late on Wednesday that it had uncovered manipulation of data on steel powder used in metallurgy and also on high-tech materials used to create films used in computer chips. As scores of its clients from Toyota Motor Corp.to General Motors Co. scrambled to determine if they used the suspect materials and whether safety was compromised, the company said two more products were affected and further cases could come to light.

Japanese vehicle, train and aircraft makers are investigating whether they have used any sub-standard materials in their products.

Kobe Steel's admission has reverberated through supply chains and cast a shadow over Japan's reputation for precision manufacturing.

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.

And on Thursday, the scope of the problem widened after Chief Executive Hiroya Kawasaki said the company had found issues going back to 2011, with faked data on metals used in a bigger range of products, from bullet trains to appliances.

Meanwhile, General Motors is checking whether its cars contain falsely certified parts or components sourced from Kobe Steel. "We won't know if we need to take any action until those investigations are complete", a spokesperson said.

He promised a senior trade ministry official that the company, Japan's third-largest steelmaker, would provide results of safety inspections within two weeks and a report on the cause of the problem within a month.

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Multinationals including Toyota Motor, Ford Motor and planemakers Boeing and Mitsubishi Heavy Industries have said they are investigating the safety of products from Kobe Steel.

Kobe Steel reported the incident to the ministry on September 28.

"Aluminium is one of Kobe Steel's key focus areas in the medium term as part of its strategy to help lighten vehicles, (and) this will certainly have a negative impact on the expansion", Matsumoto noted.

It's not the first time Kobe Steel has been caught up in falsifying data. It also found one case of falsified data on iron powder products - material used for vehicle parts such as gears - that were shipped to a customer.

Kobe Steel shares closed at the limit low after being untraded for the whole session, diving 22 percent to 1068 yen.

Shares in Kobe Steel fell by more than a fifth this week after it admitted fabricating data about the strength and durability of some aluminium and copper products delivered to more than 200 companies.

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