Economy

Potentially Defective Aluminum was used by All Car Manufacturers in Japan

Potentially Defective Aluminum was used by All Car Manufacturers in Japan

In a new corporate scandal rocking Japan, Tokyo-based Kobe Steel admitted that it's been faking data on some of its metal - specifically copper and aluminum.

According to the company, the fabrications might have started a decade ago and could have affected products sent to as many as 200 companies.

"The scope of it is in some ways is really quite breathtaking", said Tim McDonald from the BBC.

And this isn't the only scandal that's been coming out of Japan as of late.

The scandal was the most recent one of a series of scandals involving Japanese manufacturers, with Japan's Nissan Motor Co. saying last week that it will recall over 1.2 million vehicles which has undergone flawed safety inspections. And Toshiba's Westinghouse Electric Co.

Mitsubishi Heavy Industries Ltd. spokesman Genki Ono said Kobe Steel aluminum was used in the MRJ regional jet as well as the H-IIA rocket, which was launched by Japan Aerospace Exploration Agency on Tuesday for a satellite. The impacted products include about 19,300 tons of flat-rolled and extruded aluminum parts, about 2,200 tons of copper strips and tubes, and about 19,400 units of aluminum castings and forgings. Boeing said in a separate statement, "Nothing in our review to date leads us to conclude that this issue presents a safety concern, and we will continue to work diligently with our suppliers to complete our investigation".

- Mitsubishi Motors said it is confirming affected models as well as whether there's impact on auto safety.

Smaller Japanese automaker Subaru said that it used Kobe Steel products not only for vehicles sold to retail customers but also in aircraft.

It is now unclear what impact the scandal will have on Kobe´s business performance.

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Heavy machinery maker IHI Corp said affected products were used in its jet engines.

Hitachi said the Kobe Steel materials were used in its trains exported to the United Kingdom.

Kobe Steel said the misconduct involved dozens of staff and possibly stretched back 10 years.

"Aluminium is a strategic business for Kobe Steel", said Irisawa at Tachibana Securities.

In an internal audit, it was found that the company had corroborated data on the characteristics of multiple aluminum and copper parts and components.

"This is a serious matter that shakes the foundation of fair commercial transactions", said Yasuji Komiyama, director of the metal industries division of Japan's Industry Ministry.

The false data supplied to automakers was meant to make metals look like they met clients' quality standards.

Also, in February 2017, Takata pleaded guilty in the U.S.to one count of wire fraud for misleading automakers about the safety of its air bags.

"With a string of negative surprises at Kobe Steel lately, we believe investors are likely to distrust management even more due to this latest incident, despite emerging signs of earnings improvement in the steel and construction machinery segments", JPMorgan's Mori wrote.