Japanese steel scandal could derail Modi's bullet train project

Cesar Mills
October 13, 2017

Akihiro Tada, director of the ministry's Manufacturing Industries Bureau, urged the company to move quickly in resolving the problems, which are thought to have affected numerous country's largest manufacturers.

The comments came as a growing list of customers, including major automakers Toyota, Nissan and Honda, scramble to assess the safety of vehicles containing products supplied by the company, which has admitted falsifying quality data for products sold to some 200 clients.

"There are suspicious cases in Japan and abroad" that could involve further wrongdoing, as the ongoing investigation has not been completed, Hiroya Kawasaki told reporters after meeting with a senior industry ministry official.

In Japan and overseas, manufacturers that have used Kobe Steel materials have been racing to check that the safety of their own products has not been compromised. The affair has wiped off more than a third of the company's market value and led to speculation it may be broken up.

Toyota, Nissan and Mazda have all confirmed that they are customers of the metal producer and are now working to find out which vehicles are affected.

The false data scandal at Kobe, the Japanese metals group, deepened yesterday as the firm added steel to the list of supplies that could be affected.

"Trust in Kobe Steel has fallen to zero".

However, Bloomberg Markets reported that Kobe Steel had later in the week said the misrepresentations at aluminum plants were systemic and might have dated back 10 years for some aluminum items.

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So far, there has been "no real change" in customer orders, and the company's procurement of aluminium and copper metal raw materials is also normal given that production is not affected, Kobe Steel spokesman Gary Tsuchida told Metal Bulletin.

Concern has spread across a range of industries - including auto, train and aircraft manufacturers - that source materials from Kobe Steel.

"The issue shakes the foundation of fair trade and is extremely regrettable".

In Central Japan Railway's bullet trains, 310 of the tested parts were found to be substandard and will be replaced at the next regular inspection, Spokesman Haruhiko Tomikubo said.

In a statement on Wednesday, Kobe Steel denied a Nikkei business daily report that it meant to put its real estate business up for sale to help shore up its finances.

The data tampering at its aluminium unit could also hit plans to expand the business as carmakers increasingly turn to the material, which is lighter than steel, to meet tighter environmental rules.

"I talked with management of JFE, and I think they are very happy to buy Kobe Steel's steel businesses", Pham said on Thursday on Bloomberg TV.

Other reports by GizPress

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