Bad parts in bullet trains reveal widening Kobe Steel crisis

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                                                            |By Yuka Obayashi

The steel maker has come under fire after revelations it shipped more than 20,000 tons of aluminum and copper products with fabricated inspection data to about 200 undisclosed companies.

Since then the embattled firm has seen its shares plunge almost 40% - wiping more than $1.5bn (£1.1bn) off its market value.

Kobe Steel Chairman and President Hiroya Kawasaki apologized to a senior industry ministry official Thursday over the company's falsification of inspection data for iron powder, aluminum and copper in a burgeoning scandal affecting automakers and airplane manufacturers in Japan and overseas.

"Putting the utmost priority on the safety of our customers, we are rapidly working to identify which vehicle models might be subject to this situation and what components were used, as well as what effect there might be on individual vehicles", Toyota said in a statement.

Kawasaki, for his part, said he wanted to regain the public's trust and said that trust in Kobe Steel "had fallen to zero".

Kobe Steel Ltd.'s fake-data scandal penetrated deeper into the most hallowed corners of Japanese industry as iconic bullet trains were found with substandard parts supplied by the steelmaker.

The chief executive of Kobe Steel Ltd. warned on Thursday that there may be further cases of falsified data than have been previously disclosed, in a widening scandal over its inspection data that has affected hundreds of companies.

At present, Kobe says around 19,300 tonnes of rolled aluminium and extrusions, 2200 tonnes of copper products, and 19,400 units of aluminium castings and forgings were shipped with faked certificates. Data was also faked for iron-ore powder and target materials that are used in DVDs and LCD screens, it said three days later. Of the tested parts, 310 were found to be sub-standard and will be replaced at the next regular inspection, spokesman Haruhiko Tomikubo said.

The Japanese government wants the steelmaker to report on the result of its safety checks within two weeks.

Investigations have been completed on about 100 of 200 companies to which Kobe Steel supplied the affected products, Kawasaki said.

On October 8, 2017, Kobe Steel stated that it "has discovered that in its Aluminum & Copper Business, including group companies, a portion of the products traded with customers did not comply with the product specifications which were agreed between the Company and its customers".

Deputy Chief Cabinet Secretary Kotaro Nogami told reporters that the government was seeking more information about the problem and trying to determine its possible impact on product safety.

Japan's steel industry is dominated by JFE Holdings Inc. and Nippon Steel & Sumitomo Metal Corp., which accounted for about 70 percent of the country's production in the year ended March.

"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.

JFE said it isn't actively considering purchasing Kobe Steel's steel business.

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