Asia Minute: Kobe Steel Scandal Widens

Oct 16, 2017

Kobe Steel Headquarters in Shinagawa, Tokyo.
Credit Wikimedia Commons

A scandal involving one of the biggest names in corporate Japan continues to grow. The incident involves Kobe Steel, and hundreds of its corporate clients. HPR’s Bill Dorman has more in today’s Asia Minute.

The scandal at Kobe Steel centers on quality control, or the lack of it, at plants and some subsidiaries both in Japan and overseas.

Top executives say workers either failed to conduct checks on their products or falsified results.

Disclosures began about a week ago, with a focus on some copper and aluminum parts. But now the situation has spiraled into a systemic issue affecting some 500 corporate clients – up from an initial estimate of 200.

The names range from Boeing and Airbus to Toyota, Honda, Ford and General Motors—as well as makers of trains. Industries involved stretch beyond planes, trains and automobiles and into electronics—even solar panels.

The developments have sent various companies scrambling to check sourcing in their supply chains.

An executive vice president of Kobe Steel said the problems at Japan’s number three steelmaker go back at least a decade.

The company is promising a multi-stage investigation with findings about safety checks in various products to be released in about two weeks, and the steps to address the issues due in about a month.

There’s no timetable on potential lawsuits—a factor investors are watching.

Shares of Kobe Steel were hammered last week, pushed lower by more than 40 percent.