Suspect Metal Rattles Car Makers

Japanese aluminum manufacturer says its workers doctored quality documentation

 TOKYO—A scandal at one of Japan’s biggest aluminum manufacturers is forcing auto makers and other customers to check the safety of their products. The incident adds to a string of corporate failings in the country that has undermined confidence in business regulation.


Aluminum from Kobe Steel was used in some car hoods and doors.

 Car makers said Wednesda that they were attempting to identify vehicles containing aluminum supplied by Kobe Steel Ltd., after the company on Sunday said it had doctored product-quality paperwork.
 Kobe Steel is the largest supplier of aluminum panels for automobiles in Japan and has a large share of the global market for forged aluminum pieces used in suspension systems.
 Japanese auto makers said it was unclear how widespread the issue is and whether the substandard metal affected vehicle safety.
 Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. said aluminum from Kobe Steel was used in car hoods and doors. Toyota said it thought the issue was restricted to its plants in Japan.
 Nissan singled out hoods using the aluminum because of the safety implications for a vehicle involved in a collision. A spokeswoman for General Motors Co. in Singapore said the U.S. auto maker was examining whether any of its products are involved.
 Any vehicle recall tied to the issue could prove costly, said analysts.
 Beyond the auto industry, the problematic metal was sold to manufacturers of Japan’s bullet trains and suppliers of components for Boeing Co. airliners. A Boeing spokesman said the company is inspecting its supply chain.
 “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.” the spokesman said in an emailed statement.
 At the center of the scandal are aluminum and copper products that Kobe Steel said didn’t fulfill specifications set by its customers over a 12 month period ended Aug. 31.
 Workers altered inspection certificates so that the material appeared to meet the standard, the company said, without specifying the product’s shortcomings.
 Kobe Steel said about 4% of its total production for the period was affected by the issue. “We are causing trouble for our customers,” a Kobe Steel spokesman said Wednesday.
 “With their help, we are swiftly proceeding with safety checks and are trying to understand the whole picture.”
 The Japanese government said Tuesday that the doctoring of product-quality information “is an inappropriate act that threatens fair trade.”
 Shares of the company have plunged by more than a third since the scandal emerged.
 Around 200 companies use Kobe Steel aluminum in their products. Car makers and others increasingly use aluminum because it is lighter than steel—if more expensive to produce— meaning that in autos it helps improve fuel economy.
 The latest development follows a series of corporate-governance scandals in Japan over the past few years that has raised questions about corporate governance and government regulation. Notably, issues with air bags made by Takata Corp. resulted in the largest automotive recall in history and ultimately in the company’s declaration of bankruptcy in June.
 Toshiba Corp. said in 2015 it had overstated profits for years, and it took a $6 billion write-down last financial year after subsidiary Westinghouse Electric declared bankruptcy.
 Last year, Mitsubishi Motors Corp. said it manipulated fueleconomy data, forcing it to pull vehicles off the Japanese market. And just this month, Nissan recalled 1.2 million cars in Japan after regulators found that quality checks were performed improperly.
 Kobe Steel has had previous problems with product-data integrity. In June last year, it said group company Shinko Wire Stainless falsified data about the strength of wire for over nine years. In 2006, the company said it falsified information about soot emissions at its Kakogawa steel factory over five years.
 A shrinking steel business and higher raw-material costs helped drag Kobe Steel to a ¥23 billion (about $205 million) loss for the year ended in March.

BY SEAN MCLAIN

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