Japanese steel and metal manufacturer Kobe Steel, that is known as Kobelco, finds itself at the centre of a quality control saga surrounding its supply of certain aluminium and copper products to customers. The company found discrepancies in the certification of some product lines that stretch back over the past year. According to Kobelco, the issue covers 19,300 tons of aluminium products, 2,200 tons of copper products and 19,400 units of aluminium castings and forgings.

Kobe Steel counts most of the Japanese majors among its customers and supplies other companies worldwide. The company has begun to contact customers it believes are affected, while instituting a quality investigation committee under its Chairman, President and CEO Hiroya Kawasaki. Reports are that the committee is looking at how far back in the past this falsification of reports extends and how deeply they are affected. In the meantime, the news and the potential ramifications on the company have sent the share price tumbling on the Tokyo Stock Exchange.

The issue has a potential to challenge the Takata Airbag saga for sheer scale, considering how much of the company’s rolled products find application in cars made in Japan. This in turn would open up the products for recall if it is found that the metal used was below recommended standards, leading to litigation and compensation besides replacement of cars.

Outside the automotive industry the implications are equally dire, with the use of high quality aluminium in aircraft built by leading brands. Similarly, aluminium is also used in the construction of the Shinkansen bullet trains. Any recall could prove to be extremely expensive for the operators and manufacturers and will impact Kobe Steel as a consequence.

This is the latest quality related issue to hit corporate Japan, with carmakers like Nissan, Suzuki and Mitsubishi admitting to a range of issues, like using unqualified staff and falsifying fuel averages.

On the flip side, since Kobe Steel supplies all the Japanese carmakers, we are yet to see which among them will be impacted and to what extent. Stay tuned to our pages to keep track.

Kobe Steel admits that the outcome on its business prospects are unclear, promising to make an announcement when the extent is clearer. It has also issued an apology, “Causing this serious matter has brought overwhelming shame to the Company. The Company deeply regrets this incident and sincerely apologizes for the enormous worry and trouble this incident has caused to its customers and other related parties. The Company will report again as further progress of the investigation is made.”

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