Behind the scandal engulfing Kobe Steel Ltd. over the falsification of data for some of the materials it supplied is a harsh reality for Japanese steel companies: the need to provide higher and higher quality metals to compete.
Kobe Steel rocked Japan's industrial economy with revelations this week that it faked data on the quality of some aluminum, copper and iron powder sales. Chief Executive Officer Hiroya Kawasaki said more cases could emerge as the company continues its investigations. Among those affected are automakers — among the biggest customers for steel producers — which have been seeking more advanced products to cut weight while retaining strength and versatility.
"The steelmakers are really trying to protect their turf, because this is a life-and-death situation for them," said Thanh Ha Pham, senior vice president in Japan for investment bank Jefferies Group LLC. "It's improve or die."