/

Japan’s automakers issue reassurances as global bodies urge freeze on Kobe Steel products

Kyodo, Staff Report

Toyota Motor Corp. and other major Japanese carmakers said Thursday that aluminum plates provided by Kobe Steel Ltd., which is mired in a data fabrication scandal, and used in the hoods or doors of their vehicles do not affect car safety.

The reassurances come as external auditors consider conducting on-site surveys this week to establish whether the problematic data affect the steel maker’s compliance with ISO 9001 quality management certifications, according to a report by NHK, and days after the European Aviation Safety Agency advised companies to stop buying materials from the Japanese firm.

Toyota said in its statement that it had examined data on faulty Kobe Steel aluminum plates for the past three years and confirmed “the materials satisfy applicable statutory standards, and our own internal standards, for key safety and durability requirements for vehicles.”

The parts were used in the hoods and rear hatches of Toyota and Lexus vehicles, the carmaker said.

“Since the announcement by Kobe Steel covers a wide range of products, we do not regard this matter as closed,” Toyota said, adding it will continue to check whether the steel maker’s non-aluminum materials, including copper tubes and wires, have affected its automobiles.

Mazda Motor Corp. and Honda Motor Co. also said they found no safety concerns regarding Kobe Steel’s aluminum panels.

Honda also uses the material in the doors and hoods. “Based on the results of verification conducted by Honda, we have confirmed that the quality of this aluminum panel material satisfies all of our stringent internal safety standards,” Honda said in a statement released Thursday.

Mazda said the parts were used in its MX-5 sports car, known as the Roadster in Japan, and its CX-9 crossover sport utility vehicle sold in North America.

Nissan Motor Co. and Subaru Corp. are also conducting an investigation to check the safety of cars that use the steel maker’s products.

Despite the automakers statements, however, the data fabrication scandal is apparently deepening. Former employees of Kobe Steel have revealed how the firm has systematically shipped products that did not meet specifications for years without notifying clients, with one saying memos had been passed down detailing how to carry out the deceptive practice.

The former employee, who worked at the steel maker’s aluminum and copper division in the 1990s, said the memos passed down in the division outlined how far products could deviate from agreed-upon specifications without causing noticeable issues.

According to people with knowledge of the industry, manufacturers sometimes agree to purchase products from steel makers that do not meet specifications but are still usable, a practice another former employee said had been common industrywide for at least four decades.

Kobe Steel’s memos were based on past examples of such products.

A third former employee, who also worked at the aluminum and copper division in the 1990s, said the practice continued as years of business with the same clients created a situation “similar to collusion.”

The scandal engulfing Japan’s third-largest steel maker broke earlier this month when the company admitted it had fabricated inspection data on more than 20,000 tons of aluminum and copper products used in everything from cars and trains to rockets, and was undergoing an internal investigation for more such cases.

It later expanded the scope to include materials used in liquid crystal displays, 140 tons of iron powder, and more than 11,000 tons of steel wire and other products manufactured at home and abroad, bringing the total number of clients affected to around 500 and significantly widening the scale of the scandal.

Kobe Steel CEO Hiroya Kawasaki said last week that public trust in his company had “fallen to zero.”

The Ministry of Economy, Trade and Industry has directed Kobe Steel to report on whether any of the products present a safety risk later this month.

It may have trouble investigating some older products, however, because records going back that far no longer exist, though according to a company source, records on products used in nuclear plants and defense equipment are kept in perpetuity.

In a different development, Kobe Steel has hired Mizuho Securities Co. to advise it on the sale of a real estate unit to raise cash, people with knowledge of the matter said.

The company will hold the first round of bidding on Oct. 20 to sell more than two-thirds of Shinko Real Estate Co., the people said, asking not to be identified because the process is private. Foreign and Japanese funds, property developers and firms unrelated to real estate are interested in bidding for the unit, which has assets of about ¥90 billion ($800 million), the people said.

Kobe Steel is seeking to sell about 70 percent of its shares in Shinko Real Estate and remain a minority shareholder, the people said. The steel maker plans to hold the second round of bidding later this year and close the transaction by March 31, they said. The company could halt the deal process if the situation changes, according to the people.

A Kobe Steel executive said earlier this week that the steel maker is considering selling its real estate unit but that it isn’t linked to its wider problems.

Representatives from Kobe Steel and Mizuho declined to comment on the deal.