Editorials

What Kobe Steel's fake data scandal portends

The product data falsification by Kobe Steel Ltd. does more than call into question the management responsibility of the major steel maker. It damages global trust in the quality control of Japanese manufacturing. Priority should be on ascertaining whether the safety of Kobe Steel products has been compromised — a daunting task in itself given that the products in question were shipped to roughly 500 clients both in Japan and overseas for use in electric appliances, aircraft, train cars, automobile components, defense equipment and so on.

What should also be examined is whether the problem that surfaced at Kobe Steel is an isolated case among Japanese manufacturers. Over the past year or so, globally operating major Japanese firms have confessed to lapses in their manufacturing processes, including falsification of fuel-efficiency data by Mitsubishi Motors Corp. and improper vehicle inspections by Nissan Motor Co. Nissan admitted Thursday that safety inspections by unauthorized staff had continued at four of its six domestic plants even after the automaker disclosed the problem and its president offered an apology in early October. Nissan is suspending all car shipments for sale in the domestic market and may consider additional recalls of cars already sold with improper inspection.

The parties involved should realize that not just the management of individual companies, but trust in the “made-in-Japan” brand, is at stake.

Kobe Steel disclosed in early October that it had tampered with quality data of its aluminum and copper products to make it look like they met all specifications and Japanese Industrial Standards (JIS). It acknowledged that such practices had been going on at its plants for around 10 years in an organized manner, with the knowledge of managers.

Subsequent disclosures showed that the data falsification extended to a total of 13 products, including the firm’s mainstay steel. The number of clients to which the questionable products have been shipped from its group companies expanded from about 200 initially to 500, affecting not just domestic but overseas companies. Aircraft giants Boeing and Airbus as well as U.S. automakers General Motors and Ford are reportedly looking into their possible use of the products and their safety. The scandal has prompted an inquiry by the U.S. Justice Department, which demanded that Kobe Steel provide documents related to the products with tampered data. The European Union’s aviation safety agency has urged firms engaged in aircraft manufacturing and maintenance to confirm whether they use Kobe Steel products and recommended that they suspend their use.

Because of the extent of its products’ reach, Kobe Steel’s case was broadly covered in overseas media. Some outlets reported on the latest scandal in the context of a string of problems at major Japanese manufacturers that have marred the reputation of the quality of the nation’s manufacturing industry, including the massive recall by air bag maker Takata Corp. Kobe Steel’s falsification of product data is said to have taken place not only in its domestic plants but its manufacturing units in China and Thailand. There are also reports that the practice has been going on much longer than the company has admitted. Two of the nine group companies that were involved in the product data manipulation were found to have similarly tampered with product data in the past — an indication that promised efforts to prevent recurrence of such lapses have not been sufficient.

Automakers Toyota, Honda, Nissan, Mazda and Subaru said Thursday they have confirmed the safety and durability of their cars that use Kobe Steel’s aluminum sheets supplied with falsified data, although they will continue to check their vehicles that use the steel maker’s other products. Because of the broad extent of the use of Kobe Steel products — including in areas that affect the safety of consumers and passengers — it is expected to take some time before the safety of all the products shipped with tampered quality data is ascertained.

The latest problem at Kobe Steel should prompt Japan’s manufacturing industries and regulatory authorities to examine whether similar practices are taking place elsewhere. Examples of lapses in production processes at firms where problems have been exposed suggest that plant workers engage in falsifications to meet stringent targets set to survive tightening competition. However, compliance with relevant laws and regulations is the minimum duty imposed on manufacturing operations. Failure of management to check and stop the practices calls their governance into question. Along with exposing the entire picture of the problem at Kobe Steel, relevant authorities should get to the bottom of why such irregular practices take place among Japan’s manufacturers.

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