Improper vehicle inspections that recently surfaced at two major automakers Nissan Motor Co. and Subaru Corp., along with product data falsification revealed at Kobe Steel Ltd., have raised more questions about compliance and product quality control in Japan’s manufacturing industry. One of the questions concerns whether a divide between the management of the firms and their manufacturing operations and workers is at the root of the problem. It is a question that the manufacturing industry as a whole should revisit.

Some of the problems that took place at leading manufacturers in recent years, such as Mitsubishi Motors Corp. manipulating the fuel efficiency data of its vehicles, are said to have occurred as production workers tried to meet stringent targets set by the management. The falsification at Kobe Steel, in which workers and managers at its plants reportedly tampered with product quality data to make it look like they met industry standard or specifications on contracts when they didn’t, reportedly took place as the plant workers sought to meet supply deadlines.

At Nissan and Subaru, uncertified technicians at their automotive assembly plants were performing final quality checks on vehicles before shipment, in violation of ministry guidelines. The president of Nissan said the automaker will cope with the problem by increasing the number of certified technicians, effectively admitting that the company did not have enough at the assembly plants.

Subaru, which acknowledged that the practice has been going on for more than 30 years at its plants, said the uncertified technicians were taking part in the vehicle inspections after getting relevant training, so that they had the necessary knowledge and skills to carry out product quality inspections. But the plants were also customarily covering up the practice — the certified technicians were lending their own stamps to the uncertified technicians to sign of on the final inspection documents, so that they would show the vehicles had been checked by certified staff.

These problems beg the question of whether the management of the firms have a firm grasp of the situations at their production plants. The top management of the firms make decisions on the introduction of new and competitive products/services to meet consumer demands. They also must make sure that their manufacturing plants have the necessary skills, manpower and equipment. As the companies try to assess and control damage from the problems like improper product inspection and data falsification, they also need to get to the bottom of why those problems have taken place. They must review whether the management had fully understood the manpower, time and processes needed in their manufacturing plants — and made adequate investments — to meet the product specifications and the shipment deadlines. That is a point that perhaps all manufacturing firms should reflect on in their operations.

Practical damage to product quality aside, such lapses in compliance and quality control in the manufacturing processes have huge business consequences. Nissan, which was found to have continued the final vehicle inspections by uncertified technicians even after the president apologized for the practice in early October, had to halt vehicle shipments from all six of its plants for weeks and recall 1.2 million vehicles that were shipped with improper inspections. Its October sales (excluding minivehicles) were down roughly 50 percent from a year ago. Subaru faces a recall of 250,000 cars at a cost of ¥5 billion. While all other automakers have reported that they found no problems in their inspection systems, the problems at Nissan and Subaru cast doubts over compliance and quality control in the nation’s auto industry.

Kobe Steel says that roughly 80 percent of the more than 500 clients to which its products with falsified quality data had been shipped have tentatively confirmed the safety of the products. However, some of the clients have demanded replacements of the products in question — at Kobe Steel’s expense — and canceled their orders with the steel maker. The company has been forced to withdraw its profit forecast for the year ending next March, given that it cannot estimate the special losses that will be incurred over such expenses. The total damage from the scandal, including the lost trust of its clients, may not be known for some time.

In the face of the improper final quality inspections at Subaru and Nissan, the government is said be considering reform of the product inspection regime under which it is essentially left to each of the firms to set up its own system. As for the auto industry, the transport ministry requires that the vehicles are given final inspections by staff certified by the automakers. There is no official standard for the knowledge or skills required of the final inspection technicians, who are certified through exams given at each firm. The government must determine how to prevent the compliance and quality problems that have surfaced at the automakers.

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