Bullet Train Wheel Parts Made By Kobe Steel Failed Quality Tests

Kobe Steel, Ltd. (KBSTY) Rating Lowered to Hold at Zacks Investment Research

"But they did not meet the specifications that were agreed between us and Kobe Steel", a Hitachi spokesman told AFP.

"Aluminium is one of Kobe Steel's key focus areas in the medium term as part of its strategy to help lighten vehicles, (and) this will certainly have a negative impact on the expansion", Matsumoto noted.

Hitachi said its new trains in Britain used Kobe Steel but had all passed rigorous tests.

The Kobe Steel scandal broke on Sunday when the manufacturer first admitted falsifying data linked to the strength and quality of products.

Apan's Kobe Steel Ltd plunged deeper into crisis on Wednesday as fresh revelations showed data fabrication at the steelmaker was more widespread than initially thought, heightening a safety scare along the global supply chain. Shares in Kobe Steel stabilized on Thursday after investors, anxious about the financial impact and potential legal fallout, wiped about $1.6 billion off its market value in two days.

On Wednesday, Kobe Steel added two more products to the list of affected materials: powdered steel, which is used to create molded steel products like gears, and "target material", a specialty mix of several kinds of metal used in the production of DVDs, television screens and other electronics equipment.

Concern has spread across a range of industries - including auto, train and aircraft manufacturers - that source materials from Kobe Steel. "It seems in some cases quality control was undertaken by veteran employees who had lots of experience, highly trusted within the organisation, and somehow these discrepancies slipped by them", company spokesperson Gary Tsuchida said.

He promised a senior trade ministry official that the company, Japan's third-largest steelmaker, would provide results of safety inspections within two weeks and a report on the cause of the problem within a month. It was not clear whether the scandal affected the safety of their products. They included Toyota Motor Corp, Central Japan Railway, Mitsubishi Heavy Industries, Mazda Motor Corp and Subaru Corp, the companies confirmed.

Kobe Steel said it discovered the violations during internal inspections and "emergency quality audits".

There have been previous cases in Japan involving falsified data, including at Nissan Motor, Mitsubishi Motors and Takata, which filed for bankruptcy this year over faulty airbags that were blamed for 17 deaths and scores of injuries.

Toshiba Corp is still battling the fallout of a scandal involving reporting inflated profits. The government has urged Kobe Steel to clarify the extent of the misconduct. Kobe Steel has no plans to sell assets at the moment, Kawasaki said.

The Japanese business World newspaper Nikkei announced that a subsidiary of Kobe Steel has been identified as a data fraud.

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