Sell orders flood Kobe Steel shares on admission of false data

Kobe Steel's lies reverberate across Japan's economy

Boeing, which gets some parts from Subaru, said there was nothing to date that raises any safety concerns.

Several other end users of Kobe Steel's supplies, ranging from Toyota to JR Tokai, the rail group that operates the bullet train, said they were still investigating whether there were concerns around quality of the materials and parts.

In a statement, the company said it had begun contacting customers to explain that products including thousands of tons of aluminum and copper strips did not meet agreed specifications. After Takatas lethal airbags and testing scandals at various carmakers, this is yet another blemish on Japan's reputation for product quality.

Data related to the products' strength and durability.

Kobe Steel's probe has so far found that data were fabricated for about 19,300 tonnes of aluminium products, 2,200 tonnes of copper products and 19,400 units of aluminium castings and forgings that were shipped to clients between September 2016 through August 2017. As yet, the company, which employs about 37,000 people, says there have been no reports of safety issues.

The Japanese government has already instructed auto manufacturers to carry out safety checks on aluminum parts manufactured by Kobe Shield. Details have yet to emerge.

"We recognise that this breach of compliance principles on the part of a supplier is a grave issue", said Toyota.

A Toyota spokeswoman confirmed that it had found Kobe materials from the period in question in "hoods, rear doors and peripheral areas".

Boeing said it had been conducting comprehensive inspections and analysis of affected shipments since it was told about Kobe Steel's data falsification. Hitachi Ltd. said trains it has exported to the United Kingdom contained compromised metal as well as bullet trains in Japan.

While Kobe Steel said the products were delivered to more than 200 companies, it didn't disclose their names.

Hitachi said the Kobe Steel materials were used in its trains exported to the United Kingdom. The rocket cleared all safety checks before launch, the company said.

Kobe Steel's stock fell by the maximum 22 percent on the first day of trading after the company's October 8 admission.

Kobe has set up an investigation committee to address the issues, headed up by its Chairman, President and Chief Executive Officer Hiroya Kawasaki. "If the aluminium business doesn't work out well, I question where the company can make money", given that profitability at the mainstay steel business remained low, he said. "At the moment, the impact is unclear but if this leads to recalls, the cost would be huge". In all, about 200 Japanese companies are impacted, including a number of vehicle manufacturers, as well as the Central Japan Railway, or JR Tokai.

Subaru has produced training planes for Japan Self-Defense Forces and wings for Boeingjets such as the Dreamliner, according to a spokesman, who added the company was checking for which planes and parts Kobe Steel's falsified-data aluminum was used.

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