Kobe Steel President Hiroya Kawasaki (L) bows to economy, trade and industry officials during a meeting in Tokyo on October 12, 2017
Tokyo (AFP) - Shares in Japan’s Kobe Steel dived Friday on a report that its widening quality scandal has spread to more than 30 foreign customers, including Boeing, General Motors, and French automaker PSA.
The stock fell almost nine percent to finish at 805 yen ($7.20), down more than 40 percent since the start of the week after it admitted falsifying strength and quality data for a string of products, a practice that may have started a decade ago.
The embarrassing scandal for a venerable firm that once employed Prime Minister Shinzo Abe has already hit wide sections of Japanese industry, including automakers Toyota, Nissan and Honda which used the materials in their vehicles.
But Japan’s leading Nikkei business daily reported Friday that the affected products were also used in planes built by Boeing and Airbus and vehicles made by General Motors, Tesla, and Daimler.
The company, which has admitted falsifying quality data for products sold to some 200 clients, declined to confirm the report.
It is to hold another news briefing later Friday.
On Thursday, the CEO of Japan’s number-three steelmaker warned that the quality control crisis was likely to widen at home and abroad, as he acknowledged that trust in his firm has “fallen to zero”.
“The crisis is ongoing so it’s tough to know at this point how big the impact on the company will be and which industries it will affect,” Hideyuki Suzuki, head of the investment information section at SBI Securities, told AFP.
“Kobe Steel’s share price will hit bottom once the financial impact on the company becomes clear,” he added.
About 66 percent of the company’s sales are in Japan with the rest to China and other overseas markets.
The crisis marks the latest in a string of quality control and governance scandals to hit major Japanese businesses in recent years, undermining the country’s reputation for quality.
The affected products include steel wires used in car engines and tyres – a key company product – as well as aluminium found in Japan’s bullet trains as well as materials in high-speed trains in Britain, although it is not clear whether the data fudging compromised product safety.
The steelmaker and its clients agreed on certain quality specifications, which it did not meet in many cases.
“If it was found that there are safety problems (with steel wires) it could shake the foundation of Kobe Steel,” Takayuki Atake, manager of credit research at SMBC Nikko Securities, said in a report.