On October 8, 2017, Japan’s third-largest steelmaker Kobe Steel disclosed that it had sold aluminum and copper products that failed quality control. From September, 2016, until August, 2017, an estimated 20,000 tonnes of metals were shipped to more than 200 companies, including Boeing Company, Airbus SE,  Toyota Motor, Central Japan Railway, and Mitsubishi Heavy Industries.

As the company said in an official statement, it has begun contacting the customers one by one and explaining the situation. It has also been conducting an investigation on the facts pertaining to improper conduct and an investigation to reveal whether or not similar improper conducts exist in other business units.

According to the announcement, data in inspection certificates had been improperly rewritten and the products were shipped as having met the specifications. Nevertheless, Kobe Steel claims that the products  meet safety requirements.

“ Verification and inspection to date have not recognized specific problems casting doubts on the safety of the nonconforming products, ” the company informs in an official statement. “ In the event that doubts arise on the safety of the nonconforming products, the company will quickly take appropriate action. ”

The company has set up a committee headed by its chairman, president and CEO Hiroya Kawasaki as the chairman of the committee. Kobe Steel has also requested an outside law firm for an investigation.

“We can’t rule out the possibility that the external investigation will find other cases,”  said Yoshihiko Katsukawa during a press conference. He also added that customers had not raised any safety issues or stopped buying the company’s products, the Guardian informs.

Impact on customers

As one of the Kobe Steel’s clients, the US airline maker Boeing does not raise a question of safety of the bought products.

“Nothing in our review to date leads us to conclude that this issue presents a safety concern, and we will continue to work diligently with our suppliers to complete our investigation,” The Financial Times quotes the company.

According to Reuters, Boeing is carrying out a survey of aircraft to ascertain the extent and type of Kobe Steel components in its planes and will share the results with airline customers.

Airbus, which also are among Kobe Steel clients, said to Reuters it does not buy products directly from Kobe Steel but is investigating whether any suppliers have been affected.

However, Airbus does buy titanium landing gear parts for its latest long-haul jet, the A350, from France’s Safran, which are manufactured by Japan Aeroforge, a joint venture between Kobe Steel and Hitachi Metals.

On October 13, during a press conference chief executive Hiroya Kawasaki said that the company plans to pay the customers’ costs related to the fabrication of data for its products, but the firm has not yet received any compensation requests, Reuters informs.

The incident has an effect on the company’s business performance. Since the information about falsified products was revealed, Kobe Steel’s shares plunge nearly 40% - wiping more than $1.5 billion off its market value, according to BBC.