Kobe Steel President and CEO, Hiroya Kawasaki, admitted to the company losing credibility after the cheating scandal, emphasizing the worsening crisis at the steelmaker as well as the flood of quality problems that fell over Japan’s once greatly envied manufacturing sector.
Kawasaki told reporters after meeting with government officials, “The credibility of Kobe Steel has plunged to zero.” He then added that they will “make efforts to regain trust as soon as possible.”
The CEO also said that they have discovered further cases of tampering that included their overseas operations.
Managers at Kobe Steel were also found to be involved in the fabricating of data on products used in planes, trains, and automobiles, though the senior government official that made the statement did not elaborate. Kawasaki said that he is currently prioritizing dealing with safety checks with its clients.
After the loss of about $1.6 billion in its market value within two days, as a result of the investors’ concern about the potential legal fallout and financial impact, Kobe Steel shares have been stabilized on Thursday. The shares rose by 0.9 percent.
Kawasaki also said that Kobe Steel currently has no plans to sell assets. He also noted that no recalls of cars or airplanes are expected for now, and that no orders have been canceled by the company’s customers.
Kobe Steel has been given an order by the Ministry of Economy, Trade and Industry to report on the outcomes of the safety checks in two weeks with the reasons for the tampering, as well as prevention measures within a month.
Companies Affected by the Scandal
Kobe Steel stated that data on the quality of aluminum and copper products used in cars, aircraft, space rockets, and defense equipment were admittedly falsified.
The company also confessed to having found several cases of tampering with the data on materials used in optical disks and liquid crystal displays at its Kobelco Research Institute Inc., as well as one case of fabricated data on iron powder products which were shipped to a customer.
The firm said that more than 200 of their customers were affected, who are all now rushing to check the safety of their products. Kobe Steel supplies materials to car-makers Ford, Toyota, Honda, Mazda and Subaru as well as aircraft-makers Boeing and Mitsubishi Heavy Industries. Trains that were exported to UK were also affected according to Hitachi, but had not yet started operations.
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