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Carmakers hit in Japan steel scandal

12 October 2017

Toyota, Nissan, Honda, Mitsubishi Motor, Subaru and Mazda joined aviation firms and defense contractors Mitsubishi Heavy Industries, Kawasaki Heavy Industries and IHI that have used the steelmaker's products, AFP reported.

The Kobe Steel scandal broke on Sunday when the manufacturer admitted to falsifying data linked to the strength and quality of products. West Japan Railway Co, which runs services from Osaka to Fukuoka, also found sub-standard parts made by Kobe Steel, company spokesman Yudai Ochi told Bloomberg by phone.

Aircraft maker Boeing said it, too, is looking into the problem but had no reason to believe it was a safety concern.

Shares in Kobe Steel fell by almost 40% in two days, wiping more than $1.5bn (£1.1bn) off its market value after the firm admitted fabricating data about the strength and durability of products it delivered to more than 200 companies.

The company, Japan's third-largest steel maker, said in a statement late Wednesday that it had uncovered manipulation of data on steel powder used in metallurgy and also on high-tech materials used to create films used in computer chips.

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Attorney Advertising - Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of Kobe Steel, Ltd. ("Kobe" or the "Company") (OTC: KBSTY).

The companies are trying to determine if substandard materials were used in their products and, if so, whether they present safety hazards.

Japan's famous "Shinkansen" bullet trains also used Kobe Steel's aluminium, as did high-speed trains in Britain, according to engineering firm Hitachi.

U.S. plane manufacturer Boeing also said it had not found any safety issues.

In Japan and overseas, manufacturers that have used Kobe Steel materials have been racing to check that the safety of their own products has not been compromised.

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MHI said Kobe Steel products were used on its Mitsubishi Regional Jet and rockets, including a H-2A rocket launched on Tuesday to put a navigation satellite into orbit.

"We won't know if we need to take any action until those investigations are complete", a spokesperson said. They were produced by Kobe Steel over the past five years, he said. He criticized the apparently widespread falsification of data as "inappropriate".

Toshiba Corp is still battling the fallout of a scandal involving reporting inflated profits.

He said an extreme focus on reducing costs over the past two decades has seen "management in many subsidiaries bettering their results beyond their means, while an increasing focus on profitability is stretching the limits of quality control".

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Carmakers hit in Japan steel scandal