By on October 16, 2017

Volvo Cars Torslanda assembly plant - Image: Volvo

It’s often hard to remove an ingredient after the cake’s emerged from the oven. Because of this, news of Kobe Steel’s falsified inspection reports no doubt came with a fair bit of nervous collar tugging for executives at several automakers.

The Japanese company, which has subsidiaries in numerous countries, is a go-to supplier for the automotive and aircraft industries, providing steel, copper and aluminum components to companies as diverse as Ford and Boeing. Last week, Kobe admitted to selling substandard (or suspected substandard) materials to 500 companies, among them Ford, Volvo, Toyota, Honda, Nissan, Mitsubishi, and possibly Mazda.

Oh, and Mercedes-Benz, Tesla, General Motors, Hyundai, and Renault.

Maybe you’ve heard of them.

The shocking admission appears to be the product of a company-wide culture of deception. Multiple plants reported falsified data. Now, manufacturers are struggling to determine exactly what parts went in what vehicles, and whether it’s anything to worry about.

In Japan, Kobe components are used to connect wheels to 200-mph bullet trains operated by the Central Japan Railway Company. The company claims the materials with substandard (or potentially substandard) strength and durability specs include aluminum extrusions, copper piping, aluminum castings and forgings, and flat-rolled aluminum.

At Ford, which recently gave its F-150 and Super Duty line a healthy dose of weight-saving aluminum, only the Chinese-market Mondeo sedan’s hood is suspect. The automaker, like others, is working to identify all Kobe-supplied parts. For its part, Kobe says it will release findings on new safety checks on the affected products within two weeks. Within a month, it should have an answer to why this happened in the first place, plus a plan on how to deal with it.

Also, CEO Hiroya Kawasaki says he might resign once quality inspections wrap up. The company is “intent on shouldering the costs” borne by affected companies, should that occur, Kawasaki said last week.

Despite the breadth of the scandal, no company has yet flagged a product as posing a specific safety concern.

[Sources: Bloomberg, Automotive News] [Image: Volvo Cars]

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31 Comments on “Automakers Take Stock After Major Metal Supplier Admits Selling Shoddy Aluminum...”

  • avatar

    I m not too worried. Metallurgy is checked with great regularity in PPAP, production and receiving.

    • 0 avatar
      SCE to AUX

      True, but a falsified certificate of compliance could go a long way to deceiving some customers.

      Kobe will have to review its process records, I imagine.

      The cheaters must have done this to improve perceived productivity, even if the processes themselves were truly under control. And that’s a serious cultural problem within the company.

      • 0 avatar

        This. I’m trying to avoid the broad-generalization, but there are many cultures where bribery is seen as “part of the process”. Whether it be substandard metallurgy, coatings that aren’t safe (think cookware), or certificates of “authenticity”. Our (American) system may result in higher costs, but I’m good with it.

    • 0 avatar
      Felix Hoenikker

      But, but, but superior Japanese quality will save the day!

  • avatar

    Paint coming off hoods is one thing, but having substandard parts at Boeing is a major problem.

    • 0 avatar
      87 Morgan

      As i wait in line to board a united flight reading this article i have a sudden sense of calm…

      • 0 avatar

        Lucky for you, the plane you are about to board is 20 or 30 years old, and unaffected by this. On the other hand, the plane you are about to board is 20 or 30 years old…

        • 0 avatar

          Back in the day when I was flying NorthWest DC-9s that were older than I was multiple times per week, I figured that if the old bird found her way to Fargo 10,000 times already, she could probably manage it again. Built in the late ’60s, rebuilt in the early 90s, and Delta retired the last one a year or two ago.

  • avatar

    Disappointing, but with other similar news, from Takata airbags to diesel-gate, it’s just not surprising anymore. Will wait for details before getting indignant. In the meantime, should I avoid Kobe Beef?

    • 0 avatar

      Yes, you should:

    • 0 avatar

      Shouldn’t be hard, there are only like 8 restaurants in the US that serve Kobe beef. Everything else is fake, due to loose US labeling rules.

      • 0 avatar

        A good steak is a good steak. :-)

        And I far and away prefer to cook my own.

      • 0 avatar

        Kobe beef is a branding exercise more than anything else, there are lots of other brands of Japanese Wagyu, the high quality A5 grade and all that get exported here from farms right next to Kobe. Some of them are even pricier than Kobe and in higher demand in their native Japan but Kobe beef has done a superb job of building up the brand and convincing everyone that their cows are getting specially massaged all day and night, and limiting sales to 8 restaurants is part of that. The reality is just that Japanese beef exports were banned for a long time here in the US so only now are producers shipping here.

        That said, American Wagyu tends to be pretty crappy but that’s because they hybridized the animals with less fatty breeds

    • 0 avatar

      “…should I avoid Kobe beef?”

      Kobe Steel cheated.
      Kobe Bryant cheated.

      I’m sensing a pattern.

      Might Kobe beef might have falsified the number or duration of therapeutic massages given to its animals?

      The Shadow knows.

  • avatar

    It’s a poorly kept secret that quite a few Japanese long for the old days of the Axis – maybe they were just following VAG’s lead?

  • avatar

    Gone are the days of selling a good product at a fair price. They are still out there, don’t get me wrong, but there are so many other companies out there selling on cost and more than willing to sell substandard product at lower price or pass it off as quality/top tier/grade A, etc.

    There is such a downward pressure when it comes to sourcing goods/services that corners will always be cut. Its the only way to stay in business in many industries. I think that is the end result of globalization. So many people competing for same dollar. Staying in business, appeasing shareholders, is more important than doing the right thing.

    • 0 avatar
      SCE to AUX

      To be fair, this certainly wasn’t a corporate policy, but likely there were internal pressures to ‘do what it takes’ to hit certain production numbers at a certain cost, etc, which drove people to cheat.

      But to your point, perhaps the company never realized that their stated claims of quality could be undermined by a culture that valued something else even more.

  • avatar

    …The shocking admission appears to be the product of a company-wide culture of deception. Multiple plants reported falsified data. Now, manufacturers are struggling to determine exactly what parts went in what vehicles, and whether it’s anything to worry about…

    Oh, you mean like Takata did.

  • avatar

    Asian cut-throat business practices at it again. Lets see, we have Hyundai trying to weasel out of its defective engines (until an engineer within the company blew the whistle), Mitsubishi falsifying MPG figures going back decades, then there is Takata continuing to produce unsafe airbags for years on end, and from a few years back, the price-fixing scandal from Japanese auto parts suppliers being unraveled. Clearly, these companies put profits before people.

    Wait, isn’t that the sort of accusation many anti-American-automaker members of the B&B often claim against GM, Ford and Chrysler? And usually for issues discovered after the fact, not for issues known but kept hidden?

    Yes, it does happen like that occasionally, as with the GM ignition switch debacle, but clearly it isn’t limited to big, bad corporate America, no matter how many claims that it is solely an American company issue, while perched on your high Japanese horse. Point being, you can’t claim moral superiority just because your car is German or Asian instead of American, clearly. They’ve all been caught with their pants down at one time or another.

    Oh, but it doesn’t matter, next week Ford will recall 400 cars with malfunctioning door lock actuators (made by Denso lol) and it’ll be the same old crap about stupid American companies always trying to kill us all with their evil greed and THAT’S why I drive a Toyota.

    No, I don’t hate Asians or Asian car makers, that isn’t my point at all. This isn’t personal, its just an observation based on fact. The point is scandals like this aren’t limited to, nor are they more common with American companies, no matter how many try to paint it that way.

  • avatar

    I am seriously starting to wonder how corrupt the Japanese auto industry (or at least the supplier pool) may be.

    Wasn’t there also some giant price fixing scheme that had guys sent to prison recently as well?

    You kinda expect this to happen in China, but not in Japan. Unless there is something about Japanese culture that I am unaware of. I definitely cannot reconcile how a manufacturing culture with a long history of extremely well engineered and assembled equipment could also be this highly corrupt.

    • 0 avatar

      After World War II, they learned from the best, and made it even better.

    • 0 avatar

      This is a global, and relatively recent problem. It started here (where else?) with Wall Street investors seeing huge annual increases in stocks from 1990 on.

      Companies were under pressure to increase sales/profits every quarter or the stock got hammered. A lot of them resorted to cooking the books moneywise, as well as increasing production by selling less than top quality.

      Sometimes that means skipping a step in production, or reducing the material used in a product, or substituting cheaper materials. It can also mean using materials that would have been rejected earlier.

      In the case of aluminum auto parts, automakers likely didn’t replace steel structural components for the most part – they’ve been adding high strength steel for that, but to negate the increased weight of HSS, they substituted AL for non-critical parts where weight savings could be found.

      For aircraft applications, non-spec aluminum would just reduce the considerable safety margins built into the aircraft. It would show up earlier in stress cracks during regular inspections and force replacement ahead of schedule, and maybe shorten the useful life of the aircraft.

    • 0 avatar

      There’s nothing new about this kind of thing, it’s probably just being caught more nowadays. Remember in the 90s when Mitsubishi shipped us their defective garbage? Or when Mitsubishi was caught covering up defective parts that sent wheels flying off of trucks and buses killing people?

      Nothing new about this kind of thing, other companies were better at covering it up or being more subtle about it than Mitsubishi. I’ve been to Japan and I certainly enjoyed many parts of Japan but the silly mysticism people have of how everyone there must be a super honorable crazy person who would commit seppuku before doing anything corrupt is ridiculous. Like any country anywhere with capitalism there’ll be people trying to make a buck regardless of the cost, there’s great people and terrible people everywhere. Some countries are better at regulating to stop idiots from destroying themselves and some are more lax but people are basically the same everywhere. I’ve dealt with Chinese suppliers who sent me cobbled together messes where electronic boards were held on with double sided tape and shorted out, but also with numerous other well run suppliers who produced top notch quality products that exceeded our expectations. If anything there’s just so many people and businesses in China that there’s more lousy ones that manage to stay in business.

      Regardless of where you’re buying from you need to check the quality yourself. Assuming that a Japanese supplier isn’t going to pull shady stuff would be a horrible idea, but that applies to things from every country. I think we generally think of Korea as supplying reasonably well made stuff but I’ve had completely reverse wired items sent to me, etc

  • avatar
    cRacK hEaD aLLeY

    A cheer for VW for only cheating on emissions. It could have been worse: assembly via child or slave labor and using Kobe steel.

    • 0 avatar

      No car company is more deserving of hate than Volkswagen.

      All car companies have done some shady stuff….but VW

      -Sourced factory workers from concentration camps

      -*Deliberate* (KEY WORD), widespread, cheating of emissions laws

      -Years of making poor quality vehicles

      and yet I still like GTIs and GLIs.

      VW is like the OJ Simpson of car companies, they’ve done some horrible crap, but somehow they’re still out there, and they even have some fans.

      • 0 avatar

        Pretty much all German and Japanese companies used slave labor during the Second World War. Their respective governments encouraged this behavior because slave labor is cheap and can easily be replaced by simply kidnapping and enslaving more people.

  • avatar

    I am somewhat surprised to hear these stories about large Japanese corporations. What shocks me even more that these scandals are not followed by public seppuku of the management. That’s not the Japan I remember hearing about.

    Anyway to VW, I was in Europe in the summer and on the news I heard that I believe it was ADAC that conducted a study which showed that German diesel engines were on average 4-5 times cleaner that the rest of the auto industry. But it didn’t explain why then VW needed to cheat government inspections if their diesels were so much better than others.

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