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Japanese Metal Manufacturer Faked Specifications To Hundreds of Companies (jalopnik.com)

schwit1 writes: Kobe Steel, a major Japanese supplier of steel and other metals worldwide, has admitted that it faked the specifications to metals shipped to hundreds of companies over the past decade.

Last week, Kobe Steel admitted that staff fudged reports on the strength and durability of products requested by its clients -- including those from the airline industry, cars, space rockets, and Japan's bullet trains. The company estimated that four percent of aluminum and copper products shipped from September 2016 to August 2017 were falsely labelled, Automotive News reported.

But on Friday, the company's CEO, Hiroya Kawasaki, revealed the scandal has impacted about 500 companies -- doubling the initial count -- and now includes steel products, too. The practice of falsely labeling data to meet customer's specifications could date back more than 10 years, according to the Financial Times.

For rockets the concern is less serious as they generally are not built for a long lifespan, but for airplanes and cars this news could be devastating, requiring major rebuilds on many operating vehicles.


36 of 152 comments (clear)

  1. Made in Japan by nospam007 · · Score: 4, Funny

    As our Granddads believed it was.

    1. Re: Made in Japan by Anonymous Coward · · Score: 2, Informative

      I believe the point was that during our granddads time the phrase "made in Japan" was synonymous with junk. Just like "made in China" today and "Made in the USA" was in the 70s and 80s... It wasn't until a good bit after after Japan rebuilt after WWII that "made in japan" started to become associated with anything resembling quality.

  2. Were Tesla and SpaceX customers? by Narcocide · · Score: 5, Insightful

    This could explain some conspicuous quality control issues in the materials, if so. There could be a huge lawsuit in the works here.

    1. Re:Were Tesla and SpaceX customers? by LazyBoot · · Score: 2

      Is this a reference to some specific quality issue with those companies' products?

      SpaceX had a rocket that exploded because of a faulty metal strut, and they found several more in inventory didn't meet spec (failed at about 10% of rated spec).
      If I recall, they started making those themselves after that incident.

  3. New long-term business model by Baron_Yam · · Score: 4, Interesting

    Sell supplies and advertise twice the lifetime they actually have. Fold the company, let the scandal go public after investing in the company most likely to get rich fixing the problems caused by your fraud.

    Double the profit, double the fun!

  4. So, the first question... by EndlessNameless · · Score: 5, Interesting

    How long until there is a documentable claim that this behavior killed somebody?

    Next question that comes to mind: How long until I find out if my car was built with substandard materials?

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    1. Re:So, the first question... by pr0t0 · · Score: 2

      My question: Does this change our calculus on efficacy of various alloys? If test material was equally mislabeled, there may be no safety concerns, but how we determine what metals must be present to meet certain strength and durability thresholds would likely be inaccurate.

      If test material had the advertised specification but the production material deviated, then we might have serious safety concerns.

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    2. Re:So, the first question... by cyn1c77 · · Score: 2

      How long until there is a documentable claim that this behavior killed somebody?

      Next question that comes to mind: How long until I find out if my car was built with substandard materials?

      Well, it took Takata about 10 years to fess up on their faulty airbag issues and that only happened after multiple people started dying.

  5. A lesson... by Anonymous Coward · · Score: 3, Insightful

    It's a lesson when you put unrealistic expectations on people and their performance.

    They will cheat to keep their jobs.

    And you have to consider how you compensate people too. Incentives can go horribly wrong. Wells Fargo is a perfect example and the financial meltdown of '08 for that matter.

    And when I hear from bankers that Dood-Frank can be repealed because the problems have been addressed, I LOL. No they haven't. And it's impossible to address them. Why? Human nature.

    They may have addressed the problems (that they know of) but all you need is one Harvard MBA to start pulling 8 figure bonus checks because of a loophole he found. Then others will follow and we'll be right back where we started.

    1. Re:A lesson... by mellon · · Score: 5, Insightful

      Actually, I think the lesson here is that when you source material, you need to actually test to see if it meets the specifications. You should never assume that the seller is telling the truth.

    2. Re:A lesson... by OrangeTide · · Score: 3, Informative

      Testing is costly and sometimes difficult to do in-house, depending on the nature of the testing. But there is usually the option of a third party to perform the testing for you.
      The other problem is you might get initial samples that are correct, but later shipments may be sub-standard. It's usually not economical to test every bit of material you purchase, especially if the testing is destructive. It should be possible to test randomly or test batches in order to detect discrepancies early rather than having questionable material in your supply chain for 10 years.

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      “Common sense is not so common.” — Voltaire
    3. Re: A lesson... by SuperKendall · · Score: 5, Insightful

      How is it "unrealistic" to expect a steel company to correctly produce steel and accurately describe its properties? Other steel companies seem to manage this without issue.

      But as another responder stated, if you are a company you basically cannot trust ANYTHING outsourced these days, and must constantly monitor it for quality. Which begs the question, why outsource then if you must also incur the added cost of verification and riding herd on QA...

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    4. Re:A lesson... by Anonymous Coward · · Score: 2, Interesting

      Always the MBAs fault. The customer totally wanted to spend more on the product so you could do you testing in house, but those damn MBAs, ruining everything.

    5. Re: A lesson... by dj245 · · Score: 4, Interesting

      How is it "unrealistic" to expect a steel company to correctly produce steel and accurately describe its properties? Other steel companies seem to manage this without issue.

      But as another responder stated, if you are a company you basically cannot trust ANYTHING outsourced these days, and must constantly monitor it for quality. Which begs the question, why outsource then if you must also incur the added cost of verification and riding herd on QA...

      I am not knowledgeable about auto part forgings, but for large steel rotor forgings (20-100 tons), there are about 3-5 reputable companies in the world. The equipment to manufacture such forgings costs millions, the knowledge to make such forgings is highly specialized, the cost of making a mistake and remaking the part is huge, and the volume is in the dozens or perhaps 100s of pieces per year (worldwide). It doesn't make sense for any manufacturing company to make such forgings themselves. Not even GE, Mitsubishi, or Toshiba can justify the capital and labor overhead to make such parts in house.

      Obviously smaller parts are a different story, but outsourcing does make sense for most raw material forming such as casting and forging.

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    6. Re: A lesson... by thomst · · Score: 4, Informative

      Test?! All the time?! Millions of tons of steel?!? Every roll?!?

      On September 15, 2014, U.S. Customs and Border Patrol issued HQ H209833, a ruling requiring Mill Test Certification documents accompany ALL bulk metal imports from foreign suppliers.

      Domestically, what metal production facilities still exist in the U.S. do MTC testing on EVERY roll of high-carbon sheet steel, and EVERY run of high-carbon steel pipe routinely. And they have been doing so at least since the dawn of nuclear power in this country, because the NRC requires it for pipes used in the cooling systems of nuclear power plants both commercial and DOE-owned-and-operated.

      I have a close friend who designed the first industrial-scale bar code printer for U.S. Steel Corporation back in the early 1980's, which they've used ever since to provide a certification paper trail for high-carbon structural steel products for a wide variety of applications. (Sadly, he was unable to patent it, because he was a U.S. Steel employee at the time, so his IP belonged to the company.) They do that both because for certain applications it's a requirement of federal law, and because it provides them with legal cover from liability in case of an accident that involves a product or structure that incorporates their steel.

      So, yes: EVERY roll, EVERY time ...

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    7. Re:A lesson... by CanadianMacFan · · Score: 2

      That's where statistics comes into play. If you study it then you will learn how many randomly selected samples to test so that you can be confident that the order meets the requirements.

  6. What's the beef? by brilinux · · Score: 2

    Uh oh... I just hope that they have not been lying about their steak too!

    1. Re:What's the beef? by thejynxed · · Score: 2

      And as someone who has had Kobe beef and then had the superior beef from a certain prefecture that they don't sell outside of Japan under any circumstance, I can tell you the Kobe tastes good and really is good compared to anything out of the USA or Canada, but man, this stuff is melt-in-your-mouth. Had a very high-quality (and expensive) meal containing this particular beef, as well as fresh scallops, and it was absolutely divine, especially since I had top-shelf 23% Dassai sake paired with my meal. I know they like to joke about Japanese farmers playing Beethoven to their herds and whatnot, but the truth isn't far off - they are rubbed down and cleaned daily, they never lay in dirty hay, their tails are brushed twice daily, they are fed only the best food (never, ever, does their food contain corn). In this manner, you can certainly say that happy cows make excellent beef for your dinner.

      In my experience eating in Japan, you know your meal is going to be one if not the best you've ever eaten when your chef takes you personally to purchase the ingredients and the vendors refuse to sell the best of their best to anyone but him because they feel he has the best knowledge, wisdom, and experience on how to use what they offer.

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  7. Materials Testing by albeit+unknown · · Score: 5, Informative

    I'm surprised this wasn't noticed earlier, if, in fact, the changes were substantial. All of the companies described in the summary have their own materials and finished component testing labs to verify strength, fatigue life, hardness, corrosion resistance, and so on. This is both to check incoming raw material and subsequent processing steps. No one in safety-critical industries trusts the word of a vendor without significant quality control agreements and auditing programs.

    1. Re:Materials Testing by Narcocide · · Score: 2, Informative

      They said 4%. It's highly unusual for manufacturers to stress-test even near that fraction of supplied parts. This could easily have been missed by the most rigorous testing regimes. These types of tests are designed to catch accidental deviations in manufacturing quality, not purposeful sabotage of the supply line.

    2. Re:Materials Testing by oic0 · · Score: 2

      I think everyone is so used to manufacturers lying about specs that they probably expected exactly what they were getting and it was all business as usual.

  8. Already downplayed by Tailhook · · Score: 4, Informative

    The Japanese car majors are reporting "no problems" with Kobe aluminum they've tested from the past three years. Japan Rail has said similar about undercarriage parts. There are more years, more metals and more manufacturers involved, but the pattern is clear; these issues will be pencil whipped. There is margin for error engineered into transportation products and no one is going to rip up the floor boards over paper work unless there is a demonstrative problem.

    Right or wrong that's how it will be.

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  9. Re:Why trust any vendor's claims?! by Narcocide · · Score: 2

    Wow, you fucking astroturfers really hate it when I connect the dots for people, don't you?

  10. Re:Perhaps insensitive, but by fahrbot-bot · · Score: 5, Funny

    Seppuku time?

    They tried, but the knives were made of Kobe Steel ...

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    It must have been something you assimilated. . . .
  11. Nissan's stopped selling cars in Japan by rsilvergun · · Score: 2

    until they can inspect their fleet. They didn't explicitly call the reason out but it's pretty obvious. The best part is these are likely to be structural problems not easily fixed.

    --
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  12. Where's the beef? by WaffleMonster · · Score: 5, Interesting

    I've been hearing about Kobe on English language broadcasts for a while. One constant throughout is a complete lack of contextual information.

    We all know they "Falsified data" on strength and durability of aluminum and copper... what does this mean in real terms?. Did they just check the "A-OK" box and fill in fake data without bothering to run the tests? Did they run the tests and then knowingly alter results? What is the difference between what they reported and actual conditions of materials sold? What is the risk? I would be most interested in any references that address these basic questions.

    So far every downstream manufacturer who has looked into this has not been able to find anything wrong or at least they are not admitting it publically.

  13. Re:Perhaps insensitive, but by Anil · · Score: 2
  14. Re:No. They didn't get what they paid for. FRAUD. by cfalcon · · Score: 2

    > That is fraud. Whether someone died because if is irrelevant.

    It's pretty relevant. If my grievance is that you sold me crappy metal, the resulting litigation will ultimately result in some type of restitution based upon loss of value directly, possible loss of market value, etc. If instead my grievance is that your crappy metal, sold to somebody else, cost me a family member, you are facing a much more open ended amount of damages- you could meaningfully be destroyed by a number of such lawsuits.

  15. Re:Why trust any vendor's claims?! by thinkwaitfast · · Score: 3, Informative

    How much do you destroy

    A few cm^3.

  16. Re:Screw Japanese Metal by sjames · · Score: 2

    Compare, Japanese metal

  17. Re:Made in Japan aka Jap Crap by Solandri · · Score: 4, Interesting

    Actually, this is a common cycle. Post-WWII, Japanese stuff was considered crap. The country was war-torn and rebuilding its industrial base. Most emphasis was put on volume of production and expansion, little on quality.

    As Japan modernized and "got" how to produce quality consistently, it earned a reputation for making the best stuff in the world. Korea and Taiwan followed the same pattern, about two decades behind Japan. (Most of the world's computer components are currently produced by Korean and Taiwanese companies. Even the stuff that goes into Apple's products.) China is currently in the first stage. The U.S. probably went through the same thing after it broke off from colonial Europe.

    I suspect however that there's a third stage - complacency and mediocrity. The U.S. went into this in the 1970s and 1980s, which helped Japanese products to gain a fairly sizeable foothold here. Japan seems to be going through this third stage the last couple decades, allowing Korean and Taiwanese products to eclipse Japanese as considered "best" in the world.

  18. Because testing is cheaper than building a foundry by raymorris · · Score: 3, Insightful

    > you basically cannot trust ANYTHING outsourced these days, and must constantly monitor it for quality. Which begs the question, why outsource then if you must also incur the added cost of verification and riding herd on QA

    Your good options are:

    1) Buy from a steel company and test a statistically appropriate number of samples
    2) Build and operate your own foundry and test a statistically appropriate number of samples

    You need to test either way. The question is, "which is better, buying steel from a company that is good at making steel, or build and operate your own steel company?" If you're in the business of making appliances, or bottle caps, or lawn sprinklers, or anything other than refining steel, buying from an existing steel maker is probably a better idea than launching your own foundry.

    Of course there are also two wrong ways to do it:

    1) Buy from a steel company and never test any of it
    2) Build and operate your own foundry and never test any of it

    Either of those will end up with you using sub-standard steel.

  19. Re:Why trust any vendor's claims?! by barbariccow · · Score: 4, Funny

    Seriously how hard is systemd? So you have to learn something new once in a while. That doesn't mean throw away everything inclluding OS which I seriously doubt was cheaper (man hours, experience, time spent, alternatives required) than just spending a few hours learning how to go from single-layer serial boots to an event asynchronys model..

  20. Re:Made in Japan aka Jap Crap by luis_a_espinal · · Score: 2

    Actually, this is a common cycle. Post-WWII, Japanese stuff was considered crap. The country was war-torn and rebuilding its industrial base. Most emphasis was put on volume of production and expansion, little on quality. As Japan modernized and "got" how to produce quality consistently, it earned a reputation for making the best stuff in the world. Korea and Taiwan followed the same pattern, about two decades behind Japan. (Most of the world's computer components are currently produced by Korean and Taiwanese companies. Even the stuff that goes into Apple's products.) China is currently in the first stage. The U.S. probably went through the same thing after it broke off from colonial Europe. I suspect however that there's a third stage - complacency and mediocrity. The U.S. went into this in the 1970s and 1980s, which helped Japanese products to gain a fairly sizeable foothold here. Japan seems to be going through this third stage the last couple decades, allowing Korean and Taiwanese products to eclipse Japanese as considered "best" in the world.

    The fact that one company got caught doing shitty work somehow translates into the state of quality of Japanese workmanship :/

  21. broadcast... complete lack of context by bjamesv · · Score: 2

    ... they "Falsified data" on strength and durability of aluminum and copper... what does this mean in real terms?. Did they just check the "A-OK" box and fill in fake data without bothering to run the tests? Did they run the tests and then knowingly alter results? What is the difference between what they reported and actual conditions of materials sold? What is the risk? I would be most interested in any references that address these basic questions.

    Agreed. All that the outlets I've read have let slip was: 1) there was a whisleblower, that got ignored, 2) all the numbers we've heard: 4% of aluminum sheets & rods, 200 buyers of iron powder, ongoing for up to 10 years, etc.

    But what was the whisleblower's observation? Is reporting on that kind of detail just beyond the capacities of English language outlets?

    My only guess is products which failed internal testing were by some process packed with good product/labeled as passing, the whisleblower had access to those internal tests but probably company's unclear on who misbehaved. Without internal failed test records, how else would they know "it was 4% of sales"?

  22. Re:Made in Japan aka Jap Crap by Spy+Handler · · Score: 2

    Takata, Mitsubishi, Toshiba, scandals just off the top of my head. Japanese workers may still be fanatically devoted to quality but management seems to be cutting corners more and more. Probably due to increasing price pressure from Korea China et. al.

    Japanese quality probably reached its zenith in the late 80's to mid 90's.