Europe Aviation Agency Warns on Kobe Steel as Scandal Deepens

By: | at 02:39 AM | Maritime  

Europe’s air-safety regulator recommended that companies using material from Kobe Steel Ltd. review their supply chains and—if alternative suppliers are available—suspend purchases from the Japanese company that admitted to faking data about product strength.

Japanese authorities, including the Japan Civil Aviation Bureau, are investigating the extent of the problem regarding affected parts, the European Aviation Safety Agency said in a statement dated Oct. 17. Several organizations have indicated they will evaluate the concern, EASA said.

The present situation isn’t considered to be an “unsafe condition” that would require the agency to issue a so-called airworthiness directive, EASA said.

“Design approval holders are advised to establish the scope of use of affected parts in its products, paying particular attention to identifying such material usage in more critical applications,” EASA said. “Where alternative suppliers are available, it is recommended to suspend use of Kobe Steel products until the legitimacy of the affected parts can be determined.”

A Kobe Steel spokesman said the company is checking the facts of the matter and isn’t able to comment immediately.

Kobe has said some 500 companies worldwide are in a supply chain tainted by admissions that it falsified certifications on the strength and durability of metals going back to 2007. Automotive giants Ford Motor Co. and General Motors Co. as well as plane makers Boeing Co. and Airbus SE are among companies that have said they’re reviewing their parts networks after being informed of the issue.

So far, no safety concerns surrounding products using Kobe Steel parts have been cited. EASA’s recommendation to halt use of the company’s products is the first of its kind since the case came to light on Oct. 9.

Real Estate

Separately, the embattled steelmaker hired Mizuho Securities Co. to advise on the sale of a real estate unit to raise cash, people with knowledge of the matter said. The company will hold the first round of bidding on Oct. 20 to sell more than two-thirds of Shinko Real Estate Co., the people said, asking not to be identified because the process is private.

Revelations this month that Kobe Steel falsified certifications on the strength of its metals for at least a decade have raised questions over whether the company can withstand compensation costs. The U.S. Department of Justice this week requested documents related to the scandal, which may affect companies including Ford and Boeing.

Kobe Steel shares fell as much as 4 percent in Tokyo trading on Wednesday. The stock has plunged 38 percent since it revealed the falsification. Kobe’s shares were the most-traded among companies in Japan’s benchmark Topix index on Tuesday, while the company’s credit default swaps hit a fresh four-year high as a local credit ratings firm placed the steelmaker on monitoring for a possible downgrade.


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