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Asia Today ISSN 1861-4604 Friday, December 15, 2017

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Japan’s Toray admits to more cases of data falsification

Toray Industries

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TOKYO, Japan - In a damning admission, Japan’s Toray Industries on Tuesday revealed 149 cases of quality data falsification at a materials-making subsidiary spanning eight years.

The admission of cheating, which became the latest quality-assurance scandal to hit a Japanese manufacturer, led to the announcement of a broader probe.

Toray Industries, which is the world’s largest maker of carbon fiber composite materials said in a statement issued on Tuesday that the cheating involved products including tire-strengthening cords sold to 13 clients by Toray Hybrid Cord Inc. 

While the company did not name any affected customers, it ruled out U.S. aircraft maker Boeing Co.

The Japanese company is a major supplier of carbon fiber used in Boeing passenger jets.

Uniqlo parent Fast Retailing Co Ltd, which uses Toray’s products in its best-selling Heattech clothing line too was not named as the affected customer.

Toray however, revealed that its subsidiary became aware of its problems in July last year.

It said that the group learnt of the problems in October but the company only decided to publicly disclose the cheating after rumors appeared earlier this month in an anonymous online post.

Addressing a news conference, Toray President Akihiro Nikkaku said, “There were no legal violations or safety problems; this was between us and our customers, and so there was no need to disclose it.”

Nikkaku said that the internet post forced it to “give a proper explanation before rumors spread.”

He added that even if similar cases were found in the future, the company would not be required to make them public.

Toray further said that it was in the process of notifying clients about the falsification and had not heard back from them about performance or safety issues with the fiber products used to strengthen tires and other industrial goods.

Toray said that it found the cases after an in-house survey pointed to the malpractice, prompting an internal investigation.

Nikkaku said he hoped the investigation would be completed by March next year.

Nikkaku added that that combined revenue of the 149 cases amounted to 150 million yen ($1.35 million) and would not have a big earnings impact.

The two quality control managers who led the falsification, were reportedly motivated partly by pressure to meet product delivery targets and had now been transferred to different positions.

It was subsequently revealed that a broader probe is ongoing into the possible wrongdoing across the group.

After widespread data falsification was exposed at Kobe Steel Ltd, Japanese companies have being increasingly pressurised to disclose quality-assurance failings.

Then, last week, Mitsubishi Materials Corp admitted that it may have sent products with falsified data to scores of customers.

It also admitted that it possibly continued to ship these products for months after the wrongdoing was discovered.

Recently, automakers Nissan Motor and Subaru Corp have also been hit by compliance scandals.

However, Tuesday’s admission by Toray threatens to damage trust in Japan’s manufacturing industry at a time when the country’s firms are facing growing competition from its Asian neighbors including China and South Korea.

Following the announcement, Toray’s shares plunged more than 8 percent and closed down 5.3 percent in a flat broader market.

 

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