Air regulator warns over supply of Kobe Steel

Europe’s air-safety regulator has recommended that companies using material from Kobe Steel review their supply chains and — if alternative suppliers are available — and 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.

Several organisations have indicated they will evaluate the concern, the agency said.

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

A Kobe Steel spokesman said the company is checking the facts of the matter.

Kobe has said about 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.

Car companies Ford Motor and General Motors, as well as aircraft makers Boeing, and Airbus 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. The agency’s recommendation to halt use of the company’s products is the first of its kind since the case came to light last month.

Separately, the steelmaker has hired Mizuho Securities to advise on the sale of a real estate unit to raise cash, sources said.

The company will hold the first round of bidding tomorrow to sell more than two-thirds of Shinko Real Estate, the sources said.

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 US Department of Justice this week requested documents related to the scandal, which may affect companies including Ford and Boeing.

Kobe Steel shares fell up to 4% in Tokyo trading. The stock has plunged 38% since it revealed the falsification.

Kobe’s shares were the most-traded among companies in Japan’s benchmark Topix index earlier this week.

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.

Bloomberg


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