Business

Kobe Steel's turn-a-blind-eye culture a concern

KOBE, JAPAN The fresh university graduate, eager to make a good impression on the job at one of Kobe Steel's main plants in Japan, punched the wrong measurements into machines making steel pipes, causing a large batch to come out too short.

"I thought I was going to be fired," recalled the former employee nearly 40 years later.

But Mr Shinzo Abe, now the prime minister, stayed on the job at Japan's third-largest steelmaker for three years before entering politics in 1982.

Kobe Steel, a 112-year-old company in south-central Hyogo prefecture, has risen from wartime devastation and natural disaster, but its past is littered with examples of corporate misconduct.

Its admission last month that workers had tampered with product specifications for at least a decade is the latest in a string of scandals that has battered Japan's reputation as a manufacturing powerhouse.

Workers, executives and shop owners in Kobe, a gritty, industrial city bordered by sloping hills where cattle are bred for the famed beef, said they were concerned but not surprised by the scandal.

"The corporate culture was to look the other way even while you saw what was going on," said a retired employee who worked at the company's flagship steel plant, Kobe Works.

The company's other main plant in the area is Kakogawa Works, in the nearby city of Kakogawa.

"It was supposed to be instilling a culture that paid attention when improprieties were discovered," the former employee said. "In the end, it didn't create such a corporate culture. That is management's responsibility."

The company initially said that some workers had falsified data on contract specifications for a relatively small amount of aluminium and copper products, but it later admitted the problem had spread.

In 2006, Kobe Steel admitted falsifying soot-emissions data from the blast furnaces at Kobe Works and Kakogawa Works.

The latest scandal reflects "exactly the same set-up", said Kakogawa then-mayor Shoichi Tarumoto.

"It looks like nothing has changed at Kobe Steel."

A senior official in local government who has dealt with the company for years said: "Kobe Steel always scouts the backstreets for shortcuts. That is its nature."

Kobe Steel acknowledges some customers have shifted orders to other suppliers.

Major banks are instructing their Kobe area branches to keep a close watch on the credit management at companies that do business with the steelmaker, bankers say.

The scandal "isn't an open topic on the job," said a worker in his 30s, finishing the night shift around 8am at Kobe Works.

"Nobody says it out loud, but people are worried," he said.

"It is a heavy mood."

- REUTERS

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