Japanese Suppliers Admit Falsifying Building Materials Data

By Dave McCombs and Kiyotaka Matsuda | October 16, 2015

Two Japanese companies admitted falsifying data on the quality of building materials, raising concerns about the safety of rubber goods and other inputs for ships, trains and buildings.

Toyo Tire & Rubber Co. said yesterday an internal probe found the company manipulated testing data for products supplied to 18 customers over 10 years. Separately, Asahi Kasei Corp. said its construction materials unit modified data on the installation of foundation piles for condominium construction.

The admissions raise questions about the safety of buildings and products in a country long known for the quality of its manufacturing. Toyo’s previous chairman and president announced their resignations in June, months after the company admitted to selling substandard quake-resistant components for buildings.

“This is a hopeless company that could damage Japan’s image for high quality,” said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm that does not own Toyo Tire shares. “They need to bring in a new president from outside.”

Asahi Kasei dropped 14 percent, the most since 1999, to 792.7 yen. Toyo Tire’s shares rose 3.2 percent to 2,472 yen at the close in Tokyo trading after plummeting 13 percent yesterday.

Toyo said the company will expand its investigation and check products made over the past two decades.

The rubber products identified Wednesday aren’t used in bullet trains or aircraft, a transport ministry official told reporters in Tokyo. The ministry said it has yet to identify which ships and trains are using them but that the Toyo products likely don’t pose any immediate threat.

Spokesmen for Central Japan Railway Co. and West Japan Railway Co. confirmed Wednesday that some of their trains use affected Toyo Tire rubber products. Yu Sunagawa, a spokesman for East Japan Railway Co., said the company uses some Toyo Tire products but was still checking whether or not it uses the products in question.

Toyo Tire, in its statement, said it has yet to collect enough information to estimate the effect on its earnings.

In the case of Asahi Kasei, the company said it modified the construction data under a subcontract with Sumitomo Mitsui Construction Co. Sumitomo Mitsui shares, which had dropped 31 percent yesterday, surged 24 percent after Asahi Kasei said it would bear the costs for reinforcement, renovation and examination of other buildings.

Asahi Kasei said it is investigating the cause.

(With assistance from Masatsugu Horie in Osaka.)

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