Mitsubishi Materials says over 200 customers could be affected by data falsification

Mitsubishi Materials on Thursday said three subsidiaries manipulated inspection data of parts used in aircraft, automobiles and industrial machinery. Its shares dropped as much as 11 percent the following day, hitting their lowest price since August.

The admission follows a spate of compliance failings at Japanese manufacturers including Kobe Steel Ltd, Nissan Motor Co Ltd and Subaru Co Ltd which threatens to shatter the country's reputation as a maker of high-quality products.

At a briefing on Friday, Mitsubishi Materials faced questions over its corporate management after admitting data falsification at Mitsubishi Cable Industries Ltd [MTCBL.UL] was discovered as far back as February, with the subsidiary shipping products with possibly falsified data even after wrongdoing was detected.

"Making an announcement without pinning down the problem would have caused further disruption and trouble," Mitsubishi Cable President Hiroaki Murata told reporters.

The data falsification scandal is the second in as many years to hit a member of the Mitsubishi group, Japan's biggest conglomerate, after Mitsubishi Motors Corp admitted it had falsified mileage readings on some of its vehicles.

Mitsubishi Materials said customers in Japan, the United States, China and Taiwan may have received affected products. It said an internal investigation will determine the causes of wrongdoing and scope of the matter.

"My responsibility is to bring countermeasures across the whole company based on the results of the investigation," said Mitsubishi Materials President Akira Takeuchi, in response to questions about whether he would resign over the matter.

Minister of Economy, Trade and Industry Hiroshige Seko earlier on Friday called the latest scandal "a betrayal of trust in Japanese manufacturing," pointing to the amount of time Mitsubishi Materials took to reveal the wrongdoing.

The company said Mitsubishi Cable distorted data on as much as 20 percent of its rubber sealing products, used in aircraft and cars, for two-and-a-half years from April 2015. Of 229 potentially affected customers, 40 have been informed.

Another subsidiary, Mitsubishi Shindoh Co Ltd, manipulated data for metal products, used in cars and electronics, as far back as October 2016. Around half of 29 potentially affected customers have been informed.

Mitsubishi Materials, said it stopped shipping affected materials from the two units in October. In both cases the company said it had not found any safety or legal problems.

A third subsidiary, Mitsubishi Aluminum Co Ltd, also shipped products which did not meet customers' specifications. The safety of products has been confirmed with the 16 affected customers, the parent said.

Mitsubishi Materials said it did not know whether there would be any impact on its financial outlook.

The company has reported the matter to Japan's trade, transport and defense ministries, and on Friday said some products supplied to the defense ministry did not meet ministry requirements.

Earlier in the day, Defence Minister Itsunori Onodera said his ministry is working to establish any impact of the wrongdoing but does not currently plan to stop using any equipment. Affected products were used in such equipment as aircraft engines.

Mitsubishi Materials does not directly supply parts to Airbus SE, which has not yet identified any suppliers receiving products from the company, an Airbus spokesman said.

Other manufacturers such as Boeing Co, Honda Motor Co Ltd, Mitsubishi Heavy Industries Ltd and Nissan said they were looking into the issue, company spokespeople confirmed.

Toyota Motor Corp said it does not directly procure any affected parts for domestic production, and is still confirming whether its suppliers do. It said it is also still confirming whether it directly or indirectly procures affected parts for overseas production.

Mitsubishi Materials' disclosure comes after Kobe Steel, Japan's third-biggest steelmaker, admitted in October that workers had tampered with product specifications, forcing companies around the world to check the safety of their products.