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Scandals hit Japanese manufacturers as safety compliance takes backseat to deadlines

KYB Corp. President and Chairman Yasusuke Nakajima, center, Kayaba System Machinery Co. President Shigeki Hirokado, left, and KYB board member Hiroshi Ogawa are seen at a press conference at the Ministry of Land, Infrastructure, Transport and Tourism, in Tokyo, on Oct. 16, 2018. (Mainichi/Koichiro Tezuka)

A string of data-tampering scandals at Japanese manufacturers has been extended with the recent finding that Japanese shock absorber maker KYB Corp. doctored product quality data for seismic shock absorption systems at nearly 1,000 facilities nationwide. With no foreseeable end, the ongoing scandals highlight a lack of awareness about compliance and the excessive focus companies place on meeting delivery deadlines.

In a news conference on Oct. 16, KYB Corp. President and Chairman Yasusuke Nakajima stated that he believed one reason for the data fabrication was that it took three to five hours to disassemble and adjust a product that failed an inspection. He said there was a problem with meeting deadlines, and indicated that the stance of wanting to avoid redoing work led to the data alterations.

Product quality scandals have occurred one after the other since last autumn at companies at the heart of the Japanese manufacturing industry, including Kobe Steel Ltd., Mitsubishi Materials Corp., Toray Industries Inc., Nissan Motor Co. Ltd., and Subaru Corp. A common trait of the compliance-failure and data-tampering incidents is the companies' misplaced sense of confidence in safety enforced in the past with tough standards.

Hisayoshi Hashimoto, a professor emeritus at the National Graduate Institute for Policy Studies, points out, "In Japan, there is a perception that the government's and companies' product-quality standards are high, and illicit conduct has emerged against a backdrop formed by the naive perception that safety will be maintained even if the level falls a little below the standard."

As with other firms in scandals to date, lax corporate governance at KYB created a breeding ground for misconduct. Company president Nakajima stressed in the news conference that the company had thoroughly implemented a rule that if anything abnormal occurred in the workplace, it was to be reported to a superior, but the data doctoring only came to light following a report from an employee who had no connection with inspections. The misconduct had become an everyday affair on the inspection scene, and methods of data tampering are said to have been passed down among inspectors by word of mouth in an unbroken line. This indicates that the administrative structure of top managers was insufficient.

The misconduct continued from at least January 2003 -- the earliest data is available. Between then and now, a series of data tampering scandals at other manufacturers came to light. These included the falsification of earthquake-resistance data by a former first-class architect in 2005, followed by the doctoring of piling data at a subsidiary of Asahi Kasei Corp. and of data on seismic isolation products produced by Toyo Tire & Rubber Co., Ltd. in 2015. Yet KYB did not move to put an end to its own illicit practices.

Kubori Hideaki, a lawyer versed in corporate governance, points out, "The idea of 'product quality first,' the starting point for manufacturing, has switched to 'profits first,' and the company has defended its own (illicit) behavior." It will be difficult for the firm to win back trust unless it alters its organizational system that postpones quality management.

(Japanese original by Naoya Matsumoto, Business News Department)

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