JIS certification suspended at Kobe Steel’s Moka Plant, canceled at Kobe Steel subsidiary Shinko Metal Products Co., Ltd.

We deeply apologize once again for the enormous amount of trouble we have caused to customers, suppliers, shareholders and many others concerning the improper conduct at Kobe Steel, Ltd. and its group companies.

In regard to the improper conduct in the Kobe Steel Group, we underwent an examination by JIS certification bodies. As problems were found in the quality management system at Kobe Steel's Moka Plant, Kobe Steel received today a suspension notice of its Japanese Industrial Standards (JIS) certification for this facility. In addition, problems were also found in the quality management system at subsidiary Shinko Metal Products Co., Ltd. Although dimensional measurements were not carried out, dimensional results were reported to customers and products were shipped. As a result, Shinko Metal Products received today a cancellation notice of its JIS certification.

Due to the suspension and cancellation of their JIS certifications, the Moka Plant and Shinko Metal Products are unable to ship the concerned products displayed with the JIS mark. However, they can supply products that are equivalent to JIS in terms of performance. Responding in sincerity, Kobe Steel and Shinko Metal Products will contact and explain the situation to customers to which the concerned products were shipped.

In relation to the improper conduct in the Kobe Steel Group, Kobe Steel announced on November 10, 2017 that it had compiled the "Report on investigation into the causes of the Kobe Steel Group's inappropriate conducts and on measures to prevent recurrence." The Quality Assurance Department was also established in the Aluminum & Copper Business on November 10, 2017 and is under the direct control of that business unit. The Quality Assurance Department carries out audit functions for quality control and quality maintenance and is responsible for related training at each business location and group company in the Aluminum & Copper segment.

At the Moka Plant on the same date, the quality control function and the quality assurance function were clearly separated. The Quality Assurance Section is under the direct control of the general manager of the Moka Plant in order to strengthen the quality control check function.

In addition, in order to prevent falsification and fabrication in inspection procedures, the Kobe Steel Group will promote the implementation of the automatic recording of test inspection data. For test inspection data that cannot be automatically captured, a system will be established whereby a single-person process is eliminated and data is always checked by multiple people.

Based on the findings in a report to be made by the Independent Investigation Committee, which consists only of outside members, Kobe Steel will then proceed to consider various measures, which will be reflected in its final measures to prevent recurrence.

The Kobe Steel Group will correct the problems that led to the quality management deficiencies, which caused the suspension and cancellation of the JIS certifications, by steadily implementing measures to prevent recurrence and strive to recover the trust of its customers.

The Moka Plant will take corrective steps based on the findings of the certification body and work to restore its JIS certification as early as possible. Shinko Metal Products will implement measures to prevent recurrence and after improving its quality management system, aim to reacquire JIS certification.

The impact of this incident on Kobe Steel's business performance is unclear at this time. Kobe Steel plans to make an announcement when the extent of the impact becomes clear.