By Tim Kelly
TOKYO (Reuters) - Boeing (NYSE:BA) Co, the world's biggest maker of passenger jets, has used Kobe Steel products that include those falsely certified by the Japanese company, a source with knowledge of the matter told Reuters.
Boeing does not as yet consider the issue a safety problem, the source stressed, but the revelation may raise compensation costs for the Japanese company, which is embroiled in a widening scandal over the false certification of the strength and durability of components supplied to hundreds of companies.
The U.S. airline maker is carrying out a survey of aircraft to ascertain the extent and type of Kobe Steel components in its planes and will share the results with airline customers, said the source who has knowledge of the investigation.
The source asked not to be named because of the sensitivity of the issue.
Even if the falsely certified parts do not affect safety, given the intense public scrutiny that airlines operate under they may opt to replace suspect parts rather than face any backlash over concerns about safety.
Any large-scale program to remove those components, even during scheduled aircraft maintenance, could prove costly for Kobe Steel if it has to foot the bill.
Kobe Steel's CEO, Hiroya Kawasaki, on Thursday said his company's credibility was at "zero." The company, he said, is examining possible data falsification going back 10 years, but does not expect to see recalls of cars or airplanes for now..
Also in the U.S., General Motors (NYSE:GM) said it is checking whether its cars contain falsely certified components from Kobe Steel, joining Toyota Motor Corp and around 200 other firms that have received falsely certified parts from the company.
Boeing does not buy products such as aluminum composites, used in aircraft because of their light weight, directly from Kobe Steel. Its key Japanese suppliers, including Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Subaru Corp, however, do.
These Japanese companies are key parts of Boeing's global supply chain, building one fifth of its 777 jetliner and 35 percent of its carbon composite 787 Dreamliner.
"Boeing has been working closely and continuously with our suppliers since being notified of the issue to ensure timely and appropriate action," Boeing said in a statement earlier this week after Kobe Steel's bombshell announcement over the weekend.
"Nothing in our review to date leads us to conclude that this issue presents a safety concern," it added.
Work for the U.S. planemaker employs around 22,000 Japanese engineers, or 40 percent employed in the nation's aerospace business.