The WelderDestiny Compass

Kobe - Hero To Zero - Issue #043

Wednesday, October 25, 2017 / Perth Australia / By Niekie Jooste

In this edition of "The WelderDestiny Compass":

  • Trust Is Thin On The Ground
  • Kobe: Hero To Zero
  • Blockchain Trust Based Systems
  • Welding Industry Path

Trust Is Thin On The Ground

It has been only 2 weeks since we dealt with the issue of the moral obligations that we as technical professionals have in our jobs, (Click here to read Issue 41 of The WelderDestiny Compass...) and here we are staring down the barrel of the Kobe Steel scandal.

I am sure that there will be all kinds of finding made about the culture and management at Kobe Steel, but this type of fiddling with technical documents would not be possible without the implicit involvement of technical professionals.

When surveys are done to establish "the public's" ranking of trustworthy professions, then the engineering profession is generally high on the list. Given the string of safety related recalls that have affected major companies, especially in the automotive sector, in the last few years, I would not be surprised if our profession starts slipping in the rankings.

In short, trust is thin on the ground at the moment!

The next gigantic issue is obviously that any of the sub-standard materials that were used in safety critical applications will need to be located. This will be an almost impossible task, given current materials traceability systems.

Today we will look at how the welding and materials industry can take the lead in establishing trust back into our industry. - You just know this is going to involve blockchain technology don't you!

If you would like to add your ideas to this week’s discussion, then please send me an e-mail with your ideas, (Send your e-mails to: or complete the comment form on the page below.

Now let's get stuck into this week’s topics...

Kobe: Hero To Zero

For the many years that I have been involved in the welding industry, Kobelco was one of the trusted leaders in our industry. Their welding electrodes are widely used and specified with confidence.

How quickly the hero has gone to zero.

It is interesting to notice that Kobelco, like most other large companies, has a corporate social responsibility policy. One of their "principles" is: "Maintain a relationship of trust and collaboration with society at large."

Obviously it is much easier to talk the talk than to walk the walk. But then we all know this. There is no genius insight in this statement. Anybody that knows a little bit about human nature understands that this is the natural state of things.

There will obviously be much navel gazing associated with the investigations into what went wrong, and in how this can be prevented in future. In can almost hear the results already: Company cultural problems; Management vision issues; Incentives that emphasize production over quality and safety etc. etc...

This reminds me of the findings after the Piper Alpha oil platform disaster from 1988, and the Deepwater Horizon explosion in 2010. Following the investigations, there were big shake-ups in the companies, and even entire industries, but this does not prevent wrong doing when the memories start to fade.

In the past, there were no real alternatives to the usual calls for cultural change in the companies concerned. What else could be done? Today however, there are technological alternatives.

Blockchain Trust Based Systems

There are a number of different blockchain technologies out there. Each one has its own uses and strengths. The most well known blockchain is that on which the cryptocurrency Bitcoin is based. It is very good, and widely accepted, for financial transaction purposes.

The second biggest blockchain is the Ethereum blockchain. What makes Ethereum different, is that it has the capability to use "smart contracts". So, what exactly is a smart contract you may ask?

A smart contract is nothing more than a piece of code that will run only when certain conditions have been met. As an example, insurance companies are starting to develop systems that will make the necessary claim payments when the conditions of the insurance policy have been met.

Say that you have taken out travel insurance for your holiday to Bali. On the day of your return trip, there is a volcanic eruption that disrupts air travel, and your flight is cancelled. You are stuck for the next week in Bali. The system will be set up to monitor all the flights associated with the insurance company's policies. When your flight is cancelled, the condition on the "smart contract" is met, and you immediately and automatically get a payment into your account. No need to make a claim, and wait for a payment, before you can start making alternative arrangements. No possibility of the insurance company to do fancy footwork to weasel their way out of paying!

An important point to note is that such "smart contracts" could be set up between people without having to rely on third parties such as lawyers or other "trusted" counterparties. For example, it is possible to make sure that a product is delivered before a payment finally takes place. This protects both the parties involved, without getting a third party "escrow service" involved.

Theoretically this type of functionality can be implemented in a huge number of different situations. The potential applications are limited only by your imagination!

Seeing as our discussion was triggered by the Kobe scandal, let us think about how this could be implemented in the safety critical materials field.

Let us say that a plate of pressure vessel steel is produced to a specific material specification. Say ASTM A516 Gr 70. According to the specification, a series of tests are to be done, before the material certificate for the plate is produced. Typical testing would be chemical composition, tensile testing and let us say optional impact testing.

It would be possible to set up the system so that the equipment producing the steel plate automatically removes a section for testing, and assigns some "random" number to it. As it goes for testing, the people involved in the testing process will theoretically not know exactly what the requirements are, only what tests are required. As the tests are done, the results are automatically recorded to a system that feeds it into the "smart contracts" system.

Only once all the required tests have been completed, and the properties found suitable, will the material certificate be produced on the blockchain, and certified as meeting the specification requirements. When shipping the steel plate, it will only have a "barcode" associated with it, that points to its certificate on the blockchain.

Furthermore, every time this plate is sold through the supply chain, this transaction can be recorded on the blockchain, all the way till a part of it is included in a final product.

If at any time in the future, a problem is found with that particular heat of steel, it will be possible to trace it to all the final products. The end-user will then be able to easily asses whether the particular problem is an issue for their specific application.

Welding Industry Path

Up to now, it has not been possible to get past the trust issues that we need to deal with every day when we trade and do "deals" with other people and organizations. Have you read the "terms and conditions" that you need to accept before dealing with companies such as Facebook, Microsoft, Google etc.? They make my stomach turn, but what can individuals like you and me do, but to click on the "accept" button? 

The prevalence of lawsuits against big companies would suggest that our trust is often misplaced. The time to move to blockchain "trust based systems" has arrived. We now have an option in blockchain technology. Also called distributed ledger technology.

Kobelco could turn their current zero trust fiasco into a great marketing coup by implementing a system as I have described above. Given that it is going to cost them a fortune to re-gain the industry's trust to do business with them again, there is a big incentive to rather spend that money on developing their trust based system for certifying and tracing materials.

As users of engineering products that are included in safety critical products, I think that we need to start putting our voices behind the development of such systems, and then supporting the companies that do implement them.

The time for blockchain trust based systems has arrived!

Yours in welding

Niekie Jooste

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