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| GM CEO: 15 fired over ignition-switch recalls; probe shows pattern of failures, no coverup | GM CEO: 15 fired over ignition-switch recalls; probe shows pattern of failures, no coverup |
| (about 4 hours later) | |
| A long-awaited internal investigation into General Motors’ failure to recall millions of small cars containing a deadly ignition-switch defect found a pattern of “incompetence and neglect” but no conspiracy to hide the problem, the automaker’s chief executive told employees Thursday. | A long-awaited internal investigation into General Motors’ failure to recall millions of small cars containing a deadly ignition-switch defect found a pattern of “incompetence and neglect” but no conspiracy to hide the problem, the automaker’s chief executive told employees Thursday. |
| GM chief executive Mary T. Barra said 15 employees deemed responsible for not vigorously tackling the problem have been forced out of the company, and five others have been disciplined as a result of the probe. But she added that the investigation by Anton R. Valukas, a former U.S. attorney, did not tie the problems to top executives in the company. | GM chief executive Mary T. Barra said 15 employees deemed responsible for not vigorously tackling the problem have been forced out of the company, and five others have been disciplined as a result of the probe. But she added that the investigation by Anton R. Valukas, a former U.S. attorney, did not tie the problems to top executives in the company. |
| Rather than finding a coverup, the internal probe revealed a corporate culture in which employees failed to take responsibility for the ignition-switch problem. The report said one executive described the “GM nod,” where company officials would attend a meeting, nod in agreement on a proposed course of action, and then leave and do nothing. | Rather than finding a coverup, the internal probe revealed a corporate culture in which employees failed to take responsibility for the ignition-switch problem. The report said one executive described the “GM nod,” where company officials would attend a meeting, nod in agreement on a proposed course of action, and then leave and do nothing. |
| That culture contributed to GM waiting more than a decade to recall 2.6 million Chevrolet Cobalts and other small cars equipped with the defective switch, which has been linked to at least 13 deaths and 54 accidents, the report said. | That culture contributed to GM waiting more than a decade to recall 2.6 million Chevrolet Cobalts and other small cars equipped with the defective switch, which has been linked to at least 13 deaths and 54 accidents, the report said. |
| The report said that for more than a decade GM showed no urgency to address the problem, in part because it did not understand it. Engineers and others who looked into the ignition switch problem, which caused cars to inadvertently stall, did not realize that the defect also disabled air bags. Consequently, for years the company viewed the issue not as a safety problem but as simply of one of customer convenience -- “annoying but not particularly problematic,” the report said. | The report said that for more than a decade GM showed no urgency to address the problem, in part because it did not understand it. Engineers and others who looked into the ignition switch problem, which caused cars to inadvertently stall, did not realize that the defect also disabled air bags. Consequently, for years the company viewed the issue not as a safety problem but as simply of one of customer convenience -- “annoying but not particularly problematic,” the report said. |
| “Once so defined, the switch problem received less attention, and efforts to fix it were impacted by cost considerations that would have been immaterial had the problem been properly categorized in the first instance,” the report said. | “Once so defined, the switch problem received less attention, and efforts to fix it were impacted by cost considerations that would have been immaterial had the problem been properly categorized in the first instance,” the report said. |
| GM officials continued to misdiagnose the problem even as accidents and legal settlements mounted, and outside investigators began to see the switch problem as an urgent safety issue, the report said. | GM officials continued to misdiagnose the problem even as accidents and legal settlements mounted, and outside investigators began to see the switch problem as an urgent safety issue, the report said. |
| “What Valukas found was a pattern of management deficiencies and misjudgments – often based on incomplete data – that were passed off at the time as business as usual,” Barra said. | “What Valukas found was a pattern of management deficiencies and misjudgments – often based on incomplete data – that were passed off at the time as business as usual,” Barra said. |
| Describing the report’s findings in a town hall meeting with 1,200 GM workers in a plant outside Detroit, Barra said employees did not share enough information or take enough initiative as evidence came in about the faulty switches, leading to tragic results. | Describing the report’s findings in a town hall meeting with 1,200 GM workers in a plant outside Detroit, Barra said employees did not share enough information or take enough initiative as evidence came in about the faulty switches, leading to tragic results. |
| “If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately,” the CEO said. | “If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately,” the CEO said. |
| Barra said GM has shared the report with federal safety officials, as well as members of Congress. Rep. Fred Upton (R-Mich.), whose committee has been investigating the recall debacle, said a subcommittee of his panel will hold a second round of hearings in several weeks. | Barra said GM has shared the report with federal safety officials, as well as members of Congress. Rep. Fred Upton (R-Mich.), whose committee has been investigating the recall debacle, said a subcommittee of his panel will hold a second round of hearings in several weeks. |
| Meanwhile, Sen. Claire McCaskill (D-Mo.), who is leading the Senate probe, said Thursday: “I’m going to reserve judgment until I can take a closer look at the report, which I expect to find comprehensive and thorough. And I’m looking forward to getting a full briefing from Mr. Valukas. I won’t be letting GM leadership, or federal regulators, escape accountability for these tragedies. That’s why I’ll be holding a follow-up hearing later this summer to address unanswered questions. The families of those affected deserve no less.” | Meanwhile, Sen. Claire McCaskill (D-Mo.), who is leading the Senate probe, said Thursday: “I’m going to reserve judgment until I can take a closer look at the report, which I expect to find comprehensive and thorough. And I’m looking forward to getting a full briefing from Mr. Valukas. I won’t be letting GM leadership, or federal regulators, escape accountability for these tragedies. That’s why I’ll be holding a follow-up hearing later this summer to address unanswered questions. The families of those affected deserve no less.” |
| Release of the report comes after the ignition-switch problem triggered a series of government investigations and lawsuits that prompted Barra to restructure GM’s top ranks to more quickly deal with safety problems. So far this year, the automaker has ordered 30 recalls affecting nearly 16 million vehicles in North America. The recalls alone have cost the automaker $1.7 billion. | Release of the report comes after the ignition-switch problem triggered a series of government investigations and lawsuits that prompted Barra to restructure GM’s top ranks to more quickly deal with safety problems. So far this year, the automaker has ordered 30 recalls affecting nearly 16 million vehicles in North America. The recalls alone have cost the automaker $1.7 billion. |
| Still, the company’s troubles stemming from the deadly defect are far from over. Last month, the National Highway Traffic Safety Administration levied a $35 million fine against GM, the highest amount allowed. | Still, the company’s troubles stemming from the deadly defect are far from over. Last month, the National Highway Traffic Safety Administration levied a $35 million fine against GM, the highest amount allowed. |
| The company has hired mediation specialist Kenneth R. Feinberg to create a compensation fund for families of crash victims by Aug. 1. On Thursday Feinberg said, “I have already drafted some preliminary compensation ideas and plan to share them in confidence over the next few weeks with lawyers, public-interest groups, GM and others interested in the compensation program.” GM is not expected to announce Feinberg’s findings for several weeks. | The company has hired mediation specialist Kenneth R. Feinberg to create a compensation fund for families of crash victims by Aug. 1. On Thursday Feinberg said, “I have already drafted some preliminary compensation ideas and plan to share them in confidence over the next few weeks with lawyers, public-interest groups, GM and others interested in the compensation program.” GM is not expected to announce Feinberg’s findings for several weeks. |
| Meanwhile, the company faces a spate of lawsuits from shareholders, dealers and others in connection with the defect. It is also under a series of government investigations, including a federal criminal probe that could result in financial penalties along the lines of the $1.2 billion paid by Toyota earlier this year for misleading consumers about unintended acceleration problems with several of its models. | Meanwhile, the company faces a spate of lawsuits from shareholders, dealers and others in connection with the defect. It is also under a series of government investigations, including a federal criminal probe that could result in financial penalties along the lines of the $1.2 billion paid by Toyota earlier this year for misleading consumers about unintended acceleration problems with several of its models. |
| Despite those problems, GM sales are robust: Earlier this week the automaker reported that May was its best month in nearly six years, with sales up 13 percent over the previous May. | Despite those problems, GM sales are robust: Earlier this week the automaker reported that May was its best month in nearly six years, with sales up 13 percent over the previous May. |
| GM stocks fell sharply Thursday morning before regaining some losses to flatten out by midafternoon to $36.47 per share. | GM stocks fell sharply Thursday morning before regaining some losses to flatten out by midafternoon to $36.47 per share. |
| Related: | |
| GM releases results of internal probe of ignition-switch defect | |
| Why did GM take so long to respond to deadly defect? |