GABE NELSON

GM's list of 69 dirty words has its rationale -- and risks

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Gabe Nelson is a reporter for Automotive News.
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WASHINGTON -- General Motors’ attorneys weren’t immune to the cost-cutting culture that has been blamed for this year’s ignition switch fiasco, if we are to judge from a newly surfaced slide presentation in which they coached engineers to avoid 69 incendiary words and phrases -- including “safety.”

The document, which the National Highway Traffic Safety Administration released on May 16 as it levied a $35 million fine against GM, showed that engineers were encouraged to couch their reports in jargon. It was better, the lawyers said, to write “issue” instead of “problem,” and “does not perform to design” instead of “defect.”

The blacklist, which also included words like “apocalyptic” and “Kevorkianesque,” drew ridicule and scorn as a symbol of GM’s dysfunction. One wag on the Internet created a Web site that would, at the click of a button, generate a description for a GM product by pulling randomly from the list of banned words, such as “gruesome dangerous Challenger-mobile.”

But it should not have been so surprising. Companies have a fiduciary responsibility to shareholders to reduce the amount of money they pay in product liability settlements. One common way they do that is to do the things consumers and regulators want them to do: build products according to safety standards, test them, inspect them and continually track them for potential risks -- that is, to avoid liability in the first place.

Another way is to set restrictions on the language their employees use, to reduce the risk that the internal workings of the company will appear unflattering to a jury.

“Some of the words that they put on their banned list would be enough to turn an OK document into a smoking gun,” said Sean Kane, president of Massachusetts-based Safety Research and Strategies, who regularly works with plaintiffs attorneys.

Hundreds of millions of dollars are at stake.

GM estimated in early 2009 that it would cost $921 million to resolve all future product liability lawsuits. That number dropped to $319 million by early 2010 because GM’s attorneys fought for “New GM” to be excused for any accidents and defects that happened during the era of “Old GM,” before its emergence from bankruptcy.

At the start of this year, before the ignition-switch crisis erupted, GM estimated its product liability exposure was up to $690 million.

With the stakes so high, most companies facing product liability lawsuits insist that their employees stick to the facts.

“It’s Legal Advice 101 in every single industry,” a former high-ranking NHTSA official who works as an attorney told Automotive News.

‘Thermal event’

It looks bad that “safety” and “defect” made GM’s list, but “those are the buzzwords in the auto industry,” said the attorney, who asked not to be identified because his clients include car companies. “If you went to a pharmaceutical company, I’m sure their scientists and researchers are coached not to use words like ‘side effect.’”

So the document came as no surprise to people such as Craig LeMoyne, who worked at Ford Motor Co. from 2000 to 2008 as a product development engineer. At one point LeMoyne oversaw a team of 18 engineers for the redesigned 2005 Mustang. He remembers that many of Ford’s long-timers would use jargon to couch the truth in legally acceptable language.

“The classic one at Ford was ‘thermal event,’” said LeMoyne, who now works for an electronics company in suburban Chicago. “Let’s say the brakes smelled like they were burning. Instead of just saying the brakes smelled like they were burning, some of the engineers would say it smelled like a thermal event was happening.”

In his eyes, that was an old habit from decades past, when consumer crusaders such as Ralph Nader attacked Ford over deadly fires in the Pinto compact car. But around 2005, after the Ford Firestone crisis forced a new round of introspection at Ford, the lawyers gave LeMoyne’s team a fresh set of orders: Use ordinary words.

“If you have an issue, say what it is in plain English,” he recalls the lawyers saying. But like GM’s lawyers, they asked the engineers not to use “colorful language.”

Cultural influence

The struggle over semantics is a challenge for management in any business.

Executives have to watch the bottom line. They don’t want employees to put words on paper that will later come back to bite the company. At the same time, they want employees to report any safety problems, because as the GM crisis shows, an ignored problem can be hugely expensive in the long run.

The problem is that words reinforce the culture of a company. How are employees supposed to put safety first when they’re being actively encouraged to disguise the truth in jargon -- to act like problems are less problematic than they are?

Inflammatory statements, Kane said, are a good way to get the attention of people higher up the chain of command. GM says it is trying to strike a balance.

“We encourage employees to be factual in their statements and will continue to work with NHTSA to improve our safety processes,” GM spokesman Greg Martin said in a statement last week. “Today’s GM encourages employees to discuss safety issues, which is reinforced through GM’s recently announced Speak Up for Safety Program.”

Time will tell how far GM will go to change its ways. Encouraging employees to speak up for safety could cause a company to endure some harrowing days in court.

But considering what GM is going through, that may be a risk the company is willing to take.

You can reach Gabe Nelson at gnelson@crain.com.

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