Barra promises company will set new industry standard for vehicle safety
THE GM RECALL

House panel blasts GM's 'culture of secrecy'

Barra promises company will set new industry standard for vehicle safety

GM CEO Mary Barra, left, vowed the company will set a new industry norm and standard for vehicle safety. Attorney Anton Valukas, right, who conducted an internal probe of the Cobalt recall, told House members today it was "a series of individual and organizational failures."

Photo credit: REUTERS
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DETROIT -- General Motors CEO Mary Barra faced intensive questioning from a House subcommittee for nearly three hours today over the slow recall of defective ignition switches, with lawmakers cutting off her answers and asking whether she can truly change the company’s culture. Some members of the subcommittee reprimanded the company for a "culture of secrecy."

Barra told members of the panel that the automaker has already taken numerous steps to address safety defects more quickly and that she “will not rest” until GM has fixed the “deep underlying cultural problems” that allowed a deadly flaw in the Chevrolet Cobalt to fester for more than a decade.

"We are currently conducting what I believe is the most exhaustive, comprehensive safety review in the history of the company," Barra told the panel. "I want this terrible experience permanently etched in our collective memories. This is a tragic problem that never should have happened. And it must never happen again."

In her opening remarks, Barra vowed GM will set a new auto industry norm and standard for vehicle safety.

“I know some of you are wondering about my commitment to solve deep, underlying cultural problems uncovered in the report,” Barra told the subcommittee. “The answer is simple: I will not rest until these problems are resolved. As I told our employees, I am not afraid of the truth. And I am not going to accept business as usual at GM.”

Barra’s return to Capitol Hill, 11 weeks after telling House and Senate panels investigating GM that she could not yet answer many of their questions about the Cobalt recall, follows the release of an internal report that uncovered what she called “a pattern of incompetence and neglect.”

It comes after GM recalled 3.4 million more vehicles on Monday for another ignition problem similar to that in the Cobalt. GM has now recalled more than 20 million vehicles in North America this year.

Barra, accompanied by several GM executives, including President Dan Ammann and Mark Reuss, the company's head of global product development, faced tough questions from the start of the hearing.

Rep. Tim Murphy, R-Penn., questioned whether GM’s culture could be transformed simply by dismissing 15 people from among its more than 200,000 employees.

GM's problems go "well beyond just one rogue engineer," said Rep. Jan Schakowsky, D-Ill. Fred Upton, R-Mich., suggested that an internal report overlooked stalling-related safety concerns.

“This latest recall [on Monday] raises even more questions about just how pervasive safety problems are at GM,” said Upton, chairman of the House committee holding today’s follow-up hearing.

“This is not just a Cobalt problem," Upton said. "Drivers and their families need to be assured that their cars are safe to drive. Has the company identified all potential problems? And has GM taken all necessary actions to fix the issues?”

Upton read from a 2005 e-mail from a GM engineer who took an Impala on a test drive and experienced stalling.

Laura Andres described hitting a pothole at 45 mph and the sedan shutting off. That would be a big concern to any customer on I-75 in rush hour traffic with kids in the back seat, Andres said.

‘Big recall’

“I think this is a serious safety problem, especially if this switch is on multiple programs,” Andres said. “I’m thinking big recall.”

The Impala was recalled two days ago, Upton noted and Barra confirmed. The document suggests GM employees considered engine stalls to be a serious safety issue, contrary to the findings of the company’s internal report, Upton said.

Rep. Diana DeGette, D-Colo., said it is "frankly alarming" that the GM report released earlier this month found that top executives were not made aware of the deadly ignition-switch flaw for years, even though there was widespread evidence among lower-level engineers and lawyers.

"This is nothing to be proud of," DeGette said. She said GM's "culture of secrecy" must be changed through more than structural and management changes.

Several members of the committee also said they are concerned that the number of recalls connected to ignition-switch issues continues to grow.

Barra said again today she has committed the automaker to act on all 90 recommendations from former prosecutor Anton Valukas, who conducted the internal investigation of the Cobalt recall.

Valukas also testified today.

He told the committee that, although he found numerous examples of missteps by GM employees, “government officials (and perhaps judges and juries)” will have to determine whether anyone should be held liable in any criminal or civil matters, according to his prepared testimony.

“Throughout the decade it took GM to recall the Cobalt .... there was a lack of accountability, a lack of urgency, and a failure of company personnel charged with ensuring the safety of the company’s vehicles to understand how GM’s own cars were designed,” Valukas said during his testimony.

“We found failures throughout the company -- including individual errors, poor management, byzantine committee structures, lack of training, and inadequate policies.”

Valukas, responding to a question from Rep. Phil Gingrey, R-Ga., on why it took so long for the recall, said "I don't have a good answer."

Barra: Good engineering requires that everything be fully documented.

Photo credit: BLOOMBERG

Paying compensation

Barra told the committee that GM soon plans to establish a plan to compensate crash victims and the families of those killed.

Ken Feinberg, the disaster compensation expert GM has hired to administer the plan, has been given “full authority to establish eligibility criteria for victims and determine compensation levels,” Barra said, adding there will not be a cap on the compensation fund.

GM expects Feinberg to begin accepting claims Aug. 1, she said.

GM fired 15 employees in connection with the Cobalt recall, including Ray DeGiorgio, the engineer who approved the car’s ignition switch even though it did not meet GM’s own specifications.

"It looks like a lot more than 15 people should have been terminated," Rep. Mike Burgess, R-Texas, said based on his reading of the Valukas report.

A weak spring in the switch allows the key to turn out of “run” mode while the car is moving, cutting the engine, power steering and airbags. GM has linked the defect to 54 crashes and 13 deaths. It has recalled 2.6 million cars for the problem since February.

GM says DeGiorgio also was responsible for the ignition switch in the 3.4 million more cars it recalled Monday, including the Chevrolet Impala, Buick Lucerne and Cadillac DTS. The company says it knows of eight injuries in six crashes that may be related to the problem, but no fatalities.

GM said it plans to “rework or replace” the keys in those vehicles, using a solution very similar to what it offered starting in 2005 to owners of the Cobalt and Saturn Ion. At that time, though, it divulged the solution only through a technical service bulletin sent to dealers, rather than by issuing a recall and publicly notifying all of its affected customers.

The solution involves putting a small plastic insert into the slot of the cars’ keys, which GM says will prevent a heavy key ring from pulling downward on the edge of the key and moving the ignition into “accessory” mode when the car experiences a jarring event, such as running over a pothole.

As part of the original recall announced in February, Barra said today that more than 400,000 replacement switches have been sent to dealers for repairs.

"The challenge is getting the customer to come in and get the vehicle repaired," she told members of the panel. "I can't be more proud of how our dealers are supporting the customer."

Reuters and Bloomberg contributed to this report.

You can reach Nick Bunkley at nbunkley@crain.com. -- Follow Nick on Twitter

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