Lawmakers press Barra on unheeded 2005 warning, culture change
THE GM RECALL

GM, in shift, deems stalling a safety issue

Lawmakers press Barra on unheeded 2005 warning, culture change

“Anytime a vehicle stalls now, we consider it to be a safety issue," GM CEO Mary Barra told a House subcommittee today.

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General Motors CEO Mary Barra told members of Congress that the automaker now considers unexpected vehicle shutoffs to be a safety concern, reversing a policy that had treated complaints about the Chevrolet Cobalt as low priority.

“Anytime a vehicle stalls now, we consider it to be a safety issue,” Barra said Wednesday during a House Energy and Commerce subcommittee hearing.

Her statement contrasts with the approach that GM engineers used a decade ago, when they viewed stalling Cobalts and Saturn Ions as a matter of customer inconvenience and studied it with little urgency until they established a conclusive link between the ignition position and airbag deployment.

Her testimony also signals that the pool of victims eligible for a share of the compensation fund GM is establishing could expand significantly by taking into account accidents where the switch played a role, even if airbag failure wasn’t a factor.

‘I’m thinking big recall’

The hearing revealed evidence that GM discounted a report nine years ago from one of its employees about a similar issue affecting millions of other cars. The employee alerted engineers that a 2006 Chevrolet Impala suddenly shut off after she drove over a rough section of road at 45 mph.

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

But GM didn’t recall the Impala until Monday as part of a broader action involving ignition keys. It was indeed a big recall, covering 3.4 million vehicles from the 2000 through 2014 model years.

Members of the congressional panel cited that recall, and 39 others that GM has announced since acknowledging the Cobalt’s faulty ignition switch in February, in arguing that GM’s safety deficiencies are widespread and not easily fixed.

“A culture that allows safety problems to fester for years will be difficult to change,” said Rep. Fred Upton, R-Mich., the Energy and Commerce Committee chairman.

Delphi not fully cooperative

Some on the panel accused GM lawyers and other employees of intentionally hiding a deadly safety defect, discounting parts of the 325-page report by former federal prosecutor Anton Valukas, who concluded there was a pattern of incompetence but no cover-up.

"It smacks of a big cover-up to me,” said Rep. Phil Gingrey, R-Ga.

Valukas testified that GM gave him unfettered access to its employees for his three-month investigation but that Delphi Automotive, which manufactured ignition switches for the Cobalt in Mexico, refused to fully cooperate, and that trial lawyers involved in cases against GM didn’t respond to his correspondence.

His report revealed numerous missteps by GM employees in various divisions of the company that allowed the faulty switches to remain in millions of cars, contributing to at least 54 crashes and 13 deaths.

GM dismissed 15 employees after its top executives and board of directors reviewed the report on June 2, Barra said. That’s not enough, some on the panel countered.

“Reading the report, it looks like a lot more than 15 people should have been terminated,” said Rep. Michael Burgess, R-Texas.

Among those let go was Ray DeGiorgio, the engineer who approved the switch in 2002 and signed off on a redesign in 2006 without documenting it or telling any of his colleagues, the Valukas report concluded.

GM has said DeGiorgio also oversaw the switches in the cars that were recalled this week. DeGiorgio was among those who received the October 2005 e-mail from Andres about the Impala shutoff.

Barra, when questioned about DeGiorgio’s statements to investigators, responded bluntly: “I don’t find Mr. DeGiorgio credible.”

DeGiorgio ‘made the decision’

Congressional staff members learned that DeGiorgio met with his superiors around February 2002 to inform them that the ignition switch for the Ion, which was months away from beginning production, would be delayed. But it’s unclear what the result of that meeting was, as the Ion ended up being shipped to dealers that fall.

Among those named as attending the meeting were Gary Altman, the Cobalt’s program engineering manager, who was also among those fired this month. But Barra defended others who would have been present at the 2002 meeting or may have known about complaints later on, including Doug Parks, who was GM’s chief engineer for small cars and is currently vice president of global product development.

“Mr. DeGiorgio ultimately made the decision to change the part,” Barra said. “There’s 30,000 parts on a car. The chief engineer has to count on the vehicle engineers doing their job.”

Risk of stalling in traffic

Barra was flanked in the hearing room by GM President Dan Ammann and Bob Ferguson, its former head lobbyist who recently moved back to Washington to help steer GM’s response to the recall crisis.

She was repeatedly asked about GM’s plans to compensate victims who were injured in crashes and the families of those killed. She said disaster compensation expert Ken Feinberg, whom GM hired to administer a compensation fund, will have full authority over the program and that the company will not place a cap on the total amount of money he can pay out.

Barra declined to discuss who might be eligible to receive compensation. The 54 crashes GM has linked to the defect so far involved a frontal impact and a lack of airbag deployment caused by the ignition switch slipping out of the “run” position.

But the lawmakers, lawyers and safety advocates have argued that the criteria should be broader, given the potential consequences of a vehicle suddenly stalling in traffic. Thus, GM’s classification of stalling as a safety issue on its own could be significant.

“We want to capture every single person who suffered serious injury or lost a loved one — every single one,” Barra said. “If the ignition switch was part of the issue, we want them in the program. We want to get everybody that’s affected.”

But Barra said GM would continue to assert that its 2009 bankruptcy shields it from liability in the dozens of lawsuits filed by owners claiming that the recall has reduced the value of their car.

In 2005, GM admitted publicly that Cobalts could turn off unexpectedly, but it asserted that the car was not defective because it said the driver still could maintain control.

“That’s just insane, isn’t it?” Rep. Diana DeGette, D-Colo., asked Valukas.

“I won’t use the word ‘insane,’ but I’m troubled by that,” he replied.

GM’s Web site for the ignition recall says dealers had repaired 199,457 of the 2.6 million vehicles it covers. Barra said about 400,000 repair kits had been produced. But despite widespread complaints about the pace at which dealers are able to handle customer requests, Barra said any backlogs should be alleviated soon.

“The challenge is getting the customer to come in and get the vehicle repaired,” she said.

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

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