GM CEO: 15 fired over ignition

switch recalls; probe shows

pattern of failures, no coverup
GM CEO Mary Barra revealed the findings of an internal probe into why the company did
not recall faulty ignition switches earlier and detailed the company's actions, including firing
15 employees.
BY MICHAEL A. FLETCHER June 5
A pattern of incompetence and neglect led to the long failure to recall
millions of General Motors small cars over a deadly ignition switch defect, but
there was no conspiracy to hide the problem, the companys chief executive
said Thursday.
Outlining the results of an internal probe, 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.
But 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 investigation revealed an ingrained
corporate culture in which employees failed to take responsibility for the
ignition-switch problem or treat it with urgency. Investigators misdiagnosed
it, and information that could have helped unravel the mystery remained
trapped in GMs bureaucratic silos, even as accidents and fatalities mounted.
The report 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 GMs 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.

Engineer Mark Hood shows the ignition assembly, which has a faulty 2005 ignition switch
(black piece at left). McSwain Engineering Inc. helped conduct engineering investigations.
The failure analysis resulted in the recall of 1.65 million GM vehicles. (Michael
Spooneybarger/Reuters)
Barra, a GM lifer who took over as chief executive in January, has vowed to
break that pattern, which contributed to the companys decline and eventual
2009 bankruptcy and federal bailout.
Despite the ignition switch debacle, GM sales have been strong in recent
months and its future has appeared bright, continuing a trajectory the
company has been on since it emerged from bankruptcy.
GM now logs one-third of its sales in China, the worlds fastest-growing auto
market. And this week, GM reported that in May it had its best sales month in
nearly six years.
But for the company to continue that momentum, analysts said, Barra and
other leaders must persuade consumers that GM has shed its old ways.
It is a real trick to say we had a decade of a pattern of incompetence and I
wasnt a part of it, said Daniel G. Hill, president Ervin Hill Strategy, a crisis-
management firm. Part of their effort is to convince consumers that the new
GM is not the old GM.
The report said that GM had problems with the ignition switch from the
beginning. The part never met GM specifications, but an engineer approved it
for use anyway a decision that complicated later efforts to solve the
problem.
At first, the parts electrical system was so balky that it had to be redesigned.
Then the switch was found to not have enough torque, allowing it to be
accidently switched off, sometimes when a drivers knee hit the steering
column or a key ring was heavily weighted down.
Complaints flowed almost from the start. The lead engineer for the part, Ray
DeGiorgio, even once called it the switch from hell, in a missive to parts
supplier Delphi, the report said.
DeGiorgio, primarily concerned about the electrical problems that caused the
switch to have trouble starting cars in cold weather, repeatedly pushed against
efforts to address the torque problem, which he did not know posed a danger
to drivers, the report said.
In 2006, DeGiorgio one of the employees dismissed by GM approved a
new design for the part without documenting the change or alerting executives
who could have ordered a recall, according to the report. In a 2013 deposition
taken in connection with a suit against GM, DeGiorgio denied making the
change. The report said he has steadfastly insisted that he simply forgot about
it.
DeGiorgio could not be reached for comment for this article. But in his 2013
deposition, he said his son drove a 2007 Cobalt that he helped him buy to
commute to school. There is no way I would have done that I gave this car
to my kid had I had any reservations, DeGiorgio said.
The change largely addressed the defect in later-model GM small cars, another
factor that misled the company about the nature of the problem.
Still, the report concluded that GM should have been able to solve the problem
but that the companys efforts at investigating it were neither diligent nor
incisive.
The company did not push harder to address the problem, in large 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 GM viewed the issue not as a safety problem but
simply as 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.
GM officials continued to misunderstand the problem even as accidents and
legal settlements mounted, and outside investigators began to see the switch
problem as a pressing safety issue, the report said.
Describing the reports findings in a town hall meeting with 1,200 GM workers
at a GM technical facility in Warren, Mich., 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, Barra said.
GM has shared the report with federal safety officials and members of
Congress. Rep. Fred Upton (R-Mich.), whose committee has been
investigating the recall, 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,
also promised another hearing.
Im looking forward to getting a full briefing from Mr. Valukas. I wont be
letting GM leadership, or federal regulators, escape accountability for these
tragedies, she said.
The report was released after the ignition-switch problem triggered a series of
government investigations and lawsuits that prompted Barra to restructure
GMs 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.
And the 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 maximum 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.
The company also faces 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.
Karl Brauer, an analyst with the automobile research firm Kelley Blue Book,
said GM is showing signs that the ignition-switch recalls will not do lasting
damage to its sales.
The company on the product side has done a very good job over the last four
years, Brauer said. Consumers are more impressed by that than they are
concerned by the recall issues.
In a conference call with analysts to discuss the report, Barra declared that the
ignition-switch problems are not characteristic of current-day GM.
We look at this as a unique series of mistakes that were made over a long
period of time, she said.

I, as a Marketing Student, first and foremost, firing 15 employees and most of them were
senior executives isnt fair without any deeper investigation made. The technical matter that
deals with the ignition, safety and security of our consumers is the main issue.