Skip to comments.Five Takeaways from the GM Safety Debacle
Posted on 04/10/2014 9:04:06 AM PDT by Kaslin
Mary Barra, CEO of General Motors, was called before Senate and House Committees last week to explain why a faulty ignition switch, responsible for at least 13 crash deaths, was not recalled for several years in vehicles manufactured by GM.
Barra, who served as Executive Vice President for Global Product Development, Purchasing and Supply Chain until January, told members of Congress that she had no knowledge of the switch problem prior to the recent recalls.
Members of Congress were left frustrated. Neither Barra nor federal regulators provided good answers as to why the vehicles were not recalled sooner and the faulty part continued to be installed in GM vehicles for so many years.
Here are five takeaways from the hearings and what we know so far from the actions of GM and government officials.
1. The GM bailout failed and $10 Billion in Taxpayer Money has been squandered
Starting in 2009, the U.S. Treasury put $51 billion into General Motorsthrough loans and stock purchasesand ultimately lost $10 billion. Part of President Obamas strategy to put GM through quick wash bankruptcy, this left most of the existing management in place.
Managements mediocre commitment to quality and safety helped put GM into financial trouble a decade ago, and now we see that problem continues unabated.
Had GM been forced through conventional bankruptcy reorganization, private investors would have replaced much of the existing senior management with more customer focused leadership. Better quality control systems to guard against episodes like the ignition switch scandal could have saved lives.
2. GMs culture is broken. The company cant make reliably safe cars
GM has heavily layered and highly compartmentalized management and product design structures. Problems like the ignition switch can be discovered by GM engineersas the result of customer complaints or tragic accidentsbut go unnoticed by other units and senior leadership.
All this results in top management left unaware of tragic defects, and the public driving unsafe vehicles that should have never been put on the road.
3. Theres not much accountability for bureaucrats at the Obama White House
The National Highway Traffic Safety Administration was aware of the ignition switch problem as early as 2007 but took no concrete action to protect drivers and passengers.
President Obama was quick to hold investors and company officials accountable after the 2010 BP Horizon disaster, but not nearly enough happened to the government officials charged with overseeing the project and who turned a blind eye or were simply lazy.
Now, members of Congress from both parties are livid with NHSTA about its lax response to the GM ignition switch problem, but the White House is not rushing to get to the root of accountability at NHTSA or replace the administrator.
4. The safety of all GM vehicles is now in question
The first three months of 2014, more than six million GM vehicles were recalled to repair product defects. Of 23 auto brands ranked by Consumer Reports for qualityChevrolet and Cadillac are 19 and 20. And the consumer watchdog only recommended for purchase about one-quarter of models produced under those nameplates, even before this scandal broke.
If Barra did not know about the ignition switch problem in her position heading product development, purchasing and global supply chain management, what other safely issues is she unawareor is she aware but not yet revealing?
Until she can certify all GM products are free of suspected but unpublicized safety defects, it is irresponsible to put a child in a GM vehicle.
5. US media bias is whitewashing the presidents culpability
In 2008, I testified before the Senate Banking Committee that a federal bailout of the automakers would be a grave mistake.
Subsequently, after the industry recovered to profitability, I was repeatedly called by journalists asking if I would care to recant my statements.
Now, the failure of the bailout to break the GM culture of complacency toward poor quality and inattention to safety has been fully demonstrated by the ignition switch scandal. But I am not hearing from those progressive advocates of the Obama administration in the Fourth Estate.
Markets, not government ministries, should be left to discipline incompetence but that does not seem to happen in Barack Obamas America. Instead, we simply quick wash insolvent companies, subsidize them and let incompetent managers continue to prey on consumers.
Did they fix the product quality and business issues that forced them into bankruptcy in the first place? I argue no because they didn’t have to — the taxpayers bailed them out.
If they had gone through bankruptcy, they would have been forced to clean house, streamline, and become efficient.
On top of safety and basic build quality, someone at GM has lost their eyesight. Just looking at one of those brand new Chevy pickups in the parking lot. Only one word for it. U.G.L.Y.
I don’t know who thought that look was a winner but they need their head and their eyes examined by professionals.
6. NEVER buy a GM car.
Supporting Unions and a Nationalized Socialist company is unAmerican.
Correct me if I am wrong; but, didn’t GM get a government bailout during the Reagan Presidency?
The current line of Chevy/GMC pickups make the 1949 Dodge pickups and light trucks look positively handsome.
And that was hard to do.
“In 2008, I testified before the Senate Banking Committee that a federal bailout of the automakers would be a grave mistake.
Subsequently, after the industry recovered to profitability, I was repeatedly called by journalists asking if I would care to recant my statements.”
Didn’t they use TARP money to pay off the loan? If true, not exactly worthy of a “recant.” Why? Because all they did was shuffle money around and didn’t address the fundamental problems that forced the bankruptcy in the first place.
2. GMs culture is broken. The company cant make reliably safe cars
I HATE GM, but this demand for perfection is laughable.
“6. NEVER buy a GM car.”
This is all any of us need to know. GM products have been crap for years, surpassed only by Chrysler products (which, to be fair, don’t have any major safety defects to speak of).
To do so would have meant two things:
Spending money to fix the problems, including those in existing vehicles.
Admitting there was a problem and letting the PR chips fall where they may.
Admitting there were unsolved issues would take a back seat to the image of shining success of the Obama regime.
How typical, someone decided to double down again, regardless of reality. I sense a pattern, here, where reality is twisted for the sake of the image and the press plays along.
They did hire the 1st female CEO to take the fall though.
If things don't go well for her, she'll get a NICE golden parachute thanks to American taxpayers.
And our opinion of GM was reinforced last year when we tried to get my Dad's Jimmy running so that we could sell it.
It only had 98K miles and was having serious problems. The GM repair tech wanted to rebuild the engine. Lol. We refused and sold it for pennies. Turns out the that “computer chip” wasn't working properly — we found this out from the people that we sold it to. IMO, the GM techs are boobs. Same with the rest of the company.
That is always the issue with a business. The cost trade off of admitting that you were wrong versus hiding it or ignoring it and hoping that it will go away.
I have little tolerance for GM, though. I have had a lot of problems with them in the past.
Worst of all, we Americans are all “investors” and so we have a lot more of a right to complain than, for example, Toyota, etc.
President Reagan bailed out Chrysler and Harley Davidson
Absolutely correct. Somebody ought to sit down and figure out how many trillions of miles these 1.6M cares were driven and thus the deaths per mile.
Then go ahead and say it's unsafe to drive 10 miles to the store when the chance of a fatal accident is one in 1,000,000 or whatever it might be.
Meanwhile we cheerfully ignore much, much greater risks to children and others because we're used to them.
Except that when the issue first arose, and should have been dealt with, Obama was just a nobody in Illinois.
OK, ran some numbers myself.
Let’s assume these cars were driven an average of 100,000 miles, possibly high, but not unreasonable.
That means they were driven a total of 160,000,000,000 or 160T miles. Which means somewhere around 12B miles per fatality.
Sounds pretty darn safe to me.
Despite his having claimed a Kenyan origin in his early days, no one wanted to look at the NBC issue and declared us all “birthers”. Sometimes a conspiracy theory is just a conspiracy.
6. GM-Bailout money is union money is democRat money.
It sure is
That's 13 deaths that are now known about & one problem now known about. It's not perfection being sought -it's ethics & accountability. On those counts GM fails miserably.
Normally, market forces penalize failure & reward success. In the case of GM a corrupt administration bailed out a corrupt automaker's unions & operations. NOW maybe the marketplace will put GM & its unions where they belong -the garbage. However, I doubt that will happen because of the Obama bankruptcy of GM that rewarded the failure.
Thing is, it is not a problem. It worked. Extremely well. Better than five nines well.
That's a matter of perspective. It worked well for the idiots that ran GM into the ground, it worked well for the unions, & it worked well for Obama's political propaganda machine.
It did not work well for the stockholders zeroed out, nor the bond holders & creditors cut out of the court proceedings financially & operationally. It did not work well for conservative suppliers & conservative dealerships that were left for dead.
The market should have had input into and in some cases decided what an acceptable recovery plan was and what cuts had to be made where. Instead the Leftist Obama the free market idiot sat on his throne bolstered with taxpayer cash & dictated how properties were to be dispersed and what recovery plan was acceptable.
What happened here is that GM failed and surrendered to the market THEN Obama came in and negotiated the terms of the surrender his way rather than how the market & rule of law would have.
It worked well for 1.6 million owners as well.
But I’m focusing on the single point. The ignition switch. I’ve never been a fan of GM since I bought my brand new 1980 Buick Skylark. I learned then that their approach to cars was what we in IT call the TIP methodology: Test In Prod.
The design defects in that care were so numerous that a few years after I dumped it, I started working at a place where I guy had one sitting in his garage pending a lawsuit with GM. He had an 8x10 piece of paper full of two collumns of design problems the car had. Mine had suffered from the exact same list - everything from the wipers intermittently refusing to work to the brakes failing to keep the car from rolling.
I swore I’d never buy another GM product when I got rid of that car.
In 1983 Reagan supported raising tariffs on foreign motorcycles to give HD time to breath. Again, no federal money was given.
Thanks for the clarification.
Now GM has been fined $35 million over safety lapses.
Federal regulators have hit them with this fine.
Who has been running GM? The same govt.
Guess where the money will come from to pay the fine?
All for show.
Nothing will change.
In a sane business environment, GM would have been left to fall, reorganize and come back stronger. But they have to protect their union money laundering operation above all else.