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GM fires 15 employees, blames "incompetence and neglect" for delayed ignition recall

Motoramic
GM fires 15 employees, blames "incompetence and neglect" for delayed ignition recall

GM CEO Mary Barra addresses GM employees

General Motors' own probe into how it delayed and denied an ignition switch defect in 2.6 million cars linked to at least 13 deaths found "incompetence and neglect" at many levels, leading the automaker to fire 15 employees and discipline five more for their roles in the 11-year saga.

The results revealed by GM chief executive Mary Barra in an employee meeting today exonerate top GM management, blaming instead a bureaucratic culture that was worried more about blame than responsibility, and unable or unwilling to see how the problem might have put owners in danger.

"No one took responsibility, (and) there was no demonstrated sense of urgency right to the very end," Barra said. "No one raised the issues to the highest level of the company. From start to finish, the Cobalt saga was riddled with failure which led to tragic results for many."

The 315-page report compiled by Chicago attorney Anton Valuskas, released by federal officials, describes a decade-long miasma of puzzles, deceit and missed opportunities inside GM to identify that a Cobalt or Saturn Ion could crash without air bags due to the ignition switch. It finds that after a key GM engineer made changes to the switches in 2005, he repeatedly misled coworkers about the part — but that GM also ignored or overlooked reports from outside the company.

Valukas paints a portrait of overworked, cost-concerned engineers who would haltingly pursue a "root cause" for complaints of Cobalts shutting off and other problems without resolution, through umpteen committees and a blizzard of Powerpoint slides. (At one point, GM engineers used a fish scale to test Cobalt switches in a Michigan junkyard.)

Meanwhile, in February 2007, Wisconsin State Trooper Keith Young filed a crash report on a fatal Cobalt accident, finding that the air bags did not fire becuase the key had been josted into the "accessory" position — the first time the link had been established, and a clear warning sign. Valukas found Young's report was never seen by GM engineers or lawyers until this year — and that even when some employees finally understood that the switch could be deadly in 2012, GM let its probe drag on without resolution.

"The structure within GM was one in which no one was held responsible and no one took responsibility," Valukas' report said.

Valukas, who confirms Barra's comments that the problem was never raised with top executives, also recorded what Barra herself called the "GM nod:" "When everyone nods in agreement to a proposed plan of action, but then leaves the room and does little."

Barra read excerpts to several hundred GM employees at GM's tech center in Warren, Mich., calling it an indictment of the company's culture toward the defect. Barra said of the 15 employees fired, "some were removed because of misconduct or incompetence, others didn’t do enough."

There was a "pattern of management deficiency and misjudgments, often based on incomplete data, passed off as business as usual," Barra said. "We misdiagnosed the problem from the very beginning."

GM engineers first noted a problem with the ignition switches in 2001, but never asked top management for an official recall until late last year. GM has since paid a $35 million fine to federal regulators and agreed to years of close monitoring of its recall process, with Barra noting today that more recalls would be likely. The company also remains under investigation by congressional committees and the U.S. Department of Justice.

Barra said two engineers who had been put on leave, Ray DeGiorgio and Gary Altman, were among the 15 let go. She declined to name the others.

Barra, who headed vehicle development for three years in the period when the defect was neglected, told reporters that the Valukas report confirmed no evidence of a cover-up by top company leaders. Former GM CEO Dan Akerson told Forbes last week that he was not aware of the issue during his tenure.

"I wish I had known," Barra said. "The minute we knew, we took swift action."

Barra reiterated that the company would set up a fund to pay victims of the faulty switches in Chevy Cobalts and other models; GM said it would begin taking applications for that fund in August, but did not provide other details. She also vowed to act on eight unspecified groups of recommendations from the Valuskas probe, and urging GM employees to remember the failures that led to the day.

"This report is extremely through, brutally tough and deeply troubling," Barra said, a three-decade veteran of the automaker who started working as a factory intern before college. "I was deeply saddened and disturbed."

But, "this isn’t about our feeling and its not about our egos."

While GM has linked 13 deaths to crashes where the cars accidentally shut off and the air bags didn't fire, lawyers, safety advocates and federal regulators have said the numbers could be far higher. But establishing the exact number will be impossible without black-box data from every suspicious crash.

GM has declined to reveal the name of one victim, and has gone to court to keep the lawsuits from reopening its 2009 bankruptcy case. Under that bankruptcy, GM shed liabilities for crashes that happened before then, and attorneys for those injured say the company misled the court when it argued for that step.

GM has set aside $1.7 billion so far this year to cover more than 14 million vehicles recalled for a variety of problems, part of a surge of issues that the automaker revistied in the wake of the faulty ignitions. It has yet to say how much it will pay into the compensation fund, to be run by advisor Kenneth Feinberg, for those hurt by the vehicles. And it has hired its first global vice president for safety, Jeff Boyer.

Despite the public-relations nightmare of the case, GM hasn't seen buyers walking away. In May, GM had it's best month of sales in the United States since August 2008 — boosted in part by its offer of employee-pricing discounts to owners of Chevy Cobalts and other models affected by the recalls.