GM Fires 15 Staff Following Probe into Switch Recall

GM CEO Mary Barra Holds Press Conference On Ignition Switch Recall
Bill Pugliano/Getty ImagesGeneral Motors CEO Mary Barra shown speaking to employees before holding a press conference Thursday in Warren, Mich.
By TOM KRISHER and DEE-ANN DURBIN

WARREN, Mich. -- General Motors (GM) said Thursday that it has forced out 15 employees for their role in the deadly ignition-switch scandal and will set up a compensation fund for crash victims, as an internal investigation blamed the debacle on engineering ignorance and bureaucratic dithering, not a deliberate cover-up.

GM took more than a decade to recall 2.6 million cars with bad switches that are now linked to at least 13 deaths by the automaker's count.

Although everyone had responsibility to fix the problem, nobody took responsibility.

"Group after group and committee after committee within GM that reviewed the issue failed to take action or acted too slowly," Anton Valukas, the former federal prosecutor hired by the automaker to investigate the reason for the delay, said in a 315-page report. "Although everyone had responsibility to fix the problem, nobody took responsibility."

GM CEO Mary Barra said more than half the 15 employees forced out were senior legal and engineering executives who failed to disclose the defect and were part of a "pattern of incompetence." Five other employees have been disciplined, she said, without identifying any of them.

The automaker said it will establish a compensation program covering those killed or seriously injured in the more than 50 accidents blamed on the switches. GM said not say how much money will be involved, but a Wall Street analyst estimated the payouts will total $1.5 billion.

Barra called the report "brutally tough and deeply troubling."

The report lays bare a company that operated in "silos," with employees who didn't share information and didn't take responsibility for problems or treat them with any urgency.

Valukas also portrayed a corporate culture in which there was heavy pressure to keep costs down, a reluctance to report problems up the chain of command, a skittishness about putting safety concerns on paper, and general bureaucratic resistance to change.

He described what was known as the "GM nod," in which "everyone nods in agreement to a proposed plan of action but then leaves the room and does nothing."

Valukas exonerated Barra and two other top executives, Mark Reuss, chief of global product development, and general counsel Michael Millikin, saying there is no evidence they knew about the problems any earlier than last December.

Since February, GM has recalled 2.6 million older-model Chevrolet Cobalts, Saturn Ions and other small cars because their ignitions can slip out of the "run" position and shut off the engine. That disables the power-assisted steering and brakes, making it difficult to control the car, and deactivates the air bags.

Trial lawyers suing the company put the death toll at more than 60.

"It's somewhat comforting to realize that they do know that some things were done incorrectly and they're aware of that. They made the appropriate measures to make sure it doesn't happen again," said Ken Rimer, whose 18-year-old stepdaughter, Natasha Weigel, was killed in a 2006 Cobalt crash in Wisconsin.

Last month, GM paid a record $35 million fine for failing to promptly report the bad ignition switches to federal highway safety regulators. Federal prosecutors are also investigating and could bring criminal charges against the automaker and some of its employees.

Deep within the company, engineers and others believed the ignition switch flaw was a "customer convenience" issue rather than a safety problem, the report said. Engineers believed that the cars could still be adequately steered when the engines shut off, and they didn't realize the air bags became disabled -- even after police, academic experts and others outside GM had recognized the problem, according to the report.

Around GM, engineers were instructed not to use words like "dangerous," ''defect" or "safety" when describing problems in writing, which contributed to the lack of urgency in dealing with the problem, Valukas wrote. In addition, some workers told Valukas they did not take notes at safety meetings because they believed GM lawyers didn't want a paper trail.

In 2005, according to documents supplied recently to Congress, GM failed to make a repair of the switch that would have cost just 57 cents.

'Explicit Trade-Off Between Safety and Cost'

In his report, Valukas said he found no evidence that any employee made "an explicit trade-off between safety and cost" in dealing with the switch. But he said there was "tremendous cost pressure" at GM at the time, and he left open the possibility that it influenced the automaker's handling of the problem.

The report could hurt GM in legal proceedings and complicate matters for lawyer Kenneth Feinberg, the compensation expert hired by GM to settle some of the many lawsuits, said Carl Tobias, a law professor and product liability specialist at the University of Richmond in Virginia.

But plaintiffs' lawyers already know most of what's in the report from depositions in previous cases, and Valukas was "careful not to open too much liability exposure," Tobias said.

Under a judge's order, GM is shielded from legal claims from before it emerged from bankruptcy in 2009, and company officials wouldn't say Thursday whether they will use that protection against death and injury lawsuits. Lawyers are trying to overturn the shield, alleging GM deceived the judge.

Barra, who took over as CEO in mid-January, didn't directly answer a question about whether she should have figured out the switches were a deadly problem. Before the took the top job, she was product development chief for three years, and safety reported to her through GM's chain of command.

"I wish I had known, because the minute we knew, we took action," she said.

Sen. Richard Blumenthal, D-Conn., criticized the investigation as "the best report money can buy."

"It absolves upper management, denies deliberate wrongdoing and dismisses corporate culpability," he said.

Barra said Valukas interviewed 230 employees and reviewed 41 million documents to produce the report, which also makes numerous recommendations for handling safety problems more effectively.

Barra has already named a new safety chief and pledged to work quickly through a backlog of potential recalls. As a result, the automaker has recalled a record 15.8 million cars and trucks in North America so far this year.

In addition, GM has put procedures in place to make sure that departments communicate and that safety issues get reported to the top. Barra said people who don't think such problems are being addressed should contact her.

Barra, who testified on Capitol Hill in April but deflected many questions by saying she was waiting for the results of Valukas' investigation, is certain to be called back.

Sen. Claire McCaskill, D-Mo., said she intends to hold a hearing this summer.

"I won't be letting GM leadership, or federal regulators, escape accountability for these tragedies," she said in a statement. "The families of those affected deserve no less."

Barra, a 34-year GM veteran, told 1,000 employees gathered at the automaker's suburban Detroit technical center that the report was "enormously painful."

"I want you to never forget it," she said in a speech that was also broadcast to the company's 212,000 employees worldwide.


Probe Of GM Recall Failure Finds 'Incompetence And Neglect'

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35 Comments

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Iselin007

I guess the people fired will just leave with some fat pensions and feeling real hurt.

June 06 2014 at 12:52 AM Report abuse rate up rate down Reply
Iselin007

I am just curious about the auto brand of those that were fired at GM. The discharged former GM employees probably knew enough to drive something other than one of the effected models.

June 06 2014 at 12:38 AM Report abuse rate up rate down Reply
mchairmanmao

poor America. She dismantles and outsources her industrial infrastructure day by day and then tries to find scapegoats. Time to face up to reality America. But at least you all get to have guns and no abortions. Oh the irony! Spineless!!!!

June 05 2014 at 11:22 PM Report abuse rate up rate down Reply
Neil

Instead of talking about how they've identified and solved the problem, I wish they would get the new ignition switches, along with other parts, to the Dealerships so they can make the repairs and I can get my HHR fixed and back. Talk is cheap, positive action solves the problem.

June 05 2014 at 9:38 PM Report abuse rate up rate down Reply
elendil3136

How many vice-presidents were fired? NONE! While many who were fired were no doubt complicit, SOMEBODY close to the top of the food chain had to sign off on this. Once again, senior management gets off scott free!

June 05 2014 at 8:24 PM Report abuse -1 rate up rate down Reply
1 reply to elendil3136's comment
dopey.obamite

You mean the VPs who should have fired these engineers and lawyers a long time ago?

June 05 2014 at 11:35 PM Report abuse -1 rate up rate down Reply
raidrmik67

I can't believe I never had an ignition problem on my Saturn with all the crap I have/had on my key chain.

June 05 2014 at 8:09 PM Report abuse -1 rate up rate down Reply
thefacts22

The same pattern of incompetence of this Regime.We will need a telephone book to keep track of this regime scandals.I own an HHR 2008,against my will,as my wife love it and decided for it.No doubt that the car is cute and many people ask "is that really a Chevy"....Soon I will take it to comply with the recall,but now was told the parts will not arrive until October....There are other issues with HHR,like defective electric steering,front noise etc.....will see

June 05 2014 at 8:03 PM Report abuse -1 rate up rate down Reply
2 replies to thefacts22's comment
jojosdixoutcider

sounds like 2000-2008

June 05 2014 at 11:16 PM Report abuse rate up rate down Reply
janhuny

My gear shifter (2006 HHR) has a broken plastic part and a quick Internet search will show that this was very prevalent. No recall and the replacement is over 400 bucks plus install. When the plastic part broke it will no longer release the key from the ignition switch. To release the key I have to push a small button inside the steering column to release. The broken part also interferes with the park neutral condition and requires keeping foot on brake to start the vehicle or it will lurch forward. No way will I pay over 400 bucks to have this fixed when the car is worth 3K max. Part broke after 5 years. Who designs a part to be made of plastic that gets extreme use. And before anyone thinks I'm ragging on GM, I worked 33 yrs for GM. I will drive nothing but GM and I think both Barra and Mark Ruess are doing a hell of a job. They were both handed a lot of crap by previous people. The government needs to investigate Wagoner. He was sweating at the Senate hearing for a reason. Rick Wagoner walked away with a 20 million dollar pension and left in his wake a company in financial disaster. Many GM employees who had worked many many years and had GM stock in their 401K took a major hit because he ran the company into the ground. When GM filed bankruptcy the common stock was wiped out but not Wagoner's pension.

June 06 2014 at 3:44 AM Report abuse rate up rate down Reply
militiaman2013

This also gets the former largest shareholders off the hook Obama and Biden, LMAO did you expect it to turn out any other way in the Wild West Obamanation.

The Engineers do exactly what upper Management specifically Barra, tell them to do.

As a Ford insider, the regulars here know I been preaching for over a year about the Ford Escape, then days a go Ford issued a recall, but Ford still did not address or warn anyone of the major problem with the Escape, which is that many of the Escapes on Ford's test tracks have burst into flames and they don't have a fix for this problem yet.

The solution, don't tell the public. As far as the so-called Engineers, their not Educated Engineers rather low wage yes-men who are told what to say and do and respond like puppets on a Directv commercial. The Engineers if fact point out the problems to upper management and upper management then gives the Engineer verbal orders to continue producing the bad parts and the Engineer has put his/her signature on the memo so that if a GM type fiasco unfolds all the Barra's get away clean even though they gave the verbal command to continue producing the faulty product.

June 05 2014 at 6:39 PM Report abuse +1 rate up rate down Reply
1 reply to militiaman2013's comment
dopey.obamite

You haven't been here over a year, and last week was the first time you've brought it up.

The only Ford insider you are is inside the trunk of a Ford. Just get yourself a hooby or something already...anything but your constsnt whining and victimhood you put on a financial blog.

June 05 2014 at 10:57 PM Report abuse rate up rate down Reply
1 reply to dopey.obamite's comment
dopey.obamite

Sorry...a hobby, and constant... .... ....

June 05 2014 at 11:38 PM Report abuse rate up rate down
blastfrom

The following is an excerpt from her bio: "Prior to her current position, Barra served as Executive Vice President, Global Product Development, Purchasing & Supply Chain since August 2013, and as Senior Vice President, Global Product Development since February 2011. In these roles, she was responsible for the design, engineering, program management and quality of GM vehicles around the world." AND while with the company for 34 years and having the above positions, she had no knowledge????? Sounds fishy...........

June 05 2014 at 6:29 PM Report abuse -1 rate up rate down Reply
smithbugrun

Barra comented that the employees thought the problem was a customer disatisfaction not a safety item. GM is well known for not caring about customer satisfaction. Due to that thinking they don't care about any issue with their products. I found that out with my first and last GM truck I bought in 1999. Every time I left the service Dept. at the dealers I could see them high 5ing. They are junk and this is the reason, THEY DON"T CARE ABOUT THE CUSTOMER. All you brand loyal nuts need to wake up and put this company out of business.

June 05 2014 at 5:09 PM Report abuse +1 rate up rate down Reply
1 reply to smithbugrun's comment
militiaman2013

We already put it out of Business Obama and Biden put it back in!!!!!!!!!!!

June 05 2014 at 6:43 PM Report abuse -1 rate up rate down Reply