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GM fires 15 at top levels; report on ignition switches 'brutally tough'

Product RecallsGeneral MotorsNew ProductsAutomotive EquipmentNational Highway Traffic Safety AdministrationManufacturing and EngineeringMary Barra
GM CEO Mary Barra fires 15 over fatal ignition switch flaws saying, 'It is simply unacceptable'
Report on failures at GM did not find a conspiracy to cover up the facts

A pervading atmosphere of incompetence and neglect at General Motors led the company to allow a deadly problem to fester for 11 years before anyone acted to correct it. So says a report Thursday morning on the ignition-switch issue that has been linked to 13 deaths -- and possibly more.

GM Chief Executive Mary Barra has fired 15 people as a result of the company-commissioned investigation into why the automaker delayed recalling defective cars. Many of those fired were at the executive level. Five more GM employees were disciplined. 

In the probe, by former U.S. Atty. Anton Valukas, more than 350 interviews were conducted with over 230 individuals at GM and its suppliers. It also reviewed more than 41 million documents to examine why the automaker waited until this year to correct the problem in about 2.6 million Chevrolet Cobalts and other small cars, mostly from the 2003 to '07 model years.

“Overall the report found that, from start to finish, the Cobalt saga was riddled with failures, which led to tragic results for many,” Barra told 1,200 employees at the automaker's Tech Center in Warren, Mich., on Thursday.

The report absolved Barra and other top executives from claims of inaction, noting that the information about the problem did not reach their level of the company until January. It said the switch issue lingered for more than a decade because of poor judgment by some employees and a lack of communication within the company.

“The report highlights a company that operated in silos," Barra said, "with a number of individuals seemingly looking for reasons not to act, instead of finding ways to protect our customers.”

The report did not find a GM conspiracy to cover up the facts or evidence that employees made a trade-off between safety and cost.

“Together, we have to understand that the attitudes and practices that allowed this failure to occur will not be tolerated,” Barra said. “Also, if we think that cleaning up this problem and making a few process changes will be enough, we are badly mistaken. Our job is not just to fix the problem. Our job must be to set a new industry standard for safety, quality and excellence.”

GM still faces ongoing investigations into the ignition-switch problem by the National Highway Traffic Safety Administration, the Department of Justice and Congress.

Congressional panels also are examining why NHTSA didn’t step in to force GM to recall the defective cars. “I won’t be letting GM leadership or federal regulators escape accountability for these tragedies,” said Sen. Claire McCaskill, (D-Mo.)

The chairwoman of the Senate's Consumer Protection Subcommittee said she would hold a follow-up hearing later this summer.

Some saw the report as a whitewash.

"The GM public relations campaign is pitching this report as an independent review. In truth, it seems like the best report money can buy. It absolves upper management, denies deliberate wrongdoing and dismisses corporate culpability," said Sen. Richard Blumenthal (D-Conn.).

In her remarks to GM employees and at a later news conference, Barra said she could not explain why engineers at GM approved a switch for the cars that did not meet the company’s performance standards.

Drivers were killed or injured in the cars because the switch suddenly cut off in certain conditions, such as driving on rough roads or when the driver had an especially heavy key ring, disabling key functions such as the air bags and power steering. At least 13 deaths have resulted, and likely more according to federal regulators.

GM has warned drivers to operate the vehicles with only a single key until they are repaired.

GM had two designs for the switch but went with the less expensive option in 2001, when it was designing the vehicles.

In 2006, GM suddenly started to install the beefier design in the vehicles. But the company didn't change the part number or notify safety regulators that it had made the change, which Barra said should have been the normal procedure.

Barra said those judged to have participated in “misconduct” were among the group of terminated employees.

Among those fired were Ray DeGiorgio, who led the team that developed the switch and approved the later change to the more robust part, and Gary Altman, who directed Cobalt’s engineering team.

“Repeatedly," Barra said, "individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch.”

GM staff mistakenly looked at the switch problem as a “customer satisfaction” issue rather than a safety defect, the CEO said. Engineers noted that drivers were still able to control the cars when the power steering shut down, although operating the vehicle became more difficult. And staff didn’t understand that the shift in the switch also had the affect of shutting down the air bag system.

“I can tell you the report is extremely thorough, brutally tough and deeply troubling,” Barra said. “For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly.”

GM's ignition-switch issue prompted the company to review and change the process by which it decides to recall cars. It now looks at how a problem with one system in the car might cascade into the rest of the vehicle's operation, said Mark Reuss, GM’s global product development chief.

The automaker placed Jeff Boyer in the new position of vice president for global vehicle safety, making him responsible for the safety systems of GM vehicles, evaluation of their safety performance and all recalls. It created a program that recognizes employees for making safety suggestions and speaking up when they see problems.

GM also hired an additional 35 product investigators for safety issues and has issued 29 recalls this year. The company has said it will spend at least $1.7 billion on recall fixes and related issues this year and that the number of cars called back and spending are likely to increase in the coming months.

GM has fixed about 113,000 of the millions of cars with the faulty switches but because of a parts shortage won’t complete repairs on all of the cars until October.

The NHTSA said it was reviewing the report and would "take appropriate action regarding the investigation's findings and GM's corporate reforms as warranted."

Last month the agency fined GM its maximum penalty of $35 million for failing to recall the cars sooner.

Copyright © 2014, Los Angeles Times

UPDATES

7:05 a.m.: This post was updated with additional details about the actions taken Thursday, as well as comments from an industry analyst.

8:06 a.m.: This post was updated with details from the reports findings.

This story was originally published at 6:48 a.m.

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Product RecallsGeneral MotorsNew ProductsAutomotive EquipmentNational Highway Traffic Safety AdministrationManufacturing and EngineeringMary Barra
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