Lawmakers ask GM boss if she can fix company culture
House • Investigation finds pattern of “incompetence and neglect” inside GM.
Published: June 18, 2014 07:39PM
Updated: June 18, 2014 08:00PM
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General Motors CEO Mary Barra listens as she testifies on Capitol Hill in Washington, Wednesday, June 18, 2014, before the House Oversight and Investigations subcommittee hearing examining the facts and circumstances that contributed to General Motors’ failure to identify a safety defect in certain ignition switches and initiate a recall in a timely manner. (AP Photo/Cliff Owen)

Washington • Lawmakers investigating why General Motors took more than decade to order a recall to fix a deadly ignition switch defect Wednesday pressed CEO Mary Barra about her efforts to alter the company’s often unresponsive internal culture.

Making her second appearance before a House subcommittee probing GM in connection with the defect tied to 54 accidents and 13 deaths, Barra, a GM lifer, faced skeptical questions about whether she could change a company notorious for its stilted and uncommunicative bureaucracy.

Barra’s appearance came less than two weeks after GM released the results of an investigation into why it took GM more than a decade to recall a defective switch that caused cars to inadvertently stall, stiffening brakes and steering and disabling air bags.

“I know some of you are wondering about my commitment to solve the deep underlying cultural problems uncovered in this report,” Barra told the committee. “The answer is I will not rest until these problems are solved.”

The recalls have cost GM $2 billion, and the automaker also is facing dozens of lawsuits in connection with the delayed recall. On Wednesday, the automaker was hit with a potential class action filed in federal court in California alleging that owners of GM cars have seen the values of their cars decline because of the recall saga.

“You wonder how deep this things go,” said George Cook, a former Ford executive and a professor at the University of Rochester. “What Mary Barra is doing is a great job , I think, of clearing the deck and making sure there is not a reoccurrence down the road.”

GM’s probe, led by former U.S. attorney Anton Valukas found a pattern of “incompetence and neglect” inside GM but no conspiracy to hide the problem, which affected 2.6 million Chevrolet Cobalts and other small cars.

Rep. Tim Murphy, R-Penn., chairman of the subcommittee holding the hearing, said the investigation’s findings were not reassuring. Perhaps “the report should be subtitled don’t assume malfeasance when incompetence will do,’” he said.

Rep. Diana DeGette, D-Colo., called the report’s findings alarming, and declared that GM’s “culture of secrecy” must change. “Ms. Barra, while you are a new CEO, you have a decades-long history with GM,” DeGette said, adding: “So while you many not have known about this defect, many people who worked for you did.”

Barra was also grilled about a GM recall on Monday of more than 3 million cars to fix an ignition switch defect similar to the one that affected its small cars.

Rep. Fred Upton, R-Mich., who chairs the House Energy and Commerce Committee, said GM should have acted years earlier. To support his point, he cited a series of emails involving a GM employee who complained about a Chevrolet Impala she was driving inadvertently shutting off when it hit a pothole in 2005.

“I think this is a serious safety problem, especially if this switch is on multiple programs,” wrote the employee, Laura Andres, in copies of the messages distributed by Upton’s staff. “I’m thinking big recall. I was driving 45 mph when I hit the pothole and the car shut off.”

But replies to the emails indicated that GM engineers could not replicate the problem, and the part was not recalled until this week.

Barra and Valukas sat side-by-side as lawmakers hit them with a barrage of questions about the internal report and its central finding that GM treated the ignition-switch problem with no sense of urgency, even as accidents and injuries mounted. For years, the problem was misdiagnosed and treated as a customer convenience issue, rather than a critical safety problem because engineers did not know it affected air bag deployment.

That mistake caused GM to view any potential fixes through a cost-benefit lens, Valukas said. If safety were known to at risk, he said, cost would not have been a factor.

GM began recalling 2.6 million Chevrolet Cobalts and other small models equipped with the defective switch in February. That recall has been followed by dozens of others, and so far this year GM has recalled 20 million cars in North America.

After receiving the findings of the Valukas report, GM dismissed 15 employees and disciplined five others.

The company also has hired compensation specialist Kenneth Feinberg to establish a fund for the survivors of those killed and those seriously injured because of the switch defect. She said Feinberg has full authority to establish eligibility criteria for victims and determine compensation levels.

Feinberg is expected to present his plan to GM executives by the end of the month and the fund intends to begin processing claims Aug. 1.

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