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Lawmakers skeptical that GM can remodel its leadership

June 18, 2014 at 6:28 PM EST
General Motors CEO Mary Barra returned to address Congress about an internal company report on the ignition switch defect that has been linked to at least 13 deaths. Barra announced a new campaign to reward employees who report safety concerns, but lawmakers remained skeptical that the corporate culture could be changed. Gwen Ifill gets more detail from David Shepardson of The Detroit News.
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GWEN IFILL: Federal regulators have opened a new investigation into a second Detroit automaker, digging into reports that air bags failed to open in some older Jeep, Dodge and Chrysler models because of potentially defective switches. So far, no deaths or injuries have been reported.

That news came on a day when General Motors’ troubled record on ignition switches was the focus of a second round of congressional hearings.

MARY BARRA, CEO, General Motors: For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly.

GWEN IFILL: For the first time since the release of a critical internal investigation, GM CEO Mary Barra faced tough questions on Capitol Hill over how her company handled the ignition switch defect now linked to at least 13 deaths.

Barra sought to reassure lawmakers.

MARY BARRA: I want this terrible experience permanently etched in our collective memories. This is not another business challenge. This is a tragic problem that never should have happened and must never happen again.

GWEN IFILL: Attorney Anton Valukas, who led the independent investigation for GM, also appeared before the House subcommittee.

ANTON VALUKAS, Head of GM’s Internal Investigation: The story of the Cobalt is a story of individual and organizational failures that have led to devastating consequences.

Throughout the decade it took General Motors to recall the Cobalt, there was lack of accountability, a lack of urgency and, extraordinarily, a failure of the company personnel charged with safety issues to understand how this car was manufactured and the interplay between the switch and the other aspects of the automobile.

GWEN IFILL: Valukas said GM long characterized the ignition switch troubles as a — quote — “customer convenience issue,” rather than a safety problem.

Colorado Democrat Diana DeGette pounced on GM’s record.

REP. DIANA DEGETTE, D, Colo.: This kind of boggles my mind. A car could be going down the highway at a high rate of speed, 65 miles an hour, and it gets bumped. It goes into neutral and then everything stops, the power steering, the brakes, the air bags, yet the GM engineers said that this was a convenience issue, right?

ANTON VALUKAS: They not only said it internally. They said it publicly when they were interviewed by the press. They said, this is our position, that a stall doesn’t constitute a safety issue.

REP. DIANA DEGETTE: I mean, that’s — that’s just insane, isn’t it?

ANTON VALUKAS: I — it is — I don’t — won’t use the word insane, but I’m troubled by that.

REP. DIANA DEGETTE: OK.

GWEN IFILL: Barra said GM has now launched a campaign to reward employees who report potential safety issues.

But several House members, including Republican Tim Murphy, remained skeptical, even in the wake of this month’s announcement that 15 GM employees and managers would be fired.

REP. TIM MURPHY, R, Penn.: You mentioned 15 were fired. That’s 99.999 percent, if my math is right, of the people are the same. If you haven’t changed the people, how do you change the culture?

MARY BARRA: Well, again, the people — the 15 people that are no longer with the company are the people that either didn’t take action they should or didn’t work urgently enough to rectify this matter. And they are no longer part of this company. That was a strong signal to send within the company.

GWEN IFILL: GM has issued 44 recalls this year alone, including Monday’s pullback of 3.2 million cars for a separate ignition switch defect.

I am joined by David Shepardson, who covers the automotive industry as Washington bureau chief for The Detroit News.

Welcome back, David.

DAVID SHEPARDSON, The Detroit News: Thanks.

GWEN IFILL: Let’s start with this Chrysler — what is the scope of this Chrysler investigation that we hear about today?

DAVID SHEPARDSON: So, it covers about 1.2 minivans, SUVs.

It’s a similar issue in which there are hundreds of complaints of stalling when a driver’s knee hits the key, similar to what happened in the GM cases. The difference is, there are no reports of any people killed or injured.

However, the same issue, that the air bags could fail to deploy in the event that the key moved out of the run position, is what’s prompting the government to take a very serious look at it.

GWEN IFILL: At GM, Mary Barra said today that they now fixed 199,000 vehicles, which is quite — sounds like quite a lot.

DAVID SHEPARDSON: Right.

GWEN IFILL: Did she in any way satisfy members of Congress today that GM is taking sufficient action about what seems like an endless round of recalls? We announce more every week.

DAVID SHEPARDSON: Right.

Well, I don’t think she satisfied members of Congress, but she did, I think, set the right message that this is crucially important. Yes, they fired 15 people, disciplined five, hired dozens of engineers, recalling almost everything under the hood.

But she said words — you know, actions are going to speak louder than words. This is not going to be resolved in a week or a month. GM is going to have to spend a long time convincing the public, Congress that this really is a new company and that they’re not going to allow a problem like this to fester for a decade without fixing it.

GWEN IFILL: Well, speaking of festering for a decade, we hear today about a flawed Impala, Chevrolet Impala, which I don’t — don’t even know if they make them anymore, that someone reported that there was a problem and they didn’t do anything about it for nine years?

DAVID SHEPARDSON: Right.

It was certainly troubling. They do still make the Impala. They have just redesigned it. And it’s getting some good reviews. But what happened was, in 2005, a GM employee sent e-mail saying, hey, I had a serious stall, to the same engineer responsible for the Cobalt, at the center of the deaths.

And they didn’t do anything about it. And it wasn’t until Monday of this week that GM recalled three million cars, including the Impala, for this ignition or the steering problem. So it does raise the issue that, despite all the progress they have made, all the recalls, there are still a lot of issues that are still hanging out there.

And why, if an employee said, hey, this is a big issue, we have got to address it, why did no one take it more seriously?

GWEN IFILL: A big issue, 15 people, including this engineer you talked about, no longer with the company, as they put it euphemistically.

Is that satisfying? Is that enough? Do people think that a series of recalls over a decade in this amount of time can point to only 15 people?

DAVID SHEPARDSON: Well, I think that gets to the culture problem at GM, that did the senior management, the board, the CEOs, how did they let this culture exist where problems didn’t get — didn’t go to the top, where employees were under the impression, don’t take notes during serious meetings about safety issues?

There just wasn’t a culture of we — this is very important, we have to do whatever it takes to prevent customers from being hurt. And, you know, I think, you know, the 15 people are not going to resolve it, as the congressman said, that 99.9 percent of the employees are still there.

But I do think that has sent a huge message to people. We’re talking about vice presidents — or a vice president, senior lawyers. A lot of key people at GM were forced out.

GWEN IFILL: But how do you change culture? It seems that that’s more difficult than fixing an ignition switch.

DAVID SHEPARDSON: Absolutely.

A company like GM, with 220,000 people, this is like a battleship trying to turn around. And it’s not a new issue. GM’s culture has been pilloried for decades. And the company does things its own way. It’s very siloed. When you have a company that big, you people with very narrow responsibilities, and people don’t always talk.

And there’s not a — hasn’t been enough incentives to bring bad news up the chain. It’s easier — or has been easier to just push it under the rug.

GWEN IFILL: Compensation, that’s the big question hanging out there right now, for people who either owned the cars or people whose loved ones died in the cars, but not necessarily — well, actually, not for just people who owned the cars, only for actual victims, and there lies the rub.

DAVID SHEPARDSON: Right. Right.

Ken Feinberg is going to announce by the end of the month a proposal to compensate the 13 families, at least, of people who were killed related, plus the 54 crashes, but will not propose money for the millions of owners who the value of their car, they say, has declined as a result of these recalls.

So those lawsuits are going to go on for years. However, GM is contending that because of its exit from bankruptcy in 2009 as a new company, they’re shielded from the liability from those old cars; therefore, they shouldn’t have to pay anything for those. So that’s going to drag on, I think, for a long time.

GWEN IFILL: Is it fair to say they expect more recalls?

DAVID SHEPARDSON: Certainly. GM has said they want to wrap up the big issues by the end of the month. They have had 44 so far, but I would expect at least a few more for the next couple weeks.

GWEN IFILL: OK.

David Shepardson, Detroit News, as always, thank you.

DAVID SHEPARDSON: Thanks, Gwen.