Bloomberg News

Documents Show GM Slow to Respond to Safety Complaints

April 12, 2014

Sidelined GM Engineer Signed Off on Work-Around, Document Shows

Leo Ruddy, center, and his wife Mary Theresa Ruddy, right, from Scranton, Pa., holds up photographs of their daughter Kelly Erin Ruddy and the 2005 Chevy Cobalt that she crashed and died, as they sit in the audience to listen to testimony by General Motors CEO Mary Barra, left, on Capitol Hill in Washington on April 2, 2014. Photographer: Pablo Martinez Monsivais/AP Photo

Internal General Motors Co. (GM:US) documents released yesterday by Congress show that company executives, including Chief Executive Officer Mary Barra, were slow to respond to complaints about vehicle safety that built up for more than a decade.

In an e-mail sent in 2011, Barra was told regulators were investigating steering problems with the Saturn Ion. While the flaw wasn’t connected to the ignition-switch defect linked to the deaths of 13 people in Chevrolet Cobalts and other small cars, GM executives didn’t recall the Ions until March 31, the day before the CEO testified before a House panel.

Read the original Delphi memo

The documents also paint a picture of a company in denial and engaged in subterfuge over vehicle safety and less cooperative with government regulators than other carmakers. Though GM had two opportunities to fix the deadly ignition switch, it declined to do so because it would take too long and was too expensive. Then an engineer quietly authorized a fix to the switch and later under oath denied making it.

“The general perception is that GM is slow to communicate, slow to act,” Frank Borris, head of the U.S. National Highway Traffic Safety Administration’s Office of Defect Investigation wrote in a note to GM’s director of product investigations in July 2013, complaining of the automaker’s inconsistency and lack of coordination on several unrelated recall investigations.

Fresh Details

The message was forwarded to senior GM executives, including John Calabrese, vice president of global vehicle engineering; Alicia Boler-Davis, senior vice president of global quality and customer experience; and Jim Federico, who at the time was an executive chief engineer directing mini-car development. All are key executives working in the “new GM” that Barra touted in congressional hearings last week.

The trove of documents, released yesterday by the U.S. House Energy and Commerce Committee, provide fresh details on how GM delayed and deceived during more than a decade of problems with the ignition switch.

“The question is: Why didn’t they act?” said Maryann Keller, a veteran auto analyst who has written two books on GM. “Was it in their best interest not to do it? Were their careers going to be sidetracked if they did? Was their boss’s career going to be sidetracked?”

Barra Memo

The 2011 e-mail to Barra about Saturn Ions referred to a 2010 recall of Chevy Cobalts and Pontiac G5 small cars that could lose power steering while driving. GM replaced a defective module in those cars yet didn’t replace the faulty ignition switch, which company engineers knew by then could also de-activate the power steering. GM didn’t recall the mechanically similar Ions at the time, citing insufficient data.

In 2005, GM shrugged off complaints about the ignition switch, saying the loss of power steering wasn’t a genuine safety risk. In 2010, it was recalling thousands of cars to address just that symptom.

Separately, GM found no pattern of problems with air bags failing to deploy in Chevrolet Cobalt models now being recalled to replace the switch linked to 13 deaths, U.S. safety regulators said in a 2007 document.

Ray DeGiorgio, an engineer GM put on paid leave this week, approved a redesign in 2006 to the faulty ignition switch in the Cobalt, Ion and other small cars. He “agreed to implement change without changing GM” part number, according to a May 27, 2006, correspondence from supplier Delphi Automotive Plc (DLPH:US) released by House investigators.

Multiple Investigations

Congress, federal regulators and the U.S. Justice Department are all investigating why it took GM more than a decade to recall cars with faulty ignition switches that allowed the key to fall out of the “on” position, shutting off the engine and disabling air bags. Barra, who has said GM failed to act quickly enough, suspended DeGiorgio and Gary Altman, chief engineer of the Cobalt.

“Documents show individuals at GM allowed vehicles with safety concerns to remain on the road for almost a decade, resulting in at least 13 fatalities,” Tim Murphy, a Pennsylvania Republican on the House Oversight and Investigations Subcommittee, said in a statement. “We will continue our investigation into what went wrong because it’s the only way public trust can be restored for both GM and the National Highway Traffic Safety Administration.”

No Contradiction

GM emphasized in a statement that the Ion memo to Barra was unrelated to the faulty ignition switches discussed at last week’s hearings. The e-mail “in no way contradicts Ms. Barra’s previous statements or testimony before the House or Senate subcommittees,” GM said yesterday. “The e-mail was among the thousands of documents GM willingly provided to the Energy & Commerce Committee of the U.S. House of Representatives upon the Committee’s request.”

If DeGiorgio “signed off on changes to the part, that’s a good thing. The problem is why the part number wasn’t also changed,” said Joan Claybrook, a consumer-safety advocate and former NHTSA administrator. “Some are concerned that by not changing the part number, that was an attempt to cover up that there was a problem.”

NHTSA, the U.S. auto-safety regulator, first asked GM in 2007 about problems with the ignition switch that was finally recalled in February, according to the documents.

‘Blowing Up’

Separate documents show GM said in 2007 it saw no problems with patterns of non-working air bags noted by regulators in 2005 and 2007, and that DeGiorgio suggested in 2012 that the ignition switches be replaced only if customers brought their cars into dealerships.

In 2005, a year before DeGiorgio signed off on the design change on the ignition switches, he told members of a GM team “that it is close to impossible to modify the present ignition switch,” according to an internal GM document. “The switch itself is very fragile and doing any further changes will lead to mechanical and/or electrical problems.”

A Delphi memo from June 2005 suggests DeGiorgio was seeking tests on ignition switches.

“Ray is requesting this information,” wrote Jack Coniff, a senior project engineer at Delphi. “Cobalt is blowing up in their face in regards to turning the car off with the driver’s knee.”

Altman, the Cobalt manager suspended this week, rejected a fix proposed for the ignition switch because it was too expensive and would take too long, previously released documents indicated.

GM fell (GM:US) 4.1 percent to $31.93 yesterday in New York. The stock has dropped (GM:US) 22 percent this year. The document release follows a pair of congressional hearings looking at the GM recalls that have included testimony from Barra.

GM on April 10 said it expects to take a first-quarter charge of $1.3 billion primarily for the cost of recall-related repairs that may lead to the automaker’s first quarterly loss in more than four years.

To contact the reporters on this story: Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net; Tim Higgins in Washington at thiggins21@bloomberg.net

To contact the editors responsible for this story: Jamie Butters at jbutters@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net Robin Ajello


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