Barra: ‘Today’s GM will do the right thing’ – USA TODAY

Posted: Wednesday, April 02, 2014

WASHINGTON — In what already could be a turning point in her fledgling reign, General Motors CEO Mary Barra on Tuesday battled a congressional subcommittee that wanted far more information about GM’s fatal ignition-switch foul-ups than she was able to provide.

She was battered for speaking “gobbledygook,” thumped for not firing an engineer who apparently concealed a change to the potentially deadly switches, and blasted because GM made an economic decision to keep the flawed component in production while knowing it didn’t meet GM standards.

Barra, who has been CEO for less than three months, fielded questions from the House Oversight and Investigations Subcommittee for two hours, avoiding any obvious gaffes and keeping her cool but also largely ducking specific answers, saying an internal investigation is underway into why it took GM so long to address ignition-switch problems first detected in 2001 this year.

Representatives kept demanding “yes” or “no” answers right now, while Barra, an engineer, wanted to explain. Nor could they fathom how the CEO of a company couldn’t just find things out, while Barra said she shouldn’t meddle in the internal investigation already underway by former U.S. attorney Anton Valukas.

She also announced that she is bringing in another outsider, a compensation expert, to help it sort out GM’s response to consumers affected by the defect linked to 13 deaths: Ken Feinberg, an attorney who led victim compensation efforts in the World Trade Center attacks of Sept. 11, 2001, the BP Gulf Coast oil spill and the Boston Marathon bombing.

Families of those losing their lives have asked that a victims fund be established. GM has remained silent on that subject but Barra said Feinberg will help “assess the appropriate next step.”

Barra told the panel looking into the recall of more than 2.53 million vehicles that the company has moved away from a “cost culture” to a more customer-friendly one.

“You talk about a new culture. Has anybody been held accountable?” demanded member Rep. Steve Scalise, R-La.

Barra said nobody has been fired or disciplined as a result of involvement in the switch fiasco, as far as she knows, but that could change when the investigation is finished.

Even then, she said, “we will share what’s appropriate” and not necessarily the whole internal GM report. This irritated some committee members.

Some implied that GM might have concealed information about the problem-plagued switch to avoid carrying forward responsibility for damage, injuries and deaths caused by the switch into the “new GM” formed July 2009 after the car company’s bankruptcy reorganization.

Barra seemed to suggest it was possible that happened: “I did not personally withhold anything. I can’t speak to every single person.”

Asked about a report indicating that GM considered a fix in response to problems in 2004 because of the “lead time required, cost and effectiveness,” Barra said she “found that statement to be very disturbing” and called it “unacceptable. That is not how we do business in today’s GM.”

“It’s not acceptable to put a cost on a safety issue,” she later added under questioning.

With Barra facing the glare of a congressional investigation for the first time, however — and with the company’s resurgent post-bankruptcy profits and reputation on the line — there was still little she could tell members to explain why it took GM more than a decade to link ignition switch issues with air bag deployment.

Over the past two months, the company has recalled millions of Chevrolet Cobalts and HHRs, Saturn Ions and Skys and Pontiac G5s and Solstices, saying the ignition switch could inadvertently be jostled out of position, potentially disabling the air bags in the event of a crash.

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The acting head of the National Highway Traffic Safety Administration, David Friedman, was called to testify as well and said his agency missed the link, too, despite hundreds of complaints. Friedman, however, said the agency could have taken a closer look at the relationship between the ignition switches and air bag deployment if GM had shared more information with it.

Friedman said NHTSA considered investigating non-deployment in Chevrolet Cobalts and Saturn Ions in 2007 and in 2010 but that no discernible pattern was indicated. Neither car, he said, “stood out when compared to other vehicles.”

“We applied expertise, we applied understanding,” Friedman said. “I wish the connection was as direct as we now know it is.”

U.S. Rep. John Dingell, D-Mich., said Congress may need to make changes to ensure NHTSA considers a greater range of data and several legislators are talking about strengthening reporting rules for automakers in the wake of the recall.

“It appears we have a flaw in NHTSA’s decision-making process,” Dingell said.

Barra and Friedman testify again Wednesday morning on the recall before a Senate subcommittee.

Rosie Cortinas, whose 23-year-old son Amador, of Caldwell, Idaho, died in a Cobalt crash five months ago, said she was frustrated with how the hearing went, believing Barra was holding back.

“I have to keep walking out,” she said, wiping a tear from an eye. “I feel like there is some kind of inhumanity in this room. They aren’t looking at it as a human point of view. They are looking at it from a company’s point of view.”

Committee members didn’t appear to pull any punches and hammered away at Barra on information that the supplier of the switch, Michigan-based Delphi, told GM as early as 2002 that the switches did not meet the company’s specifications yet it still accepted them.

“Why in the world would a company (like GM) purchase a part that did not meet its own specifications?” asked Rep. Joe Barton, R-Texas.

“I want to know that as much as you do,” Barra responded, saying that it’s part of the internal investigation but that she couldn’t answer the question right now. “It’s not how we do business today.”

During another part of her testimony, however, Barra suggested that there are circumstances where even if a part or product is substandard it doesn’t mean that it’s defective. Barton called this answer “gobbledygook.”

Members also questioned why an engineer at the company, identified in documents released by the committee from Delphi as Ray DeGiorgio, signed off on a change in 2006 to the ignition switch, apparently without the knowledge of others at GM. Another document from 2005 provided to the committee showed consideration of a change to the part but noted concerns over the cost — adding about 90 cents to the price of the switch.

Barra indicated that if the company had recalled all the switches in 2007, it would have cost the company less than $100 million. But there were clear indications that while a change was made to the part, “it appears there was information at one part of the company and another part of the company didn’t have access to that,” she said.

While much of the questioning was polite, it was also dogged. Members of both parties continued to ask how GM — which knew there were issues with ignition switches as early as 2001 during preproduction of the Saturn Ion and approved the change to those switches in 2006 — could have missed so many warning signs for a recall.

“Documents produced to the committee show that both NHTSA and GM received complaints and data about problems with ignition switches and air bags. The complaints go back at least 10 years,” said Rep. Fred Upton, R-Mich., who chairs the full House Energy and Commerce Committee.

“A small spring inside the switch — a piece that cost pennies — failed to provide enough force, causing the switch to turn off when the car went over a bump,” added Rep. Diana DeGette, of Colorado, the ranking Democrat on the subcommittee. “GM knew about this problem in 2001. They were warned again and again over the next decade but did nothing.”

Earlier in the day, the families of people who lost loved ones in crashes involving the recalled vehicles held a news conference, asking that GM take all the cars off the road until they are fixed; GM has said they are safe to operate as long as drivers take all the weight off the keychain.

The company has also agreed to provide loaners if drivers are nervous about the vehicles. To date, some 13,000 loaners have been provided, Barra said.

New parts are supposed to become available this month with Delphi expected to add a third shift at a Mexican facility to produce them. But committee members said they still have concerns, especially because Delphi officials told staff investigators that even after the 2006 change, the parts did not meet specifications.

Feinberg, meanwhile, could help the company determine what to do regarding potential claimants. GM is generally protected from liability claims for incidents before it went through bankruptcy in July 2009. That protection, however, could be limited if it can be shown GM officials knowingly hid the defects.

Families of those losing their lives have asked that a victims fund be established. GM has remained silent on that subject but Barra said Feinberg will help “assess the appropriate next step.”

“We understand we have civic responsibilities as well as legal responsibilities,” she said. GM expects to meet with Feinberg on Friday and expect it will take 30 to 60 days for him to report back. “We’re going to work very hard to do the right thing for our customers.”

Rep. Tim Murphy, R-Pa., the chairman of the subcommittee, asked pointedly whether there was “culture” at GM before the bankruptcy that “would put cost over safety.”

Barra — a veteran of GM — said the company “moved from a cost culture after the bankruptcy to a customer culture.”

GM has recalled 7 million vehicles worldwide since the beginning of the year.

“I know you’re taking this job at an inauspicious time,” said Rep. Henry Waxman, D-Calif., “You’re trying to clean up the mess your predecessors left for you.”

Spangler reports for the Detroit Free Press. Contributing: John Bacon, USA TODAY


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