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Research Dossier

Prepared By: Hayden Pratt


Research Subject: Upper level management and their Knowledge of
General Motors Faulty Ignition Switches, Leading to The Biggest Recall
in GM History.
Organizing Methodology: Ive prepared this dossier in a
chronological format, starting with what began the crisis of faulty
ignition switches in Chevy compact cars, and ending with two phase of
how General Motors and their Management handled the crisis, and the
aftermath of the crisis.
Phase 1: Pre Crisis
Phase 2: How long did upper management know?
Phase 3: Handling the Repercussions of the recall
Code Key: Deductive Appeals to Ethos, Pathos and Logos. The +, signs show whether it was a positive reaction or a negative one.
Pre-Crisis / Rising Action
2001: During pre production testing, GM Engineers experience
problems with ignition switches on the Saturn Ion. The ignition switch
holds the key in place once it is turned on, making it extremely
dangerous to have a faulty ignition switch.
2003: GM service technician sees a Saturn Ion stall while it is being
driven with several other keys on the key ring. The technician writes
in his report that the additional weight of the keys had worn out the
ignition switch.
2004: A GM engineer bumps the key in a Chevrolet Colbalt during
testing, causing it to abruptly lose power.
2005: GM receives more reports of Chevrolet Colbalts losing power
when keys are bumped or moved out of the Run position. Engineers
propose that the head of the key to be redesigned so that things
hanging from the keys are less likely to jostle it. That proposal is
initially approved but then later canceled by GM, saying it was too
costly to fix.
2006: Delphi, the company that makes the ignition switch, proposes
an ignition design change. A GM engineer signs off on the change and
the new part goes into production. But the part number is not changed,
so most of the automakers employees are not aware of the fix. GM
hands out key inserts to limit the keys movement to 474 owners of
models later recalled.

2007: GM begins installing the new, redesigned switch on 2007 model


year cars. During an unrelated meeting with auto-safety regulators, GM
employees are informed of a fatal 2005 Colbalt crash where the
airbags did not deploy. By the end of the year, GM is aware of 10 more
deaths where Colbalt airbags failed. An engineer is assigned to look at
Cobalt front crashes in which the airbags did not deploy, and in 4 of the
9 cases, the ignition was not in Run at the time of impact.
2011: A new investigation is opened into front crashes of Cobalts and
Pontiac G5s where airbags did not deploy. Ignition switches are
removed from cars in salvage yards and are tested.
2012: Engineers notice all the crashes in which the ignition was
switched out of Run only happened from the 2007 model year and
earlier.
2013: GM investigators notice that ignition switches built in later years
are less prone to movement out of position then earlier models. GM
hires outside engineers to conduct a thorough assessment of ignition
switches from cars built before and after 2008. They conclude that
changes were made to the ignition switch sometime after the cars first
went into production.
Crisis Begins
2014: February 7th, GM issues a recall on about 800,000 Chevrolet
Cobalt ad Pontiac G5 vehicles.
How long did upper level management know?

An attorney is suing the automaker over recently unclassified emails,


where GM placed an emergency order for half a million ignition
switches, 2 months before they came out to the public with the news of
recall. The email chain also included information showing that top
executives in General Motors knew about the faulty ignition switch.
These emails were exchanged 2 MONTHS PRIOR to CEO Mary Barra
coming out to the public about the recall.
The chain of emails between lower-level GM workers and Delphi Corp.
seem to indicate that GM knew at least by Dec. 18, 2013, that the
switches were the cause of air bag non-deployment in certain models
such as the Chevrolet Cobalt and needed to be recalled.
Analysis and Coding Upper level management involved in
GMs ignition switch crisis thought they could keep information
away from the public, which they did for just a little too long.
This appeals to ethos, for everyone has hid, lied or done
something bad to try to cover another situation. It states in
plain site that the management knew about the emails long
before the public was notified of a recall. (-)
The Valukas report, which didn't mention the switch order, said GM
executives didn't decide internally on a recall until January 2014, and
alerted the government about the decision on Feb. 7. Also, the order
was not mentioned when CEO Mary Barra subsequently testified before
Congress.

"Sworn to tell the truth, how did Mary Barra forget to tell Congress that
-- while she was the GM executive vice president, global product
development, purchasing and supply chain, and nine days before she
became CEO of GM -- GM purchased $3 million dollars of ignition switch
supplies to replace the defective ones -- a cost that was not
budgeted?"
The parts were ordered a day after a committee of three GM
executives met to consider a recall but decided that it didn't have
enough information to make a decision. According to Valukas' report,
the decision was delayed after then-Vice President of Engineering John
Calabrese thought that company investigators didn't know what was
causing air bags not to inflate. Calabrese has since retired.
But Hilliard said the company wouldn't order a half-million parts if it
didn't know the cause of a problem. Hilliard said he is seeking
additional documents to see how high up knowledge of the order went
in the company's hierarchy.
"This email chain creates more questions than it answers. It will be
interesting to learn from the GM documents how high up it went, how
far back it went," he said.
GM would not comment on details of the emails, but said in a
statement that the emails are "further confirmation" that its system
needed to be reformed, which it has done.
Analysis and Coding Hilliard (Attorney) does have a point
here. The company wouldnt order half a million parts if it
didnt know the cause of a problem. Of course, GM would not
comment on these details and further investigation is
required. GM is not showing a good act of reliance or honesty
to their customers. (-)

Summary of Upper Level Managements Knowledge


CEO Mary Barra testified in front of congress, and swore to tell the
truth. She definitely lowered her credibility when she forgot to
mention to congress that GM ordered 3 million dollars worth of ignition
switch supplies. Although these parts were ordered a day after a
committee of 3 GM executives met to consider a recall, but didnt have
enough information.
It is said that John Calabrese, President of Engineering for GM thought
that the company investigators did not know what was causing the

airbags not to inflate, which is insane due to only a miniscule amount


of things can cause that.
Robert Hilliard, a personal injury attorney out of Texas states that A
company wouldnt order a half million parts if it didnt know what the
cause of the problem was, and he believes GM was not forthright with
this situation.
CEO Mary Barra of GM testified that the company moved quickly to
announce a recall as soon as other top executives learned of the
flawed ignition switches at the end of January. The email chain,
Attorney Hilliards findings, the part order receipts/emails, is all there.
Lets take a look at how GM responded to the allocations, procedures
and policies of their recall.
Handling Repercussions of the Recall

GeneralMotorsCo.sproblemshavegottensobadthatthisyearithas
recalledmorevehiclesthanitssoldsincethecompanys2009bankruptcy,
raisingquestionsaboutwhetherthecenturyoldcarmakerhasmadeany
progressunderU.S.taxpayersupport.

The30recentsafetyrecalls,includingtheoneannouncedWednesdayfor
218,000oldermodelChevroletsduetoapotentialfirehazard,putsinto
questionhoweffective$11.2billionofpublicrescuefundshavebeenin
gettingGMtoimprovequality.Theanswermaybethepubliclyfunded
rescuehadnothingtodowithautosatall.Wastheconcernoftheauto
bailouttomakethecarsmorequalityortojustkeepemployeesinthe
company?
AnalysisandCodingAngeloYoung,awriterfortheInternational
BusinessTimesasksthequestion,Wastheconcernoftheautobailout
tomakethecarsmorequalityortojustkeeptheemployeesinthe
company?ThisquestionisnowatoughonetoanswerforGeneral
Motors.
SavingjobswasoneofthemainprioritiescarczarStevenRattner,lead
advisortoPresidentBarackObamasautoindustrytaskforcein2009,had
whenhehelpedorchestrateGMsquickreorganization.Questionsabout
qualitycontrol,andGMslonghistoryofpressuringpartsmanufacturersto
lowercosts,whichultimatelyjeopardizedquality,wereconsidered
secondarytopreservingjobsofUnitedAutoWorkermemberswhoworked
forGMandGMsuppliers.
AnalysisandCodingGMplansduringthebailoutshowthatkeeping
employeeswasmoreimportantthanimprovingqualityoftheirvehicles,
whichwasobviouslyneeded.Thesamefederalgovernmentthat
emphasizedtheneedtosaveGMandindustryjobsisonlyrecently
addressingitsfatalqualitycontrolproblem.Asimplegooglesearchalso
willshowwhatconsumersthoughtaboutthequalityofGMvehicles
afterthebailoutandignitionswitchissues,whichwasverylow.()
(WordsofformerCEOofGM,DanAkerson.)
Ithinkweallincludingthenewandtheoldpartofthemanagementteam
didntfullyrealizehowdeepsomeoftheproblemsran,hesaid.
IthinktheyformulatedaplanofrecoveryandIthinkthatssomethingto
beproudof,hesaid.IcantthinkofabetterleaderthanMary.
Barradismissed15GMemployeesoverthedelayedrecall,andfornowhas

setaside$400millionforvictimcompensation.Theautomakerhasrecalled
atotalof28.8millionvehiclesin60campaigns,andhasallotted$2.5billion
fortherecalls.
Thisisamarathon,shesaid.Wearegoingtodotherightthingwhether
itstheeasythingorhardthingtodo,andwereconfidentthatitsgoingto
payoff."
AnalysisandCodingIntheabovesectionsfromDanAkerson,it
showsthatGMisstatingtheyhaveformulatedaplanofrecoveryand
theythinkitissomethingtobeproudof.(GM)Cantthinkofabetter
leaderthanMary.ItalsostatesBarrasetaside400millionforvictim
compensation,showingthatGMandtopexecutivesdocare.Tome,this
seemslikeapleafromGMsayinglookwhatweredoingtofixthisbut
inreality,somethinglikethistakesyearstorecoverfrom.Theyare
takingthecorrectstepstogettowheretheywanttobe.GMdoestruly
believeinCEOMaryBarra.(+)

ConsumerandvictimoftheGMrecall,LauraChristiantalkstoCNNabout
herexperiencewithGeneralMotorsduringtherecall.Her16yearold
daughter,AmberMarieRosewaskilledinlate2005duetoafaultyignition
switchinherChevyColbalt.LauraChristian,hermotherstatesinthe
interview,Whilenothingcanbringmydaughterback,weneedasystem
whereautoexecutivesareaccountabletothepublicandnotjustcorporate
profits.
MaryBarrarespondedlaterinthedaytoLauraChristianwithThisisa
tragicsituationandweunderstandthatlivesareimpacted.Wevemade
substantialchanges,andpeopleknowwearesincere.
AnalysisandCodingVictimLauraChristiansharesherthoughtsthat
shebelievesGMisaselfcentered,corporateculturedcompany.She
believesGMisnotaccountabletothepublic.Barrarespondstothis
sayingGMhasmadesubstantialchangesbutdoesnotincludethese
changes.Barraalsoadds,peopleknowwearesincere.Withthis
statement,sheisinferringthatpeoplethinkGMissincere,which
obviouslytheydonot,refertothecommentsbelowforclarification.()

SummaryofAnalysisandCoding

MaryBarrahasbeenwithGMsince1980,whereshebeganworkingas
aninternat18yearsold.Shethenclimbedthecorporateladdertil
2014,whereshebecamethefirstwomanCEOofalargeautomotive
company.Shepromisedtochangethecarmakersculture,butthengot
slappedwiththelargestrecallinGMhistory.Withnearly1400casesof
deathsandseriousinjuries,MaryBarraandtopGMexecutiveswill
continuetomakeamendstoconsumersworldwide,andtheirqualityof
vehicleswillremainquestioneduntilagoodstreakofproductioncars
aremade.

Sourcing
"AkersonSaysGM'sProblemsWereWorsethanExecs
Thought."AutomotiveNews.2014.Web.13Apr.2016
ValdesPena,Peter."GM:StepstoaRecallNightmare."CNNMoney.Cable
NewsNetwork.Web.13Apr.2016.
Healey,JamesR."6KilledinGMCarswithFaultyIgnitionSwitches."USA
Today.Gannett,14Feb.2014.Web.13Apr.2016.
Young,Angelo."QualityCrisisatGM:TheWorstYearForRecallsSince
2004."InternationalBusinessTimes.21May2014.Web.13Apr.
2016.