A pattern of incompetence and neglect, but not a cover-up, was at the heart of General Motors' long delay in dealing with faulty ignition switches linked to at least 13 deaths, a report released Thursday by former U.S. Attorney Anton Valukas and paid for by the Detroit automaker found.
Many in the company knew about the problems for more than a decade. But GM waited until February to launch a recall of 2.6 million cars to repair the switches -- something the 315-page report described as a saga of failures that led to "tragic results" and "catastrophic failures."
You can download the report from the National Highway Traffic Safety Administration website here; on the right side of the page under "Latest News and Information." Here is CEO Mary Barra's remarks to employees. Here is a company press release from Thursday. And here is a look at the company's plan to implement a compensation program for victims.
Here are highlights of the Valukas report:
- BLOATED BUREAUCRACY: Too many employees operated in silos, keeping the problem buried. Some in the company were "looking for reasons to not act," CEO Mary Barra said in her summary of the report to employees. Nobody raised the issues to high-level executives.
- ENGINEERING ERRORS: A critical factor in the delay was a "failure to understand, quite simply, how the car was built," referring to the Chevrolet Cobalt and other cars equipped with the faulty ignition switch. The report says they missed something fundamental: Airbags wouldn't deploy when the switch failed and the car stalled. Because of that, "drivers were without airbag protection at the time they needed it most." It also meant that the company saw the problem as a "customer convenience issue" rather than the far more serious safety defect that it was.
- CULTURAL DISCONNECTS: The report concludes "nobody took responsibility" even though everybody had it. Barra told the report's authors that the phenomenon is known as the "GM nod" -- "when everyone nods in agreement to a proposed plan of action, but then leaves the room and does nothing." The report also chides GM for the "astonishing number of committees" that the ignition switch issue passed through.
- NO COVER-UP, BUT COST CONCERNS: There's no evidence that anyone within the company "made an explicit trade-off between safety and cost," but the report couldn't "conclude that the atmosphere of cost-cutting had no impact." Engineers, it said, "did not believe that they had extra funds to spend on product improvements."
- NOT BLAMING BARRA: The new CEO, who has said she didn't know details about the problems until late January but acknowledged GM had a culture that picked cost savings over safety, was spared along with other current high-level executives. The report says Barra, as head of global product development for three years, became well-acquainted with the recall process when issues with the Chevrolet Volt's battery came up in 2011. Based on her experience, she believed the recall process worked "with appropriate urgency." The report confirms Barra was kept out of the loop on email exchanges concerning the switch problem, and she and other current leaders didn't learn about ignition switch's safety issues until December 2013 at the earliest.
- RECOMMENDATIONS: There are many, but a key is for the company to let employees know that shielding senior executives from concerns so they can later deny knowledge of problems is not acceptable, and "employees should err on the side of elevating potential safety issues." The report also calls for improving communication with the National Highway Traffic Safety Administration and to view the government agency as not only a "regulator," but also an "ally." Barra told employees Thursday that the report "represents a fundamental failure to meet the basic needs of these customers" and it would serve as "a template to strengthen the company."
The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.