GM Switch Fix Began Months Before Recall | News | HMG LLP

GM EMAILS SHOW IGNITION SWITCH FIX BEGAN 2 MONTHS BEFORE RECALL

August 31, 2017

Source: Insurance Journal By David Welch

The disclosure of December e-mails by General Motors Co. shows that the company was working on a fix for its faulty ignition switch in December almost two months before it officially recalled the part, which has since been linked to 32 deaths.

Man examining key in ignition switch

The newly released e-mails weren’t in the 315-page report prepared by former U.S. Attorney Anton Valukas that Chief Executive Officer Mary Barra called “extremely thorough, brutally tough and deeply troubling” when it was released June 5. The e-mails, detailing GM’s efforts to order hundreds of thousands of replacement parts, show that the automaker was aware there was a problem in December that it hadn’t yet reported to regulators. The law requires carmakers to report safety-related defects within five days.

The latest disclosures underscore that the company was still dragging its feet on whether to report to the National Highway Traffic Safety Administration that its cars had a potential safety defect. GM has since said that its decision- making process was too slow and that it will deal with potential recalls faster.

“What crack did this fall into and why was it not really recognized far earlier?” asked David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Michigan. “It goes back to Watergate, where the cover-up becomes worse than the problem. Rule one of business is that you don’t do that. But we have to understand that mistakes occur and problems happen.”

Two Months
The e-mails show that in mid-December — two months before car owners were told about the flawed ignition — GM was working with its parts supplier to get a better switch into production. GM didn’t disclose the information to federal regulators that month, nor did it show up in the Valukas report.

For its part, GM responded by saying that its reporting system was broken.

“These e-mails are further confirmation that our system needed reform, and we have done so,” Alan Adler, a GM spokesman, said in an e-mail. “We have reorganized our entire safety investigation and decision process and have more investigators, move issues more quickly and make decisions with better data.”

Valukas said yesterday in a statement that the new e-mails don’t change the conclusions he made in his report. When it was released, he said to members of Congress that, “we found failures throughout the company — including individual errors, poor management, byzantine committee structures, lack of training and inadequate policies.”

GM rose 0.6 percent to $31.31 at 10:51 a.m. New York time. The shares fell 24 percent this year through yesterday.

Confidential Testimony
The e-mails were part of confidential testimony that was unsealed at the request of Robert Hilliard, an attorney in Corpus Christi, Texas, who is suing the automaker on behalf of consumers who own the GM models with the faulty ignition switch.

In February, GM recalled almost 800,000 small cars because the ignition switch could slip out of the “run” position, shutting off the engine and safety features like airbags while the car is driving. The recall eventually expanded to 2.59 million vehicles.

Barra and other top GM executives have said in sworn testimony before Congress that they didn’t know the seriousness of the switch problem until Jan. 31. The Valukas report concluded the same thing. Barra was executive vice president of product development, purchasing and supply chain before she became CEO on Jan. 15.

Woman holding up key in ignition switch

No Mention
The Valukas report includes no mention of the December e- mails between a contractor working for GM and employees of the parts supplier, Delphi Automotive Plc.

In an e-mail dated Dec. 19, a GM contract employee named Sarah Missentzis said GM needed at least 500,000 replacement switches and needed shipments “ASAP.”

Automakers also are required to tell NHTSA if there is a potential safety problem within five days of determining there’s a safety-related defect.

The timeline that GM gave investigators suggests that GM hadn’t decided in December that a safety recall was necessary, even if GM was working to order replacement parts. GM’s Executive Field Action Decision Committee decided on a safety recall on Jan. 31, and the company notified NHTSA on Feb. 7.

That explanation is plausible, said Maryann Keller, an independent auto-industry consultant in Stamford, Connecticut. GM needed time to get Delphi or other suppliers ready to make the parts, she said. Suppliers run with very little inventory even for new models, so they need time to fulfill an order of 500,000 parts, she said.

“This is an ordinary e-mail saying they needed parts as soon as possible,” Keller said. “You have to give suppliers lead time. Valukas is made to look like he isn’t getting all the info, but there is nothing here that’s nefarious.”

Big Question
That still leaves a big question for GM, said Hilliard. If the company knew it would have to replace the parts, it should have alerted drivers sooner. Since the ignition switch had a tendency to slip into the off position if it had heavy items on the key ring, GM could have suggested the drivers remove items from key chains, even if replacement parts weren’t ready, he said in an interview.

“Part of the recall was to tell customers to take weight off the key chain,” he said. “Why delay telling customers that?”

The Texas lawyer said that between the time the purchase order was made and the recalls were announced, multiple accidents occurred. Of his clients alone, this included 45 accidents and one death, he said.

Designated Confidential
The e-mails were part of millions of documents that GM and Delphi have turned over to lawyers for plaintiffs suing the automaker, Hilliard said in an interview. The companies sought to have the material designated as confidential, Hilliard said.

“It was damning,” he said. “It was embarrassing.”

The U.S. Senate subcommittee investigating the ignition switch recalls also has the documents, Hilliard said.

What the e-mails don’t say is whether Barra or other top executives knew anything before January. The correspondence is between Delphi and mid-level GM employees.

“You’d expect a mid-level manager to make these decisions,” Keller said.

That may be where things broke down.

“Either they didn’t tell Valukas or they didn’t tell the executive committee,” Hilliard said.

““With assistance from Jeff Plungis in Washington, Linda Sandler in New York and Margaret Cronin Fisk in Detroit.

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