More recalls, a fine, and a consent order for General Motors

The best piece I have seen on the GM Recall has been done by CNBC’s Phil Lebeau, entitled, Failure to Recall: Investigating GM. The episode goes through the process of the ignition switch, the lives lost and how quickly they are fixing the problem. GM has said it will take until at least October, 2014 to change out the ignition switches. CNBC also takes NHTSA to task, something I have done as well, because I believe that NHTSA’s ombudsman, Ray LaHood, in 2008, during the Nations economic free fall, was too busy securing $60 million in earmarks for his district, $9 million went to campaign donors. Those funds came from the federal taxes you and I pay to fund NHTSA.

John Batchelor, host of the John Batchelor radio show, and Lou Ann Hammond, CEO, Driving the Nation, talk about the fine of $35,000,000 that General Motors has to pay and the consent order that they have agreed to with NHTSA.

In a press release on the National Highway Traffic Safety Administration (NHTSA) website it was reported that “The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) today announced that General Motors (GM) has agreed to pay a record $35 million civil penalty and to take part in unprecedented oversight requirements as a result of findings from NHTSA’s timeliness investigation regarding the Chevrolet Cobalt and the automaker’s failure to report a safety defect in the vehicle to the federal government in a timely manner. The defect resulted in the non-deployment of airbags in certain Chevrolet Cobalt and other GM models. This action represents the single highest civil penalty amount ever paid as a result of a NHTSA investigation of violations stemming from a recall.”

$35,000,000 is the highest fine NHTSA could give General Motors, but Secretary Fox, in the same press release, is asking Congress to support the GROW AMERICA Act, which would increase the penalties NHTSA could levy in cases like this from $35 million to $300 million. Including today’s consent order, the agency has obtained record fines of $124.5 million in the last five years from automakers who have failed to promptly report defects to NHTSA.

General Motors also signed a consent order that mandates General Motors to meet monthly with NHTSA regulators for a year and provide a list of every safety-related issue under consideration by the company, as well as report any changes to car dealers. The press release went on to say that the in the Consent Order, GM agreed to provide NHTSA with full access to the results of GM’s internal investigation into this recall, to take steps to ensure it’s employees report safety-related concerns to management, and to speed up the process for GM to decide whether to recall vehicles.

The Consent Order also requires GM to notify NHTSA of changes to it’s schedule for completing production of repair parts by October 4. GM must also take steps to maximize the number of vehicle owners who bring in their vehicles for repair, including targeted outreach to non-English speakers, maintaining up-to-date information on it’s website, and engaging with vehicle owners through the media. The Consent Order requires GM to submit reports and meet with NHTSA so that the agency may monitor the progress of GM’s recall and other actions required by the consent order.

The GM recall covers the 2005-2010 Chevrolet Cobalt, 2007-2010 Pontiac G5, 2003-2007 Saturn Ion, 2006-2011 Chevrolet HHR, 2006-2010 Pontiac Solstice and 2007-2010 Saturn Sky vehicles.

Remarks prepared for
David Friedman, Acting Administrator
National Highway Traffic Safety Administration
GM Consent Order Press Conference
Friday, May 16, 2014

Good morning everyone. I expect that there is no surprise in GMs admission that it failed to report a safety-related defect in a timely manner. But I want to make clear that the evidence we found behind that failure was deeply disturbing.

For GM, as for every company that puts cars and trucks on Americas roads, action must quickly follow information on safety defects. Our timeliness investigation found that GMs decision-making, structure, and process stood in the way of safety at a time when airbags were failing to work properly in millions of GM products.

Our investigation also found that GM was training employees in ways that could have compounded those problems. NHTSA found that GM has known for many years that the ignition switch in the Cobalt and related models can be inadvertently turned to off or to the accessory position, especially in cases where the drivers knee may make contact with the key or key fob. NHTSA further found that a supplier notified GM as early as 2009 that the air bags in the Cobalt would not work unless the key was in the run position. This notification came in the form of a report explicitly exploring the issue and a block diagram that made the relationship clear.

NHTSAs investigation further revealed that at least by 2012, GM staff was very explicit about an unreasonable risk to safety. In a September 2012 email, a GM engineer investigating the Cobalt defect explained that GM had found that quote “the drivers knee may contact the key or key fob and turn the ignition off. With the ignition in that position, the airbags will not deploy.” Similar information was made clear in a legal deposition in 2012. In this same timeframe, senior GM executives received detailed briefings about this safety-related defect. So, GM engineers knew about the defect. GM investigators knew about the defect. GM lawyers knew about the defect. But GM did not act to protect Americans from that defect.

Not until December 2013, did GMs Field Performance Evaluation Recommendation Committee agree to recommend a safety recall to it’s Executive Field Action Decision Committee. Yet, even then, GM executives delayed. One GM questioned what the rush was to discuss further the ignition switch defect. The GM team met on December 17. They did not agree to report the defect to NHTSA. And they wouldnt meet again until January 31, when they finally agreed to report the defect.

The fact that GM took so long to report this defect says something was very wrong with the companys values. GM desperately needs to rethink the corporate philosophy reflected in the documents we reviewed”including training materials that explicitly discouraged employees from using words like defect, dangerous, safety related, and many more essential for engineers and investigators to clearly communicate up the chain when they suspect a problem.Recent actions indicate that GM is beginning some change, but we must make sure that change expands and is fully operationalized and institutionalized going forward.

The Consent Order we have signed today ensures that they do so.
It commit’s GM to empowering employees to act on safety concerns and eliminating decision-making, structural, and process barriers standing in the way of swift action on safety defects. It also commit’s GM to unprecedented and immediate reporting to NHTSA of safety issues under consideration by the company and to transparency into GMs activities and changes for up to three years. And it commit’s GM to a production schedule and outreach efforts to ensure the defect they knew about long ago is finally fixed for millions of Americans at risk.

The historic GM civil penalty and reforms we have ordered today should send a clear message: all manufacturers will be held accountable by NHTSA if they fail to quickly report and address safety-related defects. This reinforces a message this Administration has been sending clearly for the past five years through NHTSA investigations and fines that now total $124.5 million dollars across 6 different vehicle manufacturers. We want to make sure all auto manufacturers and suppliers hear the message that they must react immediately to potential safety defects”the American public relies on them to do just that, and the law requires them to do so. Quickly addressing and reporting safety-defects should always be a car companys bottom line”there is no such thing as an automaker overreacting to a safety defect.

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.