General Motors and the Ignition Switch Recalls

In November 2004, Candice Anderson was driving her boyfriend, Gene Erickson, to pick up his car when her Saturn Ion swerved off the road at a slight curve and hit a tree, killing her passenger. The couple was not wearing seat belts, and the airbags did not deploy. TheTexas State Police found traces of an antianxiety medication in Anderson's system, and she was fined and charged with criminally negligent homicide. Over the next 10 years, Anderson constantly relived the nightmare and wondered how she lost control on such an easy curve.

On a cloudy Wisconsin night in October 2006, Megan Ungar-Kerns was driving with her friends Amy Rademaker and Natasha Weigel in a 2005 Chevy Cobalt. The vehicle suddenly lost power and veered off the road into a utility pole and several trees. The airbags failed to operate, the driver was seriously injured, and both passengers died on the spot. The state police report noted that at the time of the crash the key was in "accessory" mode. Brooke Melton was driving in Georgia on a rainy March evening in 2010. It was her 29th birthday. Her 2005 Chevy Cobalt suddenly stalled, slid into an oncoming vehicle, rolled, and dropped 15 feet into a creek. Melton was wearing her seat belt, but the airbags did not operate and she died on the way to the hospital. Police recorded driving too fast for conditions as the cause of the accident; she was going 58 mph in a 55 mph zone. These tragic accidents had little in common except for three commonalities: in all of these cases (and, as it turned out, dozens more like them), the driver had for some reason lost control of the car, the built-in air bag protection systems had failed to deployand the vehicles were made by General Motors (GM). In February 2014, nearly a decade after Gene Erickson died, GM began a series of recalls that eventually affected 2.6 million vehicles whose model years ranged from 2003 to 2011. The reason for the recalls was a faulty ignition switch that easily shifted the key from "run" into the "off" or "accessory" positions. When the key was not in "run," the cars lost power, including to the steering, braking, and protective air bag systems. This reduced the driver's control and increased the risk of injury in the event of an accident. In addition to facing individual and class action lawsuits, the company was under investigation by the National Highway Traffic Safety Administration (NHTSA), the U.S. Congress, and the Justice Department. By May 2014, 47 accidents and more than a dozen fatalities had been linked to the ignition switch defect. But many questions regarding the decade-long delay in repairing the defective part remained unanswered.

General Motors

General Motors was America's largest automaker with a 2014 profit of $2.8 billion, 21,000 dealerships, and a workforce of over 200,000 across six continents. GM produced several well-known brands including Chevrolet (Chevy), Buick, GMC, Cadillac, Saturn, Saab, Pontiac, Oldsmobile, and Hummer. Founded in 1908 by William "Billy" Durant, the company motto was "a car for every purse and purpose." GM was known for innovative styling, exemplified by models such as the 1953 Chevrolet Corvette and the 1959 Cadillac ElDorado. Over several decades, GM repeatedly changed with the times, enjoying a run of successes. During WWII, GM diverted 100 percent of its manufacturing to the production of $12 billion worth of airplanes, trucks, and tanks for the war effort. In the 1970s, GM responded to rising gasoline prices with engines that run on unleaded fuel, offered air bags for protection, and introduced the first emission-reducing catalytic converter. In the 1980s, GM added Saab and Hummer to its product line and expanded its global footprint through joint ventures with China and India. GM partnered with Toyota in the NUMMI joint venture in the 1990s to concrete trucks and SUVs that satisfied emerging consumer demand. By the mid-2000s, GM's push for innovation led to the development of the Chevy Volt, one of the first electric vehicles, as well as the concept of a hybrid vehicle that switched from electric to gasoline. Still, GM was not as agile as the German, Japanese, and Korean automakers and began to lose market share, especially in fuel-efficient vehicles. The recession and credit crisis of 2008 significantly undermined GM's operating budget, and the firm, along with its financial arm GMAC, agreed to a government bailout. On June 1, 2009, the old General Motors Corporation filed for bankruptcy and transferred most of its assets to the new General Motors Company, whose major shareholders included the U.S. and Canadian governments and the United Auto Workers (UAW) medical trust fund. The new owners replaced then CEO Rick Wagoner with Fritz Henderson, who was then almost immediately dismissed in favor of the chairman of the board, Ed Whitacre. They also demanded increased fuel efficiency levels to compete with foreign automakers, and required the firm to streamline operations. GM sold the Saab line, discontinued the Saturn and Hummer models, and restructured GMAC into Ally Financial. The company became profitable once again by the end of 2009. In 2010, Whitacre stepped down and Dan Akerson became the CEO until Mary Barra, a 35-year veteran of GM and the first female CEO in the auto industry, took over in January 2014. The bailout, which also included Chrysler Motors, ended in December 2014 with a net loss to taxpayers of $9.2 billion, with only $1.3 billion attributed to Chrysler. Justification for the bailout hinged on the "too big to fail" concept, as the auto industry had contributed 3.6 percent of the total U.S. Gross Domestic Product (GDP), and every additional 30 percent decline in auto sales meant a corresponding 1 percent decline in GDP.

The Ignition Switch Defect

The ignition switch at the center of the recall was first introduced in the late 1990s. Between 1997 and 2001, GM designed a new low-current switch, formally named the Discrete Logic Ignition Switch (DLIS). Concurrently, GM implemented cost-saving manufacturing efficiencies through a baseline design, called a platform, which allowed the use of common parts across vehicle makes, models, and production years. The Delta Platform included the Saturn Ion, Chevrolet Cobalt, Chevrolet HHR, and the Pontiac G5, and the Kappa Platform included the Saturn Sky and Pontiac Solstice.The recalled ignition switch, a part shared across the Delta and Kappa platforms, was embedded in the steering column and had four positions. The driver turned the key to "start" (technically referred to as "crank") to turn on the engine, and once started, the key automatically toggled into the "run" position to indicate that the vehicle had power. When the key was moved to "accessory," the system signaled an engine shutdown, which turned off the air bags, power steering, and power brakes, and left only small electrical features, like the radio, operable. In the "off" or "lock" position, the switch cuts power to all vehicle functions. Inside the ignition switch, a plunger cap and coiled spring unit that fit into a small groove called a "detent" kept the key in the selected mode. The driver applied enough pressure, or torque, to move the key between positions. The longer the plunger and more tightly coiled the spring, the harder it was to shift key slots. The DLIS ignition switches were manufactured for GM by another company, Eaton Corporation (acquired by Delphi Mechatronics in 2001). GM's switch specifications recommended a target amount of pressure that a driver would have to apply to toggle the key from "run" to "accessory." But, as early as 1999, the parts manufacturer reported that proto type switches did not meet GM's specifications. Subsequent mechanical tests conducted by Delphi in 2001-2002 also showed that switches within every sample set had a "torque problem," tending to slip out of position when inadvertently jostled. Despite the test failures, the GM engineer in charge of the part authorized production of the switch in 2002, signing his approval email as "Ray (tired of the switch from hell) DeGiorgio." DeGiorgio's decision was based on Delphi's advice that a fix for the torque problem, such as a longer plunger, would take time, add costs, and could compromise the switch's electrical components, which he had already redesigned several times. The GM engineer apparently believed that the torque issue did not pose a safety problem, because he later told an investigator that he had "no awareness that the below-specification torque would have an impact on the safe operation of the car." However, this was not the case. The ignition switch defect compromised safety because if the car lost power while in motion, as a result of the key slipping out of position, it went into what was called a moving stall. Drivers in a moving stall would be less able to navigate the car because they no longer had access to power steering or braking (although they retained manual control). Then, if an accident occurred, the air bags would not deploy, because they no longer had power. GM used special sensors to control the air bag system. To avoid accidental inflation, the sensors were programmed to shut down when the ignition switch moved to the "off" or "accessory" position. All GM vehicles in the Delta and Kappa platforms used the same air bag sensor systems.

The First Indications of a Problem and GM's Response

The 2003 Saturn Ion was the first GM vehicle to roll off the assembly line with the DLIS switch. Within the first year of its release, the Ion had logged over 200 warranty incidents related to its ignition switch. The two most common problems were the car stalling while the early Warning team noted high warranty claim rates for the Cobalt and the Ion and asked the DAD to review. The request mentioned 43 accidents that caused 27 injuries and four deaths, and indicated that the number of claims for the Cobalt were higher than other GM vehicles, and also greater than those of other automakers. The DAD chose the Rademaker/Weigel case (from Wisconsin), but the packet of case documents related to the crash did not include some critical items, even though they were stored in the agency's own files. These included an earlier SCI study conducted by the Indiana University Transportation Resource Center, which had correctly linked the issues of low torque keys, power loss, and airbag failure, and the 2007 Wisconsin State Police report that had noted that the key had been in "accessory" mode. The packet also did not include GM's TSB related to the key slip problem. Failing to consider these reports, the team ultimately placed the blame for the Rademaker/Weigel crash on airbag non deployment due to off-road conditions. Despite a recommendation from its associate administrator of enforcement to expand research, the ODI decided not to pursue a formal investigation. In 2014, the Energy and Commerce Committee's review of NHTSA's decision found no written documentation explaining why the agency had chosen not to pursue its GM study. Over the next two years, the media published a number of reports criticizing the NHTSA for its lack of oversight regarding airbag failures. The Kansas City Star printed a series of scathing articles with headlines such as Air Bag Recall Process Drags On, Crash Kills Another Driver, and Taking Air Bag Cases to Court Can be Tricky.

The NHTSA publicly complained to the editor that the paper "ignored warnings by the [NHTSA's] experts that the underlying premise of its recent airbag story was fundamentally flawed." Nonetheless, these news reports prompted NHTSA to further examine frontal crash safety, including another look at the Cobalt. But, the DAD examined minimal data and again concluded that there was no pattern of failure, which brought the investigation to a standstill. After declining three times to cite GM, the agency would not revisit the airbag non deployment issue again until 2014, after the GM recalls started.

The GM Engineer's Secret Fix

As the NHTSA investigatedand failed to take actionthe GM engineer in charge of the ignition switch, Ray DeGiorgio, apparently set about fixing the torque problem on his own,in secret, and without fully documenting his process. General Motors followed a formal approval process for development of all vehicle parts,called the Production Part Approval Process (PPAP). This process required official sign-off from both the supplier and GM personnel. DeGiorgio had followed this process in 2004 when he approved a different type of grease to fix the cold start problem. But, in 2006, he worked secretly with the switch supplier, Delphi, to completely replace the short, problematic spring-plunger with a longer, more tightly coiled version, a design GM had originally rejected in 2001. DeGiorgio approved the low-cost plunger replacement as part of another electrical update for the cold start problem, but made no change to the part number and did not communicate the change internally. Under GM policy, a new part number should have been assigned. During investigative interviews in 2014, DeGiorgio claimed that he did not remember approving the plunger-spring part change. Documents discovered in the supplier's files suggested otherwise. In one internal email, sent in 2005, a Delphi engineer stated, "Cobalt is blowing up in their face in regards to turning the car off with the driver's knee." The Red-X team had been instructed by the GM legal department that all cars in question were under quarantine; they were unable to secure a vehicle to evaluate. The study was canceled, and the investigation was mired yet again. In the meantime, Brooke Melton's parents were convinced that she had not been driving too fast for conditions, and that there must have been something wrong with her 2005 Cobalt. In fact, just days before the fatal accident, Brooke had taken her vehicle to a GM dealership to research a worrisome and unexpected moving stall. In 2010, her bereaved parents hired an independent engineer named Mark Hood to review the accident. Hood inspected the ignition with particular focus on the plastic and metal switch, to no avail. Next, he purchased a $30 replacement part from a GM dealer and repeated the inspection. To his surprise, the newer part had a longer plunger and a tighter spring, and required a notable increase in torque to rotate the key. The details of this study were presented to GM at a deposition for the Melton case in April 2013. During the deposition, DeGiorgio acknowledged the differences between the original plunger-spring and the replacement part, but again disavowed any knowledge of a change to the parts. The evidence was then presented to the SRC, and in September 2013, they authorized a $5 million settlement with the Meltons. GM also hired an outside investigator to repeat Hood's research, and six months later in October 2013, the study concluded that there had been a definite design change in the ignition switch between 2006 and 2007, and that earlier versions of the switch did not meet GM specifications. Given this compelling evidence, the partmaker, Delphi, turned over documents that explicitly showed DeGiorgio's approval for the change in April 2006. Finally, GM understood that the ignition switch was defective, and when it slipped into a moving stall, the resulting lack of power disabled the air bags and risked the occupants' safety. In December 2013, the SRC sent its conclusions regarding the flawed switch to the Executive Field Action Decision Committee (EFADC), which was responsible for considering a recall. Their first meeting on the topic was inconclusive and a decision was delayed for another six weeks. Finally, starting on February 7, 2014, EFADC ordered a succession of recalls that eventually included over 2.6 million defective vehicles.

Congressional Hearings

Congressional hearings followed the recalls, the first on April 1 and the second on June 18, 2014. GM CEO Mary Barra and NHTSA acting director David Friedman testified at the April hearing. For his part, Friedman admitted shortcomings within NHTSA, but placed the blame on GM, stating that the automaker withheld critical information such as the failure to change the switch part number and the fact that defect discussions were covertly held with the supplier. Government interrogators suggested that NHTSA had ample information and might have been too soft on GM. Senator Claire McCaskill opined in the hearing that the agency was "more interested in singing Kumbaya with the manufacturers than being a cop on the beat." Representing GM, Ms. Barra promised full disclosure and indicated that the company and its board of directors had retained outside counsel, the law firm Jenner & Block, to conduct a full investigation. In May, immediately following the hearings, Senator Ed Markey introduced stricter

legislation related to the Early Warning system and commented: At almost every juncture for the past decade, whenever NHTSA was made aware of possible safety issues with the GM vehicles, it chose to take no action. As damaging as the "GM nod" that is said to have embodied the culture of ineptitude at the company, the "NHTSA shrug," when confronted by evidence of this fatal safetydefect, was also responsible for keeping these deadly vehicles on the road. It is time to pass legislation to ensure that information about possible deadly defects is made

public so American families can be protected even if NHTSA abdicated its responsibility to public safety again in the future. In May 2014, NHTSA slapped GM with the maximum $35 million penalty for failure to

disclose the defect in a timely manner. The same month, GM fired 15 employees, including engineer Ray DeGiorgio and several high-level lawyers, and disciplined five more. The Valukas Report, named after its lead author Anton R. Valukas of Jenner & Block,was released on June 5. In preparing the three hundred-page report, Valukas and his team had reviewed over 41 million documents and interviewed 230 witnesses. The report concluded that the delayed recall was due to a pattern of "incompetence and neglect," a dysfunctional organization, and a culture driven by cost over safety. The report exonerated senior leadership, including the board of directors. However, the Valukas report also described a culture of mixed messages from management. On one hand, management promoted a message of safety first, saying "when safety is at issue, cost is irrelevant;" while on the other hand, it also promoted a message of"cost is everything," seeming to suggest the opposite. A quality training course from 2004 instructed employees to demand excellence: The harsh reality iswe are competing in a new world, one that demands a culture where there is no tolerance for defects at any point during [sic] the vehicle development and manufacturing process. Because the marketplace has zero tolerance for defects, this organization will have no tolerance for defects. Yet, statements from GM workers indicated that cost-containment measures in the 2000s overshadowed the "zero tolerance" directive, noting that a cost-control focus "permeates the fabric of the whole culture." Leading up to GM's 2009 bankruptcy, the company was clearly concerned about costs when they instituted workforce reductions in 2006, 2008, and 2009 that shrank a 1979 peak headcount of around 468,000 to just 66,000. The Valukas Report concluded by stating that there had been no intentional cover-up related to the ignition switch defect. The June hearing included testimony from Ms. Barra and Mr. Valukas, who were both grilled by members of Congress over the findings of the Valukas Report. The hearings were opened by House Representative Tim Murphy, who suggested that the Valukas Report could have been subtitled "Don't Assume Malfeasance When Incompetence Will Do." Murphy went on to state that: Even when a good law, like the TREAD Act of 2000, is in place, it requires people to use common sense, value a moral code, and have a motivation driven by compassion for it to be effective. Here, the key people at GM seemed to lack all of these in a way that underscores that we cannot legislate common sense, mandate morality, nor litigate compassion, and at some point it is up to the culture of the company that has to go beyond paperwork and rules. Congresswoman Diana DeGette pressed Mr. Valukas about management's role, saying: The report singles out many individuals at GM who made poor decisions or failed to act, but it doesn't identify one individual in a position of high leadership who was responsible for these systemic failures. The report absolves previous CEOs, the legal department, Ms. Barra, and the GM Board from knowing about the tragedy beforehand. This is nothing to be proud of. That the most senior GM executives may not knowhave known about a defect that caused more than a dozen deaths is, frankly, alarming and does not absolve them of responsibility for this tragedy.

Mr. Murphy went on to question Mr. Valukas about a possible cover-up:

Mr. Murphy: Does an employee who acts alone, or who hides or doesn't share information, a cover-up?

Mr. Valukas: If the individual knows that the information is afor instance, a safety information, and understands that and deliberately decides to conceal that, that is a cover-up, yes, it is.

Mr. Murphy: I just find it hard to believe that of 210,000 employees, not a single one in that company had the integrity to say, I think we are making a mistake here. Not a single one. That is puzzling to me. Despite the intense scrutiny, Ms. Barra remained composed and promised to turn the company around: We are currently conducting, and I believewhat I believe is the most exhaustive comprehensive safety review in the history of our company. We are leaving no stone unturned, and devoting whatever resources it takes to identify potential safety issues in all of our current vehicles and on vehicles no longer in production. Our responsibility is to set a new norm and a new industry standard on safety and quality. I have told our employees it is not enough to simply fix this problem; we need to create a new standard, and we will create a new norm.

DiscussionQuestions

1. Who or what was responsible for the ignition switch defect and the resulting deaths and injuries? In your response, please consider the roles of General Motors and its managers and employees, U.S. auto safety regulators, and the drivers of the vehicles themselves and their representatives.
2. If you were a GM employee, what would you do if you had knowledge of a safety defect? If your manager told you to ignore the problem, would you go outside the company to blow the whistle? What might be the cost of keeping silent to the employee and the employer?
3. If you were the CEO of General Motors, what changes would you implement to avoid similar problems from arising in the future?
4. What actions do you recommend that policymakers and regulators take to avoid similar problems from occurring in the future?
5. As a consumer, what can you do to ensure safety in your own vehicle, before and after purchase?