General Motors Recall Has Roots in the Past

General Motors

Recalls of automobiles are a fact of life for the manufacturer, the owner of the vehicles in question, and the National Highway Traffic Safety Administration (NHTSA). Some of those recalls are taken care of before legal action is instituted, some cases bog down in courts and take years to resolve. This past March ended a defect situation that began 10 years ago, as General Motors (GM) recalled 1.3 million cars with power-steering integrated parts that could suddenly stop working. The roots of this General Motors recall is steeped in the past.

For years GM stated that a loss of power steering was not a serious safety risk. It took a government agency 10 years to prove Saturn Ions built between 2004 and 2007 did pose a risk. Government records reviewed by the Wall Street Journal illustrated owners of this vehicle complained about power steering problems four times more often than owners of similar automobiles.

The length of this particular case has roots in another GM legal recall battle from 30 years ago. According to hundreds of complaints from owners, in the early ’80s a recall case was ordered by the NHTSA against GM concerning the rear brakes locking up on first-generation front wheel drive X-body style cars. The NHTSA lost the case against GM. The final outcome of this case was that customer complaints no longer held sway, as it was not proof that a recall was needed or that a defect in fact even existed.

The verdict meant NHTSA needed positive proof in the form of exact data illustrating that a defect was present before a recall or lawsuit could be brought against any automobile manufacturer. Complaints began to mount, though no testing was done by the NHTSA until 2011. Eight models of GM cars were involved, with the steering wheel mechanism shutting down unexpectedly, but three specific models were cited: the Chevy Cobalt, the G5 and the Saturn Ion.

GM conducted its own tests and found that oil was leaking into the electric motor used for the steering column. In March 2010 General Motors informed the National Highway Traffic Safety Administration they would recall more than a million vehicles, but only the G5s and Cobalt models, even though the steering motor on the Saturn Ion was the same. The warranty on the Ion was extended. Owners with a steering problem could have a free motor installed if the vehicle had less than 100,000 miles on it, and if they complained to dealers and made them aware of the issue.

In tests performed by the NHTSA data was gathered on the Ion steering problem by turning the power steering off and evaluating the results of the drivers’ responses when they were forced to turn the wheel while driving on a test course. It was determined drivers needed four or five times the regular force it normally takes to turn a steering wheel.

The experiment simulated a worse case scenario, a situation few Ion owners would ever encounter. Roots of the General Motors recall spurred the NHTSA to search for more evidence of defects. Just before the end of March, Mary Barra, the CEO at GM, was brought before Congress and testified why the auto maker took 10 years to recall cars with an ignition-switch defect, which was part of the steering column problem.

After the Congressional testimony of Mary Barra, GM made a public announcement concerning several recalls, the Saturn Ion power steering deficiency among them. The NHTSA closed the investigation of the Ion. Barra has only been in her position for six months, and during her testimony at the Congressional hearing mentioned changing the culture at General Motors, focusing on vehicle safety and creating an atmosphere of cooperation with the NHTSA.

Alan Mullaly, CEO at Ford Motor Co. who is set to retire on July 1 of this year found himself in a similar situation in 2006. Mullaly became the CEO at Ford after a long and distinguished career at Boeing. He saved Ford by changing the culture it was steeped in for many years. Ford was losing $12.7 billion in 2006, but by 2013 it was making $8.6 billion.General Motors

Mullaly, an outsider, had a focused plan of action that included trimming the product line, producing more fuel-efficient cars, making them smaller and sticking with the plan. Along with this aspect it was important to shift the focus of executives from an attitude of getting ahead on the mistakes and short-comings of others to making then accountable for their actions. Every week a meeting was held with required attendance by all top executives. These managers were expected to point out problems and offer solutions.

According to Ford executives everything was running smoothly, and this behavior continued for several weeks. Then Mullaly announced that Ford was going to lose billions of dollars and asked if everything was still running smoothly. Mark Fields stood up and admitted to serious issues. He is slated to be Mullaly’s successor.

Mullaly has advantages over Mary Barra, since his plan also worked at Boeing, he was not steeped in the automobile culture of Ford at that time and he stuck with his plan even when Ford struggled to make a profit. With a history of problems that have roots in the past, Barra and General Motors will face more obstacles, including more possible recalls.

By Andrew Towle

Wall Street Journal

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