March 28, 2014 at 1:00 am

GM culture, crisis may have slowed move to recall

General Motors Co.’s bureaucratic, slow-moving, compartmentalized culture — coupled with its fight for survival — may have slowed the automaker’s decision to finally recall 1.62 million cars tied to 12 deaths, observers and former insiders say.

The company’s vow that it is a new GM with a revamped culture focused on customers will be heavily tested as the company works to fix the recalled cars and regain public trust.

GM’s own chronologies tied to recalls in older Chevy Cobalts, Saturn Ions and other cars show silence in GM’s own review into the ignition-switch investigation for nearly two years after GM’s June 2009 bankruptcy. Investigations into the Ion also stopped about a year and a half before the bankruptcy filing.

The recalls, announced in February, came a decade after some in the company first became aware there might be a problem. The faulty ignition switches can allow the engine to be turned off accidentally while driving, which disables power steering and air bags.

The chronologies also show that lack of communication inside the company and between departments at the vast organization may have delayed a recall. In one instance, GM legal staff knew in September 2005 of a fatal crash involving a 2005 Chevy Cobalt in which air bags didn’t deploy, but the company’s engineers learned about it from regulators in a March 2007 meeting.

Thousands of seasoned salaried workers were shed during the economic downturn in the run-up to GM’s bankruptcy in June 2009. The automaker cut nearly 5,000 salaried jobs in the U.S. between the end of 2007 and end of 2008.

It was a disruptive period for the company, which saw whole groups disband, said David Cole, chairman emeritus of the Center for Automotive Research. “Any organization that’s going through this kind of thing, it’s in chaos,” he said. “You have really dramatic downsizing.”

A few company insiders who no longer work for GM say that while there was upheaval at the time, GM staff continued product safety investigations, and recalls continued.

Cole said it will be important to find out what kind of changes were made to teams working on Cobalt and Ion investigations, and if any of those workers left the company.

GM has indicated it became aware of ignition problems in a pre-production Ion as early as 2001. GM’s employees in 2004 reported troubles with the ignition shutting off while driving Ions. And in 2004, before the launch of the 2005 Cobalt, GM also learned of a similar problem with a Cobalt. GM received dozens of complaints from owners of Cobalts in 2005 and 2006. GM has said its team created a redesigned key head to address the problem, but canceled the revamp.

Morningstar Inc. auto analyst David Whiston said the recall chronologies show a lot of “very poor communication, a lot of siloed operations” where some GM departments had information others didn’t, and where potential problems didn’t reach senior management level. “I suspect no one wanted to hold up the launch of the Cobalt, because it might have been bad for their job security,” he said.

The recall, announced last month in two parts, has led to investigations by federal regulators and Congress, and a criminal probe by the Justice Department.

Given the complexities of what’s involved — layers of bureaucracy, people who’ve left, the scattered data involved — one former GM executive said it would be a “miracle” to find out exactly what happened.

Committees confuse feds

The culture of old GM still seems apparent today when reviewing GM’s recall process: It’s filled with layers of people and confusing and similar-sounding committees. For example: GM in its recall chronologies refers to a field performance evaluation review committee and a field product evaluation recommendation committee, using the acronym “FPERC” for both.

The National Highway Traffic Safety Administration — which is investigating the timeliness of GM’s recall — even seems baffled.

“Are these two different committees?” asked O. Kevin Vincent, chief counsel for NHTSA in its March 4 questionnaire in its timeliness investigation into GM that’s due Thursday. “If yes, describe the purpose of each committee. If no, explain the reason GM’s chronology uses two names for this committee.”

GM’s safety review and recommendations for recalls are shielded from the executive offices by design so that management doesn’t interfere with technical experts’ analysis. Ultimately, the data-crunching and recommendations reach a three-person executive-level committee, which GM calls the Executive Field Action Decision Committee, or EFADC.

Mark Reuss, GM’s head of GM’s global product development, purchasing and supply chain, told reporters last week that GM collects problem data from car owners, dealers and customer-assistance centers.

“That data assimilation and field investigation is the fact-gathering that leads to a group of peers that integrate that data. That group of peers then forms a recommendation, very simple, that goes to the governing body of safety in the company,” Reuss said. “We’re talking about eight people here.”

GM has said it is already taking steps to focus on safety and recalls. The company last week announced it had created a new position, vice president of global vehicle safety. Jeff Boyer now is responsible for safety development of GM vehicles such as engineering and validation of safety performance, crash testing and recalls.

In a message to employees last week released by GM, Boyer said GM is implementing a new team to “focus on emerging issues, early identification and safety analysis.” GM has not released details.

GM has hired outside lawyers to investigate what went wrong with its system.

Data analysis questioned

Another problem area that may have slowed GM’s response was its data-analysis capability. A tremendous amount of data flows into the company. Each car or truck has thousands of parts, and GM has tens of millions of vehicles on the road in the U.S.

“The trick is, now we are finally getting mathematical tools to integrate to tell a story,” Cole said.

GM reassured media last week that its analytical tools are robust enough that it can find a “needle in a haystack.”

Under former Chairman and CEO Dan Akerson, GM began transforming its information technology organization, in-sourcing thousands of workers from various vendors and cutting 23 data centers to two. Akerson had pointed to past problems such as a lag in financial reporting and not being able to pinpoint what was profitable.

The company continues to stress that today’s GM is different. It has apologized several times and admitted its process was broken, which the old GM likely would not have done, industry watchers say.
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