June 18, 2014 at 10:13 pm

Congress slams GM over 'deadly breakdown'

General Motors CEO Mary Barra arrives Wednesday to testify on the GM ignition switch recall during a U.S. House Oversight and Investigations Subcommittee hearing on Capitol Hill in Washington. (Getty Images)

Washington — Members of Congress on Wednesday roundly criticized General Motors Co.’s failure to recall 2.6 million cars for ignition switch defects linked to at least 13 deaths, and questioned whether the company could reform itself. With GM CEO Mary Barra testifying in an encore committee appearance, the automaker came under scathing criticism for its failure to recall the cars for more than a decade after employees knew of problems.

“Our investigation tracks with the findings of the report: a maddening and deadly breakdown over a decade plagued by missed opportunities and disconnects,” said Rep. Fred Upton, R-St. Joseph, chair of the House Energy and Commerce Committee, during the nearly two-and-a-half-hour hearing. “I find it very disturbing and downright devastating — to you, to GM, to folks in Michigan who live and breathe pride in our auto industry.”

House members focused on the failings of GM’s corporate culture and questioned its secrecy. They repeatedly challenged GM’s failings and urged the automaker to reshape its corporate practices. They vowed to hold a future hearing looking at the National Highway Traffic Safety Administration’s role in failing to uncover the defect.

Rep. Tim Murphy chaired the subcommittee questioning Barra and lawyer Anton Valukas, the author of GM’s internal investigation. He found it puzzling that in a company of 220,000 employees “not a single one in that company had the integrity to say I think we’re making a mistake here. Not a single one,” Murphy said. “Even out of the VA hospital we have lots of whistle-blowers. I don’t see here at GM that there’s whistle-blowers.”

Murphy asked Barra how she could change the culture. Barra said she had sent a “strong signal” by dismissing 15 people and disciplining five. She said she has repeatedly pressed employees to report safety issues immediately.

However, Rep. Diana DeGette, D-Colo., the senior Democrat on the panel, said a senior GM source told her that the firings “have only created more paranoia within the company that people are going to lose their jobs.”

Although the questioning was tough, the treatment wasn’t as rough as the two days Barra faced on Capitol Hill in April. She may be called again to speak in Washington to a Senate Committee in mid-July.

Upton disclosed an email from a GM employee in August 2005 that raised concerns about problems in a 2006 Impala that caused the ignition switch to turn off the engine when the car hit a bump at speed. A since-fired GM engineer, Ray DeGiorgio — who came under criticism for his handling of the ignition switches of Cobalts and other since-recalled cars in which at least 13 have died — dismissed the complaint. GM did not recall the Impala until this week. DeGette called it “just insane” that the stalling issue wasn’t seen as a safety issue.

The Impala was among nearly 3.4 million Chevrolets, Cadillacs and Buicks recalled Monday for ignition switch problems. The component in those cars is different than the one in the Cobalt, but also was designed by DeGiorgio.

Murphy and Upton said the latest recall raised serious questions, as did the callback of 510,000 Chevrolet Camaros on Friday for similar problems. Those recalls “make it painfully clear that this is not just a Cobalt problem,” Upton said.

Murphy called the problems “hauntingly similar. ... There are no easy fixes for the kinds of systemic, cultural breakdowns and fundamental misunderstandings that permitted GM engineers not to suspect a safety problem when Cobalts were stalling due to a faulty ignition switch.”

Asked if there are any other vehicles under investigation for ignition switch problems, Barra didn’t answer, but said the company is continuing an intensive review of all possible issues.

What's next for GM

Valukas told reporters after the hearing that he is satisfied his investigation covered the issues.

He blasted the automaker: “GM engineers and attorneys who were given the facts including reports on stalls and air bag malfunctions — and who were tasked with figuring out what went wrong — didn’t connect the dots. That’s because they were either incompetent or intentionally indifferent.”

He continued: “If employees do not have the moral fiber to do the right thing, and do not have the awareness to recognize when mistakes are being made, then the answer must be to change the people or change the culture.”

GM hopes the four months of intense press coverage will subside in a few weeks after it gets past a few hurdles: wrapping up any outstanding recall issues, and announcing a victim compensation plan by the end of the month. It may then take months or years to resolve investigations and lawsuits.

GM faces dozens of suits, including one filed Wednesday seeking $10 billion or more on behalf of all GM owners who own a recalled vehicle.

GM has recalled a record 20 million vehicles worldwide this year — compared with fewer than 1 million in 2013 — after 44 recall campaigns.

Since the first recall in February, GM has implemented a number of changes including naming a head of global vehicle safety, hiring 35 new safety investigators, restructuring its recall process to involve senior management and launching an employee program to encourage workers report potential safety issues.

The Justice Department, Securities and Exchange Commission and a dozen state attorneys general are investigating the automaker.

Grading testimony

George Cook, a former Ford Motor Co. marketing executive and an executive professor at the University of Rochester’s Simon Business School, said he would grade Barra’s testimony on Wednesday with an “A.”

On cultural changes, Cook said Barra laid out a clear path and direction, and that GM employees know they should elevate any potential safety or quality problem to leadership.

“It’s ‘Follow the leader and you’ve got to walk the talk,’” Cook said. “She’s made some very strong comments on changing the tone, changing the culture.”