General Motors is known for a company culture that encourage

General Motors is known for a company culture that encourage

Postby admin » Fri Jan 01, 2016 12:39 am

General Motors is known for a company culture that encourages employees to keep quiet about problems.
By Teresa Welsh
April 2, 2014

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Internal General Motors documents show that the car company was aware of an ignition problem that caused 13 deaths, but declined to spend 90 cents per car on a fix. The company would also have had to pay a one-time cost of $400,000 to change its equipment and installation processes, and the 2005 emails debated whether or not known faulty ignition switches should be replaced.

The car company knew about the ignition problem, which cut off car engines and disabled airbags, power steering and power breaks, for more than a decade before it recalled the 2.6 million cars affected. New GM CEO Mary Barra testified Tuesday in front of the U.S. House Committee on Energy and Commerce about why action wasn’t taken earlier. GM emerged from bankruptcy in 2009, and Barra, who took over the company in January, said the automaker was now abandoning a “cost culture” for a more customer-based approach.

“No corporate executives will say publicly that they prefer profits to preventing deaths, even though their actions prove otherwise,” wrote Nicholas Freudenberg for Slate. He said that as long as the public doesn’t demand stricter policies to protect against preventable deaths, corporations will continue to avoid costly regulation. “[T]he deeper task should be to strengthen the visible hand of government in protecting public health so we aren’t still facing this issue 50 years from now,” Freudenberg wrote.

The company could face severe economic backlash for the cover-up, wrote Michael Fletcher and Steven Mufson of the Washington Post. “[A] corporate culture reluctant to pass along bad news” led the company to ignore signs the ignition problem was widespread. “When GM was struggling to cut costs and buff its image, a recall of its popular small cars would have been a terrible setback,” they wrote.

Rick Moran of American Thinker said that even though GM didn’t want to pay the costs associated with a fix, there’s no excuse for blatantly ignoring the problem after it was discovered:

GM was bleeding red ink at the time and I'm sure managers felt the pressure to keep costs down. But for a company that sells 8 million cars a year with profits of nearly $5 billion to be concerned about a few million dollars spent to fix an electrical switch, that kind of cost consciousness is excessive by any measure.

He said it will take years for the company’s brand to recover, and “[w]hatever the families of the dead can get out of GM for this shockling lack of concern for custimer safety, it won't be enough.”

Greg Pollowitz of National Review questioned whether or not the Treasury Department knew about the faulty switch when it provided a taxpayer-funded bailout. The government’s remaining stake in GM was sold in December of 2013, shortly before GM determined that 13 people had been killed because of the ignition problem. Calling the timing “suspicious,” Pollowitz wondered: “Did the Treasury Department get lucky with it sales or is the government guilty of insider trading?” He said the Securities and Exchange Commission should investigate to determine who knew what, and when.

Teresa Welsh is a foreign affairs reporter at U.S. News & World Report. E-mail her at twelsh@usnews.com and follow her on Twitter.
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