GM fires 15 people following ignition switch investigation [UPDATES]
UPDATE: The text of this story has been revised with more detail, following Mary Barra's press conference this morning.
UPDATE 2: The National Highway Traffic Safety Administration has made the full Valukas report available at its website, as a PDF download. If you'd like to read it in it's full, 325-page glory, you can do so here.
GM said it has fired 15 employees related to those series of failures unearthed by Valukas.
General Motors said a pattern of "incompetence and neglect" led to a decade-long defect in an ignition switch that has killed at least 13 people, and probably more.
On Thursday morning, CEO Mary Barra said she had reviewed an internal report on the safety crisis compiled by an outside investigator, former US Attorney Anton Valukas, and that the company had taken aggressive action to fix problems and ensure such a pattern never occurs again.
General Motors said it has fired 15 employees related to those series of failures unearthed by Valukas during his investigation and disciplined five more. At least half the employees dismissed were executives, Barra said.
She did not provide specifics on the people or their positions – with the exception of confirming that Ray DeGiorgio, a design release engineer of the Chevrolet Cobalt who had previously been placed on involuntary leave, is one of the 15 dismissed.
GM also confirmed Thursday that Kenneth Feinberg, an independent consultant hired by the company in the wake of the fiasco that erupted in February, will administer a compensation fund to provide financial funds for victims of the problem, including those who lost loved ones or were injured in defect-related crashes.
Barra said the Valukas report was "extremely thorough, brutally tough and deeply troubling."
Barra said the Valukas report was "extremely thorough, brutally tough and deeply troubling," and depicted a company that valued "bureaucratic processes" over both safety and its customers.
Earlier documents had revealed GM had known about the hazards of the defective ignition switches for more than a decade, yet done nothing to fix them, all while motorists were injured and killed in crashes caused by the flaw.
General Motors has recalled more than 2.5 million cars across the world because of the faulty switches. In the ensuing fallout, GM has issued 29 recalls to date that affect 15.8 million cars in North America.
GM did not make the Valukas report available for viewing Thursday, though the company said it would be available on the National Highway Traffic Safety Administration website at a later time.
For all the focus on safety Thursday, the company left some key questions unanswered.
It said all decisions made regarding the victims' compensation fund would be answered by Feinberg, who wasn't available for comment Thursday. Barra said he would determine the dollar amount victims receive, determine who is eligible for the fund and, ultimately, determine the number of fatalities caused by the defect.
Feinberg, the company said, will solely determine the criteria and rules.
GM also did not say how it would handle legal claims from victims' families who may decide to not work with Feinberg. Their legal status has been a sensitive point, with many legal experts believing their liability is shielded by its 2009 bankruptcy.
Scroll down to find the official GM press release, and the full text of Barra's speech, below.
Show full PR text
GM Receives Extremely 'Thorough,' 'Brutally Tough' and 'Deeply Troubling' Valukas Report
- Company will act on all recommendations
- 15 GM employees no longer with company
- Five other GM employees disciplined
- Report reveals no conspiracy or cover-up
- Feinberg to administer compensation fund
DETROIT – General Motors CEO Mary Barra said today that GM has received the findings of an investigation by former U.S. Attorney Anton Valukas into the Cobalt ignition switch recall and plans to act on all of its recommendations.
She again expressed deep sympathy for the victims of accidents related to the ignition switch defect and their families. In addition, Barra announced that Kenneth Feinberg will administer a compensation program for those who have lost loved ones or who have suffered serious physical injuries as the result of an ignition switch failure in recently recalled vehicles.
Barra described the Valukas findings as "extremely thorough, brutally tough, and deeply troubling."
"Overall the report found that, from start to finish, the Cobalt saga was riddled with failures which led to tragic results for many," Barra said, noting that the report revealed no conspiracy by the company to cover up the facts and no evidence that any employee made a trade-off between safety and cost.
Barra said 15 individuals who were determined to have acted inappropriately are no longer with the company. Disciplinary actions have been taken against five other employees.
GM Chairman Tim Solso said the Board of Directors has been working closely with the management team to get the facts on the ignition switch issue and to see that changes are made to prevent such a tragedy from ever happening again.
"The Board engaged Anton Valukas to investigate and determine what went wrong while already working with GM's leadership to make necessary changes," Solso said. "We have received and reviewed Valukas' very thorough report and are continuing to work with management to oversee the implementation of the recommendations contained in the report.
"In addition, the Board also retained independent counsel to advise us with respect to this situation and governance and risk management issues. We will establish a stand-alone risk committee to assist in overseeing these efforts." Solso said. "The Board, like management, is committed to changing the company's culture and processes to ensure that the problems described in the Valukas report never happen again.
"The Valukas report confirmed that Mary Barra, Mike Millikin and Mark Reuss did not learn about the ignition switch safety issues and the delay in addressing them until after the decision to issue a recall was made on Jan. 31, 2014," Solso said.
Barra emphasized to employees that the company has adopted and will continue to adopt sweeping changes in the way it handles safety issues. The actions to date include:
- Appointing Jeff Boyer as Vice President of Global Vehicle Safety, elevating and integrating GM's safety processes under a single leader
- Adding 35 product safety investigators that will allow GM to identify and address issues much more quickly
- Instituting the Speak up for Safety program encouraging employees to report potential safety issues quickly and forcefully
- Creating a new Global Product Integrity organization to enhance overall safety and quality performance, and
- Restructuring the recall decision making process to raise it to the highest levels of the company.
In her remarks to employees, Barra said she is committed to leading "in a way that brings honor and respect to this company.
"Together, we have to understand that the attitudes and practices that allowed this failure to occur will not be tolerated," she said. "Also, if we think that cleaning up this problem and making a few process changes will be enough, we are badly mistaken. Our job is not just to fix the problem. Our job must be to set a new industry standard for safety, quality, and excellence."
GM CEO Mary Barra's Remarks to Employees on Valukas Report Findings
Thank you and welcome to our Global Town Hall meeting. I have a lot to cover today, so let's get started.
On Monday, former U.S. Attorney Anton Valukas presented the findings of his investigation into our ignition switch recall to the Board of Directors. As promised, we have shared the report with the appropriate government officials. This morning, I want to discuss it with you. I also want to update you on the company's commitment to create a compensation program for victims.
Before addressing the Valukas report, I first want to take this opportunity to again express my deepest sympathies to the families that lost loved ones and to those who were injured.
I realize there are no words of mine that can ease their grief and pain. But as I lead GM through this crisis, I want everyone to know that I am guided by two clear principles: First, that we do the right thing for those who were harmed; and, second, that we accept responsibility for our mistakes and commit to doing everything within our power to prevent this problem from ever happening again.
With respect to the Valukas report, you should know that he and his team had complete independence in their activities. The investigation covered more than 350 interviews with over 230 individuals and more than 41 million documents.
Mr. Valukas has confirmed that he and his investigators were provided with unlimited access to interview any GM employee and every request for an interview of a GM employee was granted. A number of former GM employees and third parties were also interviewed as part of the investigation.
I will share my perspective and announce some actions in response to the report. My understanding is NHTSA, our regulator, will post the full report on their website, which is available for anyone to review.
I can tell you the report is extremely thorough, brutally tough and deeply troubling. For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. I was deeply saddened and disturbed as I read the report.
But this isn't about our feelings or our egos. This is about our responsibility to act with integrity, honor and a commitment to excellence.
With all of our colleagues around the world watching today, I want it known that this recall issue isn't merely an engineering or manufacturing or legal problem, it represents a fundamental failure to meet the basic needs of these customers.
Our job is clear: To build high quality, safe vehicles. In this case with these vehicles, we didn't do our job. We failed these customers. We must face up to it and learn from it. To that end, on behalf of GM, we pledge that we will use the findings and recommendations from this report as a template for strengthening our company.
What the Valukas investigation uncovered – in this situation – is a pattern of incompetence and neglect.
Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch. If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately.
Furthermore, numerous individuals did not accept any responsibility to drive our organization to understand what was truly happening. The report highlights a company that operated in silos, with a number of individuals seemingly looking for reasons not to act, instead of finding ways to protect our customers.
Let me be clear: This should never have happened. It is unacceptable. Our customers have to know they can count on our cars, our trucks and our word. Because of the actions of a few people, and the willingness of others in the company to condone bureaucratic processes that avoided accountability, we let these customers down.
To give you a sense of the thoroughness and forcefulness of the investigation, I want to paraphrase a few of the key conclusions:
GM personnel's inability to address the ignition switch problem, which persisted for more than 11 years, represents a history of failures.
While everybody who was engaged on the ignition switch issue had the responsibility to fix it, nobody took responsibility.
Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end.
The ignition switch issue was touched by numerous parties at GM – engineers, investigators, lawyers – but nobody raised the problem to the highest levels of the company.
Overall, the report concludes that from start to finish the Cobalt saga was riddled with failures, which led to tragic results for many.
I hate sharing this with you as much as you hate hearing it. But I want you to hear it. In fact, I never want you to forget it. This is not just another business crisis for GM. We aren't simply going to fix this and move on. We are going to fix the failures in our system – that I promise. In fact, many are already fixed. And we are going to do the right thing for the affected parties.
But I never want to put this behind us. I want to keep this painful experience permanently in our collective memories. I don't want to forget what happened because I – and I know you -- never want this to happen again.
You should know that Mr. Valukas' report revealed no conspiracy by the corporation to cover up the facts. In addition, the investigators found no evidence that any employee made a trade-off between safety and cost.
The problem is this case is more complicated and more nuanced. What Valukas found was a pattern of management deficiencies and misjudgments – often based on incomplete data – that were passed off at the time as business as usual.
Unfortunately, the report found, these seemingly benign actions led to devastating consequences. In short, we misdiagnosed the problem from the beginning.
Experienced engineers, with responsibility for safety, didn't understand that the airbags would not deploy if the ignition switch changed position.