EDITORIAL
General retreat
7/7/2014
Barra
The public pummeling of General Motors Co. continues: Last week, the Detroit automaker recalled more vehicles and announced compensation packages for people who were injured or died as a result of faulty GM ignition switches.
The company worked hard and well to erase questions about the quality of domestic-made cars and trucks that prevailed in the 1970s. Today’s consumers could be forgiven for wavering in their trust of a company that appeared to put economic gain ahead of safety for more than a decade.
A flawed ignition switch on the Chevrolet Cobalt, which GM has linked to 13 deaths and more than 50 injuries, is not an isolated problem. In the first half of this year, the automaker recalled an astonishing 29 million vehicles, including more than 25 million that were sold in the United States.
GM’s new chief executive, Mary Barra, says the company now will err on the side of safety, especially in light of how appallingly late company officials were in revealing the safety problem and recalling the affected vehicles.
Ms. Barra fired 15 GM employees over the ignition-switch crisis after an internal investigation showed a “pattern of incompetence and neglect.” That’s a start, but she must do more to assure consumers that a corporate culture of self-preservation, buck-passing, and finger-pointing is on its way out as well.
The Detroit Three automakers, including GM, successfully addressed the challenge of regaining their competitive edge against foreign-based car companies after taking a beating in the 1970s and 1980s. It would be distressing if the engineering defects suggest a regression in GM’s commitment to quality.
The failure to fix the bad switch promptly will likely cost GM far more than it saved by waving the problem through. Auto analysts say the company, which emerged from managed bankruptcy just five years ago, will likely spend billions of dollars on the compensation package.
GM will offer at least $1 million to families of victims who can prove the defective part caused a fatal accident. The compensation plan fairly calls for a formula that accounts for lifetime earnings lost and offers additional support for spouses and children. But company officials acknowledge that no dollar amount can compensate for the loss of life.
“GM engineers knew about the defect, GM investigators knew about the defect, GM lawyers knew about the defect, but GM did not act to protect Americans from that defect,” David Friedman, administrator of the National Highway Traffic Safety Administration, said last month.
The latest sales numbers don’t suggest that GM is experiencing immediate fallout from the ignition-switch defect issue. But the long-term impact will inevitably be detrimental if GM doesn’t do all it can to improve its performance and pay adequate compensation to those who deserve it.
The payouts are an important step toward restoring public trust, but the consequences for General Motors must involve more than money. Checks cannot simply be written and the crisis forgotten. The automaker’s employees who knowingly put lives at risk should also face criminal prosecution.