The General Motors problem
I know a couple who bought two brand-new General Motors cars in the mid-1980s. She bought an Oldsmobile station wagon, and he bought a beautiful sleek Buick.
They carefully maintained them, didn’t abuse them, and the cars fell apart. The Oldsmobile finally died after barely seventy thousand miles. The Buick had massive electrical problems for which the company refused to take any responsibility.
Once the engine just stopped in the middle of I-75, and the man steered into a ditch so he wouldn’t be crushed by an oncoming truck. They mostly drove Volvos and Japanese cars after that. They would both rather drive Mongolian cars than ever buy another General Motors vehicle. They aren’t interested in hearing claims that GM has changed.
Multiply their experience by a few million people, and it is not all that surprising that a company that once sold more than half the cars in America now sells barely one in every six. The couple I mentioned probably wasn’t the least bit surprised by GM’s defective ignition switch disaster. There was one thing different this time. CEO Mary Barra has been far more forthcoming than any of the automaker’s Soviet-style leaders were in the past.
Yesterday, she told a group of employees in Warren, “people were hurt and people died in our cars. We let those customers down … apologies and accountability won’t change much if we don’t change our behavior.” That’s right, of course – and there’s absolutely nothing to indicate that Barra knew anything about the ignition switch scandal, which was in motion long before she became the first female CEO in any Detroit automaker’s history.
Yesterday, the car company announced it was paying $900 million dollars to settle a federal criminal investigation into the crisis. Daniel Howes, the business-friendly Detroit News columnist, succinctly defined the scandal today as one of “shoddy engineering,” followed by the usual cover-up on the part of General Motors executives, a handful of which were later fired.
The official human toll for this negligence now stands at 124 dead and 270 injured, and may well go higher. General Motors’ costs so far are a little more than a billion and a half dollars in claims and fines. Nobody knows how much the company will lose in lost future sales, or the long-term costs in terms of customer good will. The taxpayers spent billions bailing out General Motors less than seven years ago.
You have to wonder what would have happened if this had been known about then. I have no doubt that Mary Barra is absolutely sincere about trying to change the culture of cover-up and resistance to change. If I could pick any corporate executive to have dinner and a long conversation with, it would be she. But I have yet to be convinced she can do it.
Thirty years ago, a brilliant and dynamic leader named Mikhail Gorbachev tried hard to change the behavior and the corporate culture of the stagnant and nefarious old Soviet Union. But that foul old political corporation imploded and died instead.
I’m not saying that’s what’s in store for General Motors. But I’m not sure the corporation could survive another scandal like this one, and I know they just lost even more past and potential customers, probably forever.
Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.