GM’s Cobalt crisis
The Chevrolet Cobalt is in many ways the perfect representation of the bad old days of General Motors, when quality didn’t much matter, market share was more important than profitability, and financial decisions came before design and even safety decisions.
First manufactured in 2004, the car was a clunker from the start. “Owners complained about power steering failures, locks inexplicably opening and closing, doors jamming shut in the rain — even windows falling out,” according to Danielle Ivory and Rebecca R. Ruiz, writing in The Times last week.
And then there was the ignition defect that could cause the power to shut down, which led to a huge recall two months ago — and has spiraled the company into crisis. The more we learn about it — and with a handful of investigations under way, there is much that is not yet known — the worse GM looks.
The company apparently knew about the defect as far back as 2001, when it discovered the problem during testing of the Saturn Ion. It saw the problem again in 2004, as the Cobalt was about to be rolled out with the same ignition system. According to documents obtained in congressional investigations, engineers came up with a proposed fix, but it was nixed on the grounds that it was too expensive and would take too much time.
Finally, in 2006, engineers at General Motors appeared to have fixed the problem, but they did so without changing the part number, which is a shocking violation of engineering protocol, wrote Micheline Maynard at Forbes.com. It makes GM appear to have been engaged in subterfuge, hiding the fact that its ignition had been defective all those years.
Meanwhile, at least 13 people died in accidents that were clearly the result of the faulty ignition design. There are also another 140 people who died in accidents involving the Cobalt in which the cause is unknown. Yet for more than a decade, General Motors did nothing.
What makes this a particularly difficult crisis for GM is that it comes at a time when the company is trying to prove to the world that the old GM is dead. With a new chief executive in Mary Barra, 52, and a handful of newly designed cars, GM wants the world to believe that it has emerged from its bankruptcy as a smarter, nimbler, more transparent company. And maybe it has. But the Cobalt fiasco does not instill confidence; rather, it reminds people why General Motors had to be saved by the government in the first place.
On the one hand, Barra has met with the families of people who were killed in Cobalt accidents, something the old management would never have done. She has also hired Kenneth Feinberg, who has become famous for parceling out money to victims of 9/11 and the BP oil spill. He has been brought on to help the company figure out how to compensate victims and their families — a tricky bit of business since the company is legally off the hook for any accidents that took place before the 2009 bankruptcy. Of the many investigations into the Cobalt, one has been ordered by Barra herself, an internal review aimed at, among other things, answering the question of why General Motors took so long to order a recall. These are all gestures aimed at reinforcing the idea that this GM is a different kind of company.
On the other hand, Barra was forced to acknowledge before Congress that she hadn’t even known about the problem until the end of January — just a few weeks after she became the chief executive — when she was informed that the company planned a recall. She told Congress that General Motors was a place that had “silos” and that information was too often not shared. She said so little of substance during her two days of congressional testimony last week that she came across as stonewalling at times. Sen. Claire McCaskill, D-Mo., accused her of presiding over “a culture of cover-up.” These are the kinds of moments that make you wonder if General Motors really has changed.
The Cobalt crisis will eventually fade. Feinberg will figure out how to pay victims. Plaintiffs’ lawyers will sue and settle. The investigations will be completed and the results announced. Presumably some heads will roll.
It is what happens over the ensuing months and years that will tell the tale of whether General Motors is truly a different company or whether this has all been for show. The government has sold its stake in GM. The company is making money now. It is unquestionably a leaner, less bureaucratic place.
What it now needs to prove is that it makes cars that will cause us all to forget about the Cobalt. That’s when we’ll really know if it has changed.
Joe Nocera is a columnist for The New York Times.