Former U.S. attorney Anton Valukas' report on the delayed recall of millions of General Motors vehicles paints an extremely unsettling picture into the company's culture. The report -- a product of more than 350 interviews with more than 230 people and analysis of more than 41 million documents -- clearly chronicles "a pattern of incompetence and neglect" and an arrogant culture that lacked communication, accountability and oversight.Watch video
DETROIT, MI - Former U.S. attorney Anton Valukas' report on the delayed recall of millions of General Motors vehicles paints an unsettling picture into the company's culture.
The beginning of the report arguably sets the tone for the next 314 pages regarding the ignition switch recall: "In the fall of 2002, General Motors ('GM') personnel made a decision that would lead to catastrophic results."
More than a decade later, those catastrophic results have come to fruition in the form of unprecedented fines and vehicle recalls, including 2.6 million small cars due to faulty ignition switches linked to at least 13 deaths and more than 50 accidents.
But the problems insides of GM didn't necessarily start in 2002. The report – a product of more than 350 interviews with more than 230 people and analysis of more than 41 million documents – chronicles a culture that lacked communication, accountability and oversight.
"What the Valukas investigation uncovered – in this situation – is a pattern of incompetence and neglect," said GM CEO Mary Barra during an employee town hall meeting Thursday morning at its Warren Technical Center to discuss the report.
For roughly 250 pages, the report chronicles how the ignition switch recall came to be and who was involved, followed by a provocative analysis of the culture of GM, recommendations on how to ensure situations like the ignition switch recall don't happen again and the steps the Detroit-based automaker has already taken in wake of the crisis.
Despite the surprising details of culture, the report does not reveal any conspiracy by the corporation to cover up the facts or evidence that any employee made a "trade-off between safety and cost."
The report also clears Barra and other executives, including Vice President of Product Development Mark Reuss and General Counsel Michael Millikin from having any exact knowledge of the ignition switch defect until earlier this year.
Cost-cutting culture
Despite the investigation finding some saying safety was a "critical priority," the 2000s was a "time of extraordinary cost-cutting at GM" that impacted all aspects of the business, including the company routinely accepting the lowest bidder for a part, even if they were not the highest quality, according to the report.
"Some witnesses provided examples where culture, atmosphere, and the response of supervisors may have discouraged individuals from raising safety concerns, including, in a different context than the Cobalt, supervisors warning employees to 'never put anything above the company' and 'never put the company at risk,' " reads the report.
General Motors CEO Mary Barra provides an update on the ignition switch recall investigation Thursday, June 5, 2014 during a employee meeting at the GM Vehicle Engineering Center in Warren, Mich. (Photo by Steve Fecht for General Motors) Employees were even given a number of suggestive words to replace with taboo ones, such as "defect" with "does not perform with design," according to a 2008 PowerPoint documented in the report.
In addition to being trained in how to write, a number of GM employees reported that they did not take notes at critical safety meetings because "they believed GM lawyers did not want such notes taken." Although no witnesses were able to identify a lawyer ever saying anything about not taking notes.
The report also states some witnesses said that "there was resistance to raise issues or concerns" as part of the GM culture.
The cost-cutting culture of GM outlined in the report backs what Barra told a Congressional subcommittee in April: "Today, if there is a safety issue, we take action," she said. "We've moved from a cost culture to a customer culture."
In 2014, GM has recalled roughly 15.8 million vehicles globally, including nearly 13.8 million in the U.S.
No accountability
Despite the exhaustive details of GM's culture, the report says naming any actual decision-maker responsible was "impenetrable" because "no single person owned any decision."
"A cultural issue repeatedly described to us and borne out by the evidence is a proliferation of committees and a lack of accountability," reads page 255 of the report under "Culture."
General Motors CEO Mary Barra provides an update on the ignition switch recall investigation Thursday, June 5, 2014 during a employee meeting at the GM Vehicle Engineering Center in Warren, Mich. (Photo by Steve Fecht for General Motors) Also in the section are two phenomenons interviewees described as the "GM nod" and "GM salute."
Barra, in the report, describes the "GM nod" as "when everyone nods in agreement to a proposed plan of action, but then leaves the room with no intention of follow through."
Another witness described avoiding responsibility as the "'GM salute,' a crossing of the arms and pointing outward towards others, indicating that the responsibility belong to someone else, not me."
The analysis of GM's culture begins in detail on page 252 of the report and continues through 258. It's followed by recommendations from Valukas, which Barra said the company plans to follow.
"On behalf of GM, we pledge that we will use the findings and recommendations from this report as a template for strengthening our company." Barra said during the town hall, which was broadcast online.
During the town hall, Barra also said she hated sharing the report's details with employees as much as she hated hearing them, but they're something she never wants them to forget.
"I want to keep this painful experience permanently in our collective memories," she said during the town hall. "I don't want to forget what happened because I – and I know you -- never want this to happen again."
Recommendations
While the report states "there is no simple solution," Valukas' recommendations center on ensuring that a situation like the ignition switch recall never happens again.
The recommendations touch every aspect of GM's business – from individual accountability and a cultural emphasis on safety to communications with NHTSA and interactions with suppliers.
The recommendations coincide with comments made from Barra and changes already made by GM, including an entire restructuring of its global engineering department and enhanced safety measures under newly appointed Vice President of Global Vehicle Safety Jeff Boyer.
General Motors ignition assembly parts, including the parts affected under the recalls, being inspected, packaged and shipped Thursday, April 17, 2014 at the GM Customer Care & Aftersales Plant in Burton, Michigan. (Photo by John F. Martin for General Motors) Regarding organizational structure, the three recommendations include allowing Boyer to comprehensively address safety and compliance issues, including having a direct line to the president; ensuring all employees know how to report incidents to Boyer and that he coordinates with the legal staff; and removing overlap of departments and individuals, which GM's new engineering department was designed to do.
Other recommendations include communication between and within groups; role of lawyers; data storage, retrieval, and analysis; engineering processes and databases; project investigation process; field performance evaluation process; policies and training; compliance, auditing and oversight; and record keeping.
GM, according to the report, has implemented some of the measures. Valukas and his team "recommend that GM continue to implement" all the measures outlined in the report so something like the ignition switch recall doesn't happen again and turn GM into "an industry leader in the way it handles consumer safety issues."
Heads roll
As a result of Valukas' report, 15 GM employees who "acted inappropriately" or didn't do enough to flag the ignition switch defect were fired and five others have been disciplined.
The names of the 20 employees, including "a disproportionate number" of senior leaders and executives, will not be made public, Barra said. She did confirm that the two engineers who had previously been put on paid leave -- Chevrolet Cobalt engineer Gary Altman and ignition switch engineer Ray DeGiorgio -- are no longer with the company.
While the report doesn't necessarily blame one individual for the culture of GM, DeGiorgio is featured throughout the beginning of the report – from the first line to outlining numerous times DeGiorgio did not disclose that he approved an ignition switch that didn't meet specifications and redesigned it without changing the part number – erroneous in the automotive industry.
House Oversight and Investigations subcommittee Chairman Rep. Tim Murphy, R-Pa., watches at left as the subcommittee's ranking member, Rep. Diana DeGette, D-Colo. holds up a GM ignition switch, on Capitol Hill in Washington, Tuesday, April 1, 2014, as General Motors CEO Mary Barra testified before the committee. (AP Photo/J. Scott Applewhite) DeGiorgio, as previously reported, also testified under oath that the switch had not been changed. Yet, documents showed his signature on the approval to change the switch.
The role of DeGiorgio all came to light as part of a case involving a Georgia woman killed in a Chevrolet Cobalt in 2009, not GM's own engineers figuring it out.
In fact, it wasn't until November 2013, when an outside expert sent a report to GM verifying that the switch had been changed in the 2008 Cobalts that engineers figured out the problem.
"Throughout the entire 11-year odyssey, there was no demonstrated sense of urgency, right to the very end," reads the report.
According to testimony and documents submitted to the committee, GM knew about the faulty ignition switches in the early-2000s, but did not recall the vehicles until February.
Vehicles with the faulty ignition switches can cause the key to move out of the "run" position to the "accessory" or "off" positions, leading to a loss of power. If the key turns to one of those positions, officials say the front air bags may not work if there's a crash.
Ignition switch recall
The report documents countless investigations, meeting and cases that were opened regarding non-air bag deployment during crashes of the affected vehicles, but GM did not officially begin recalling vehicles until February of this year.
"A critical factor in GM personnel's initial delay in fixing the switch was their failure to understand, quite simply, how the car was built," reads the report.
In 2004, even after numerous reports of moving stalls in the affected vehicles, GM engineers concluded that the stalls "were not safety issues because drivers could still maneuver the cars." However, no one connected the to the air bags no longer deploying as a result of the defect. They considered the defect a "customer satisfaction" problem instead of a safety issue.
Gary Pittam performs recall service on a Chevrolet Cobalt Thursday, April 17, 2014, at Al Serra Chevrolet in Grand Blanc, Michigan. (Photo by John F. Martin for General Motors) Barra said if GM didn't have silos of information maybe engineers would have connected the faulty ignition switches to the non-deployment of air bags and things today would be different.
"Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch," Barra said.
The official recall started Feb. 13 with 780,000 compact cars, including Chevrolet Cobalts, Pontiac G5s and Pontiac Pursuits from the 2005-2007 model years. GM expanded the recall Feb. 25 to include Saturn Ions and three other vehicles. The total then was 1.6 million vehicles worldwide.
Then, on March 28, GM again expanded the recall to include 971,000 vehicles from the 2008-2011 model years, which may have gotten the defective switches as replacement parts.
The nearly 2.6 million vehicles affected by the ignition switch recall include 2003-2007 Saturn Ions, 2007-2010 Saturn Skys, 2005-2011 Chevrolet HHRs, 2006-2010 Pontiac Solstices, and 2005-2010 Chevrolet Cobalt and Pontiac G5 models.
Repairs to fix the millions of vehicles connected to the recall are underway. Barra on Thursday said GM has fixed roughly 113,000 vehicles and produced more than 280,000 kits to fix the vehicles.
Compensation fund
GM is setting up a compensation fund for families of victims and those who have suffered serious physical injuries as the result of faulty ignition switches in millions of vehicles linked to at least 13 deaths and more than 50 crashes.
Renown compensation attorney Kenneth Feinberg, according to GM, is independently administering and evaluating details of the program, which GM says could lead to an increase in the number of fatalities linked to the 2.6 million recalled small cars.
General Motors President Dan Ammann (l to r), CEO Mary Barra and Executive Vice President Mark Reuss answer questions from media after Barra provided an update on the ignition switch recall investigation Thursday, June 5, 2014 at the GM Vehicle Engineering Center in Warren, Mich. (Photo by Steve Fecht for General Motors) GM President Dan Ammann, who has been leading the efforts to set up the compensation program, said exact details of the compensation fund, including eligibility and rules should be ready in "the coming weeks" with GM ready to accept claims Aug. 1.
"The most important thing we can do right now is to reach out and find all of the people, all of the people that have been impacted, lost loved ones, suffered serious physical injuries as a result of this ignition switch defect," Ammann said during a press conference following the town hall. "It's so important, we independently found the best person we possibly could to administer this program."
Ammann would not speculate on financial details of the account or how many individuals are expected to be eligible for the fund.
Michael Wayland covers the automotive industry for MLive. Email him at MWayland@mlive.com & follow him on Twitter @MikeWayland or Google+.