The GM Effect

GM Headquarters in Detroit

The GM Recall of 2014 stands out not only as the largest recall in history, but also the most preventable. For well over a decade, a culture of fear, secrecy and incompetence held back a growing tide of damning evidence against the automaker – till it finally broke. To date, there are 30 confirmed deaths linked to GM’s faulty ignition switches and 31 serious injuries – all facing claims that are currently in negotiations with company representative and high profile mass-injury attorney Kenneth Feinberg. At last count however, there were an additional 1,772 serious injury claims and 196 related deaths awaiting confirmation from Mr. Feinburg’s office.

There have been endless reports detailing how such pervasive and wide spread disregard for human life could permeate an industry leader such as GM. The Valukas Report, prepared by attorney Anton R. Valukas at the behest of General Motors CEO Mary Barra, provides an unflinching look at this pattern of neglect.

According to the document, everyone from the engineers who built the dysfunctional switches to the lawyers that represented them had a hand in a cover-up that will end up costing the automaker well over a billion in fines. Ms. Barra has been quoted numerous times on her company’s wish to make amends: “We are determined to earn our customers’ trust and to take actions necessary to make our safety processes world class.” But how? Where can the embattled automaker and the automobile industry as a whole go now? What steps can we expect to see in the weeks, months and years to secure the public trust?

Accountability – Not a Top / Down Issue Anymore

Like so many institutions that have seen their core rattled over the past few decades, from schools to businesses and even religious entities, a cultural shift must happen from within the auto industry. In order to lift the veil of secrecy and fear that allowed much of this to occur many companies – including GM – have begun redefining their means of communication.

In one regard, automakers have begun moving away from what is called a “silo mentality” on the factory floor and in the board room. Instead of exclusive divisions of management that are an island unto their own, managers are required now to cross-examine and review each other’s departments for potential hazards or inaccuracies. This ensures that if one part of the system is experiencing failures or dysfunction, other divisions can spot it and make the appropriate safety call – effectively creating a long line of custody and preventing any one department from holding back information.

Recall the Recalls

Undoubtedly, many manufacturers, like Ford, are sitting up straight and taking a much keener interest in what kind of product they are shuttling out the door – now that the federal government has an eye out. With more oversight and a heightened sense of security around the industry, we can expect to see even more recalls through the next decade. Some of it may be a knee-jerk reaction to the policed atmosphere GM and others have created; but much of it falls on the automakers to simply pay greater attention to what they are building. Mass production only works if the goods being produced are worth more than the speed in which they are built.

The Price We Pay

All of this, analysts suggest, points to one inevitable outcome – a price hike at the dealership. As the industry comes to grips with the billions of dollars it must fork over in current and future mass-recalls, the only option they’ll have is to pass the cost onto consumers. Whether or not it is a fair outcome, there seems to be little manufacturers can do to prevent it. The question however becomes – are the cars they are now producing worth the hard earned money they are charging? Only time will tell.