The March 31 NY Times has a report on GM and the citrus problem - it was clear the Cobalt was a lemon almost from day one. Danielle Ivory and Rebecca R. Ruiz take a look at states with Lemon Law records, and discover a compelling body of evidence that GM was getting a message loud and clear - if they'd only paid attention.
In more than 120 instances, General Motors was forced under state lemon laws to buy back faulty Cobalts, pay settlements to owners or let them trade in the cars, an analysis by The New York Times of state databases and court records shows. The buybacks came as dozens of claims were filed separately at G.M. from 2005 to 2009 that fit a specific pattern — moving cars, sometimes traveling at high speeds, would suddenly stop working.
“There were transmission issues, issues with the clutch, engine issues, air-conditioning issues,” James Gonzales of Riverview, Fla., said of his 2006 Cobalt, which G.M. repurchased under Florida’s lemon law. “Everything went wrong with that car, and everything that went wrong needed a big fix. Mechanically, it was a huge nuisance.”
Read the whole article, and it quickly becomes clear that there was something wrong with GM's management response to design and quality issues the first year the Cobalt went into production. One of the reasons Detroit first got clobbered by Japanese automakers was over quality; somehow the lessons learned were forgotten. It's no wonder
GM needed a bailout.
While the bailout of GM saved huge numbers of jobs in the U.S. the cost to workers at GM and suppliers in concessions and other changes was not inconsiderable. What the current news about GM safety issues makes clear only now is how badly GM's management under Rick Wagoner was doing on the fundamental basics of building vehicles of quality. Wagoner became CEO in 2000; based on what is now being revealed it is a wonder he didn't get ousted until GM was forced to ask for a bailout.
There's a concept called corporate governance. Wagoner's record is another example of its failure in practice. His career path at GM seems to indicate his expertise was in finance, not actually building anything - yet in a world where financial interests have become paramount, his ability to keep moneyed interests happy would appear to have been the reason he rose to his position, not his competence in manufacturing.
Whether current GM CEO Mary Barra can survive this lately revealed legacy from Wagoner's leadership is a question. The summary at the end of the NY Times article is not encouraging.
Mr. Martin, the G.M. spokesman, said it would be “inappropriate to draw any meaningful conclusions” from individual complaints.
“At this time our full focus is on taking care of current Cobalt customers and repairing their cars as quickly as possible,” he said in an email. “We also have initiated an unsparing internal review of the circumstances that led to this recall and we will hold ourselves accountable.”
The last auto industry bailout has seen changes at car company management. Whether or not the full lessons have been learned is apparently still an open question.
And it's one that has a wider relevance. Since the financial meltdown in 2008, neither the top leadership or the corporate culture of the key players in the financial debacle has been forced to pay any great price. (The joke about Bernie Madoff is he's the only Wall Street star to go to jail because he ripped off the 1%.) Over at Esquire, Michael Goldfarb asks if anything has been learned.
Today, in London, the economy is pretty much where it was just before the crash. Bonuses are at pre-crash levels, scandals in the city like fixing the Libor rate unfold regularly. Unable to generate growth, the government orchestrates an insane housing market bubble. The Shard stands empty – the perfect symbol of our era.
Moral hazard is priced in. JPMorgan CEO Jamie Dimon got a 74 percent pay rise in January – a package worth $20 million – despite the fact that his bank paid $18.6 billion in fines in 2013 plus a further billion in legal fees.
Unthinkable levels of unemployment are priced in as well. 20 million American workers who want a full time job can't find one and now, it is clear, never will. These aren't just factory workers. They include the more than 50 percent of university instructors in the US who work on part-time contracts and millions of people like me, one-man band entrepreneurs of the professional classes.
Mangement failure - bug or feature? I guess it depends on where you're sitting.