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  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.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    peregrine kate, psyched, crose, BusyinCA

    Accountability seems like a good idea. Why isn't it more popular in practice? I guess it's one of the perks of being among the elites - only the little people have to worry about consequences.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Tue Apr 01, 2014 at 12:31:25 PM PDT

  •  try to beat Japanese or Germans at their own game (3+ / 0-)
    Recommended by:
    xaxnar, psyched, BusyinCA

    That's the only lesson Detroit needs to learn: those guys know how to make and sell cars and we don't anymore, so we need to do what they do.

    It'll start on the drawing boards (Americans really do want cheaper, more reliable, and more efficient cars), move onto the factory floors (anyone remember "Quality is Job 1"?), out of necessity grow into a complete overhaul of corporate culture, and from there into politics, specifically a drive to mimic or surpass the very different environments that Japanese and German car companies operate in and benefit from.  German car companies have a large pool of skilled labor to draw from courtesy of ingenious education policy, the guys who actually make the cars are deeply involved in making corporate policy at the highest level while the Japanese built their reputation on worker engagement and responsibility, and neither Volkswagen nor Toyota have to pay their employees' health care or retirement: German and Japanese taxpayers do that.

    Detroit needs to stop working for Wall Street and start working for itself.

    Domestic politics is the continuation of civil war by other means.

    by Visceral on Tue Apr 01, 2014 at 12:49:42 PM PDT

    •  GM builds shitty cars. (0+ / 0-)

      Since the 80's 60's they have epitomized shitty American cars and still maintain their dominance of the field. I guess as long as it is big and expensive, stoopid Americans will buy it.

      I have had more than one Ford vehicle I have wished to return to it's fathers anus, but they never pi**ed me off as much as the GM cars did.

      Chrysler has gotten a pass since the 50's because... duh... because they always made their crap look better. They understand design at least. They may not know how to make a vehicle last more than 100K miles, but it looks kewl doing it. They always made people that bought their crap think it was better looking crap than what their neighbor had.

      Disclaimer: I own a late model Ford and love it. Cheap to buy and easy to maintain. So far. Check back in 5 years.

      Until American CEO culture changes, I do not see much change in the quality of Amerkan kars.

  •  Bit of a stretch to link LIBOR to crappy car. (0+ / 0-)

    Yes, the ghastly LIBOR scandal is solid evidence that our Galtian corporate overlords are evil people who need to go to jail.

    Yes, the Chevrolet Cobalt was a piece of junk compared to other vehicles in its class like the Honda Civic. But Chevrolet is not the only company to produce an unreliable car; Volkswagen and Nissan made a few dogs, and then there's that Toyota/Lexus unintended acceleration issue.....

    And GM has also managed to produce some pretty decent cars over the same time period that compare reasonably well to other competing models.

    •  The connection is this (2+ / 0-)
      Recommended by:
      Ralphdog, BusyinCA

      The leadership at GM was replaced. The leadership in the financial industry is still largely in place. The failure to learn isn't just within the corporations - it's also in the area of those  theoretically empowered to hold them responsible. New leadership at GM, if Barra is serious about learning from this, may bring needed change. The government made that happen - but didn't with the financial industry. When the next crash happens, will we once more hear "No one could have foreseen…"

      "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

      by xaxnar on Tue Apr 01, 2014 at 01:05:30 PM PDT

      [ Parent ]

  •  There is a reason she was picked (1+ / 0-)
    Recommended by:
    xaxnar

    Over the two internal guys -- she wasn't a clone of rick wagoner like the other two are. She is a continuation of the solid management that GM has received since the restructuring. Roger smith and wagoner did their best to kill GM without even trying.

    Cobalt is a good example of GM under wagoner. No wonder GM went belly up.

    Born in Oklahoma Raised in Ohio Escaped to Meechigan!!!

    by MI Sooner on Tue Apr 01, 2014 at 01:24:54 PM PDT

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