May 28 2014, 10:40am CDT | by Forbes
General Motors CEO Mary Barra has undergone a baptism by fire. Since taking office in mid-January, Barra has been enmeshed in one of the biggest recall crises ever to affect a Detroit auto company.
That’s led to speculation that Barra, the first woman to lead a Detroit auto company, was somehow set up by GM officials to take the fall for a problem that had been festering for a decade. I wrote about this last month when she faced grillings from Congressional committees.
Now, the man who named Barra as his successor is saying that was not the case.
In her June 16 FORBES cover story on Barra, Detroit bureau chief Joann Mueller asked former GM chief executive Dan Akerson, who groomed Barra to be his replacement, if the new company CEO was thrown under the bus.
Said Akerson: “Of course not. Mary has said it: The moment she became aware of the problem, as I would expect, she confronted it. She didn’t know about it. I bet my life on it.”
Barra has said that she did not learn of the ignition switch defect on Chevrolet, Saturn and Pontiac vehicles until Jan. 30, two weeks after taking office, when GM announced its first recalls of the vehicle. In testimony to Congress, she said she learned in late December that there was an issue with the Chevrolet Cobalt, but did not have details.
GM was recently fined $35 million by the Transportation Department for failing to take prompt action on the ignition switch defect. The government says GM knew about the problem in 2009.
Documents released by a Congressional committee show that engineers modified an ignition part years earlier, but did not change the part number, a camouflage that prevented the company for years from tracking the source of the problem.
The FORBES cover story provides some explanation of why the GM CEO did not receive information about the problem until years after insiders knew it was happening.
As Muller writes, GM has 219,000 employees today compared with 326,000 a decade ago, when the switch problem surfaced. Although a fraction of the size it once was, GM remains a complex organization, with 30,000 people in product development alone. As Barra noted during her testimony, it’s also not very good at communicating.
“There were silos, and as information was known in one part of the business, for instance the legal team,” she told a Congressional committee, “it didn’t necessarily get communicated as effectively as it should have been to other parts, for instance the engineering team.”
Beyond that, many automakers have a process for evaluating safety issues that deliberately doesn’t involve senior management, because they don’t want undue cost influence. “I can’t intervene,” said Sergio Marchionne, CEO of GM rival Fiat Chrysler. “My technical people will decide.”
Still, Congress and federal investigators continue to seek answers from GM. So does the GM board, which recently hired an attorney to find out why information about the defect did not flow to the top.
Barra, for her part, gets a strong endorsement from GM board chairman Tim Solso, a retired executive with Cummins Inc. “The confidence has grown over a period of time, given the way that Mary has handled all the situations: testifying before Congress, meeting with the media,” Solso told Muller. “She’s done a superb job, and the board recognizes that.”
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