57 Cents a piece is what it would have cost General Motors to change a faulty ignition switch that was involved in crashes that killed at least 124 people. The company is currently facing lawsuits from hundreds of angry customers who have dealt with injuries. The problem can be traced to a part in the vehicle's ignition switch, the switch incident plunger, that is less "springy" than it should be, making it possible for the ignition key to turn off the engine if jostled. That part is about half an inch long and costs just 57 cents. This is according to comments at the April 1st, 2014 hearing by Rep Diana DeGette, and based on the work of investigators. This faulty ignition switch could be jarred into the accessory position, shutting off the engine, disabling power steering and brakes, as well as in preventing airbags from deploying. Many of the cars with this faulty ignition switch were also entry level vehicles advertised to starting drivers in high school and college.
On February 6, 2014, General Motors recalled about 800,000 of its small cars for their faulty ignition switches. The company continued to recall more of its cars over the next few months, resulting in nearly 30 million cars recalled worldwide. General Motors spent 2014 under a harsh congressional spotlight, recalling millions of Ions, Cobalts and other vehicles. It's already spent $2 billion to resolve investigations and securities lawsuits, as well as injury claims. Yet GM knew about the faulty part about a decade before the recall. If only they had acted earlier, the financial cost, as well as the cost to human lives would have been much, much less.
GM KNEW ABOUT FAULTY PART A DECADE BEFORE RECALL
In December 2005, GM sent its dealers a bulletin saying the ignition in Cobalts might turn off when "the driver is short and has a large and/or heavy key chain." GM told dealers that "the customer should be advised of this potential and should...[remove] unessential items from their key chain." But GM kept manufacturing the cars, and it didn't issue a recall.
According to documents obtained by Reuters, GM engineers debated via e-mail in 2005 about whether to change the ignition switch. One e-mail claimed the change would have cost an extra 90 cents per car and additional tooling costs of $400,000." In the e-mail exchange," Reuters reported, "one of the engineers, John Hendler, said his team was prepared to continue using a switch that was made by Delphi Automotive and approved by GM, even though Delphi told the automaker in early 2002 that the switch did not meet GM's performance specifications." Hendler recommended waiting for a new switch until 2009. Another GM executive, Lori Queen, who had responsibility for the development of GM's small cars, responded, "I'm not sure it's ok to wait."
WHILE GM WAS KILLING THEIR CUSTOMERS
THEY WERE GETTING BAILED OUT BY THE GOVERNMENT WITH $50 BILLION IN TAX PAYER FUNDS
During later deliberations on the matter—which likewise ended without a recall—GM was likely trying to save more than just the cost of replacing a part. Revealing the extent of its irresponsibility and blatant disregard for human life might have affected filing for bankruptcy and a $50 billion federal bailout in 2009. So while GM was killing people to save 57 cents, they were also getting bailed out by the US government.
At the time, the Obama administration applauded the auto giant as an American job creator that was "worth saving." As Obama said in a 2009 speech, "If we can carry one another through this difficult time and do what must be done, then we will look back and say that this was the moment when the American auto industry shed its old ways, marched into the future, remade itself and once more became an engine of opportunity and prosperity not only in Detroit, not only in our Midwest, but all across America." On top of that, the bankruptcy could get GM off the hook legally for their crimes. GM became a "new" company in July 2009 when it emerged from bankruptcy protection. It left behind billions in bad debts, including product liability claims for all crashes that happened before that time.
GOVERNMENT AND INDUSTRY, PARTNERS IN CRIME
It can be said that the National Highway Traffic Safety Administration (NHTSA) is an accomplice in the GM's crimes, since the federal agency failed to act at every step of the way. According to a memo released by the House subcommittee investigating the GM recall, the NHTSA decided not to look into problems with GM cars, despite the fact that in 2007, its investigators reported four fatal crashes, 29 complaints and 14 other reports showing the defect disabled air bags. As the New York Times reported:
In a presentation dated November 17, 2007, the safety agency's investigators reported to its Office of Defects Investigation on the fatal crashes, as well as broad range of complaints and other reports about cars shutting off. "The panel did not identify any discernible trend and decided not to pursue a more formal investigation," the House memo said.
Three years and more reports of air bags not deploying later, the NHTSA reached the same conclusion: There wasn't enough evidence to warrant an investigation. The fact that GM and the NHTSA reached many of the same conclusions is hardly a surprise, considering how safety regulators transition into jobs consulting for the auto bosses. For example, former NHTSA administrator David Strickland is now a partner at the corporate law firm Venable, where his expertise includes "regulatory" issues. Former NHTSA employees can also be found in Toyota's Washington offices. In many ways, the synchronized responses of the watchdog and the watched is built into the federal regulatory system, which largely relies on the auto industry to come forward with its own problems. So in other words, the industry is allowed to regulate itself.
DISCLOSURE OF PROBLEM NOT REVEALED BY INDUSTRY OR GOVERNMENT
IT WAS REVEALED BY A LAWSUIT
The defective part was not disclosed by GM nor was it discovered by government regulators or transportation safety agencies. Instead, public knowledge came about because Lance Cooper, a Marietta, Georgia attorney who sued GM on behalf of the family of a woman who had died in a crash, obtained thousands of pages of documents from GM and took the depositions of several GM engineers. According to Sean Kane, the president of a vehicle safety research firm, Cooper "single-handedly set the stage for this recall."
In summary, if agencies and corporations were human beings, GM would currently be charged as a serial killer and the NHTSA would be tried as an accessory to murder.
GM EVENTUALLY PAYS FOR FAULTY PART REPLACEMENT
BUT ONLY AFTER BEING SUED
In 2017, GM settled the deadly switch ignition case for $120 million. They agreed to pay $120 million to settle claims from the dozens of states affected by the massive scandal. The settlement came after the U.S. Supreme Court ruled that GM could no longer avoid the hundreds of lawsuits from victims of the defective ignition switches. The settlement is tied to violations of consumer protection laws and is on top of Detroit-based GM's previous penalties and settlements of an estimated $2.5 billion, including $900 million to settle a U.S. Department of Justice criminal case. The settlement was reached with the attorney generals of 49 states and the District of Columbia, according to the Office of Michigan Attorney General Bill Schuette.
“There is no denying having cars on the road with faulty ignition switches was dangerous,” Schuette said in a release. “Today’s settlement shows General Motors is taking responsibility and committed to moving forward and creating quality cars Michigan residents can trust.” (USA Today, 10-20-17)
GM said it had reached a "constructive resolution" in the case, set in Ingham County Circuit Court in Michigan. (USA Today, 10-20-17)
"The resolution includes a financial component, and assures GM will continue ongoing improvements made to ensure the safety of its vehicles. These improvements include continuation of a new organizational structure devoted to global vehicle safety and the company’s Speak Up for Safety program," the company said in a statement. (USA Today, 10-20-17)
In addition to the $120 million settlement, GM must adhere to several other requirements, including not representing that a vehicle is safe unless the company has complied with the applicable Federal Motor Vehicle Safety Standards. (USA Today, 10-20-17)
RELATED ARTICLES
General Motors ignition switch recalls (Wikipedia)
GM settles deadly ignition switch cases for $120 million (USA Today, 10-20-17)
Supreme Court Rebuffs G.M.’s Bid to Limit Ignition-Switch Lawsuits (New York Times, 4-24-17)
GM Ignition Nightmare Won't Go Away, for Victims or Company (Bloomberg, 1-8-16)
GM Fund Leaves Out Scores Hurt or Killed in Cars With Switch Flaw (Bloomberg, 7-1-15)
Their lives weren’t worth 57 cents to GM (Socialist Worker, 4-8-14)