Hot Seat: GM's Mary Barra Grilled by Congress Over Recall

Company Hires Attorney Kenneth Feinberg to Help Craft Response to Victims

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Mary Barra listens to opening statements at a House Energy and Commerce Committee hearing in Washington
Mary Barra listens to opening statements at a House Energy and Commerce Committee hearing in Washington Credit: Bloomberg/Pete Marovich

Unlike the CEO's of the Big Three automakers who flew corporate jets to Washington before begging for taxpayer billions, General Motors CEO Mary Barra was smart enough to fly commercial when she took the Congressional hot seat Tuesday.

From a crisis PR standpoint, Ms. Barra did the right things Tuesday. Seated alone at a table with no lawyers whispering in her ear, she apologized over the "tragic" situation, gave short direct answers when she could and pledged the "new" GM would do the right thing in the future.

She met briefly with grieving families of the victims, who filled up several rows at the hearing. She announced GM had hired noted attorney Kenneth Feinberg (who handled the fund for victims of the 9/11 terror attacks and Boston Marathon Bombing), to decide how to compensate owners and families.

But that was as good as it got for Ms. Barra as members of the House Energy and Commerce Committee grilled her about why GM delayed taking action on the faulty ignition switches that have been linked to 13 deaths and the recall of up to 3 million vehicles.

The crisis is GM's biggest since emerging from bankruptcy in 2009. Yesterday, the automaker doubled its recall-related charges to $750 million after saying faulty power steering in 1.5 million other vehicles needs to be fixed. So far this year, GM has recalled almost 7 million vehicles worldwide, denting a reputation for quality that the automaker had only recently repaired after emerging from a government-sponsored bankruptcy.

GM's first female CEO, who was celebrated by First Lady Michelle Obama for crashing through the auto industry's steel ceiling just two months ago, faced a stream of hard questions. And among Ms. Barra's fiercest interrogators were female members of the U.S. House of Representatives.

Rep. Diana DeGette, D-Colo., theatrically waved the cheap-looking ignition switch device -- and demanded to know why GM didn't fix the inexpensive part despite receiving hundreds of reports from customers that the faulty switches suddenly cut off engines on vehicles such as the Cobalt from 2003-2014.

"Time and again, GM did nothing. The company continued to sell cars knowing they were unsafe," she told Ms. Barra, while insisting the GM boss limit herself to yes or no answers..

Before inheriting the recall crisis in January, Ms. Barra served as GM's VP-global product development, purchasing & supply chain. Rep. Marsha Blackburn, R-Miss., served notice her actions will be part of the Congressional probe.

"We want to know, who knew what when. And Ms. Barra, that includes you. We're going to want to know what your exposure was to this issue as you took the helm at GM as the CEO."

But with GM's internal probe still ongoing, Ms. Barra was unable to offer many real answers. That didn't go over well with some impatient members of Congress. Especially since American taxpayers were forced to save the the former "Government Motors" from bankruptcy just a few years ago.

When Congressman Joe Barton, R-Texas, asked why GM would purchase parts that didn't meet its own specifications, Ms. Barra said she didn't know either. "It's not the way we do business today," she said.

When Mr. Barton asked whether Ms. Barra would accept parts that didn't meet specs in the future, she gave one of her few long, meandering answers. "With all respect, what you just answered is gobbledygook," he countered.

Cost concerns
Ms. Barra was asked to respond to revelations that GM decided it would be too expensive to fix the part. After months of studying switch failures in the Chevrolet Cobalt, GM canceled a proposed change in 2005, when a project engineering manager cited high tooling costs and piece prices, according to documents obtained by House investigators.

Representative Tim Murphy, a Pennsylvania Republican, asked how GM balances cost and safety.

"We don't," Ms. Barra said. "Today, if there is a safety issue, we take action. We've moved from a cost culture to a customer culture."

Congress didn't come out of it looking great either. With victim families looking on, Rep. Peter Welch, D-Vt., tried to be funny by congratulating GM on getting squabbling Republicans and Democrats to actually work together. Not to be outdone, Lee Terry, R-Neb., after blaming his tardiness on his plane's mechanical failure, wondered if it might have been an ignition-switch problem.

The most powerful TV moment came when Rep. Bruce Braley, D-Iowa, noted the photographs of the dead victims lining the back wall of the hearing room.

"I see young women the same age as my daughter. I see young men the same age as my two sons," he said.

--With Bloomberg News

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