General Motors is at the center of a still evolving story on what promises to be The product defect case study of the past decade.
Starting as far back as 1997, GM began manufacturing and selling cars with an ignition switch which when jostled by other weight on a key ring could easily turn to the off position, shutting down the engine and disabling the power brakes and power steering even while the car was traveling at 60 miles per hour down the highway.
By GM’s own admission, the defect has resulted in at least 10 fatalities. Outside watch dog groups have estimated that the real number is more like 300, and GM itself is currently investigating a number of fatal accidents well into the hundreds.
GM became aware of the switch problem as early as 2004. Engineers estimated that fixing the problem would take a one-time $400,000 investment in new tooling and then about $0.90 / vehicle after that. After winding its way through GM’s byzantine corporate bureaucracy, the company decided that the fix was too expensive.
GM’s recall of cars with the defective switch is now in the 10’s of millions and at least one expert has estimated the eventual cost of the switch problem to be in excess of $7 billion – frankly with all of the problems, that sounds low.
The issue boiled over into the public eye after GM’s recently appointed CEO Mary Barra was called to testify before congress last March. She testified that she had first learned of an ignition switch problem in December 2013 and that senior management did not become fully aware of the extent of the problems until January 2014. She has promised that she is focused on reforming GM’s corporate culture around cost vs. safety and around customer expectations of real quality as opposed to packaging and marketing, but many are skeptical that such a massive organization as GM can be turned around so easily.
To learn more about the GM ignition switch case take a look at the following resources which include 2 articles discussing the ignition switch problem and a timeline from NPR laying out how it unfolded. There is also a short video (about 1 minute) which has an interesting animation as to how the switch actually fails and causes a fatal car accident.
As mentioned above, the case was in the headlines just last week as GM settled at least some of the federal regulatory claims against it with a payment of $900 million to the US Government. The last link below is to an editorial in USA Today questionings some aspects of this settlement.
After reviewing the materials, discuss the ethical dimensions of this case with an eye toward the following questions:
1. How did the corporate culture at GM impact this ignition case both in the original design and installation of the defective switch, and then the slow response to the problem including the decision not to fix it because of the cost?
2. What incentives or disincentives do you think there were at GM which might have motivated particular employees, from design engineers to management, to behave the way they did?
3. Do you think they should / will be held liable for damages in the deaths that resulted from the defective switch? Under what legal theory (refer to our class discussion)?
4. Do you think they have any defense to these claims? If so, what?
5. Do you think that the payment made by GM to the US Government is an adequate penalty for their conduct?
6. How do you think GM should manage this problem from here forward in order to mitigate the continuing threat not only to the safety to their customers but to the reputation of the company?