Transcript: Sen. Barbara Boxer’s Q&A with GM CEO Mary Barra on the ignition switch recall

Partial transcript of Sen. Barbara Boxer’s (D-California) Q&A with General Motors CEO Mary Barra on “Examining the GM Recall and NHTSA’s Defect Investigation Process”. The U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Consumer Protection, Product Safety, and Insurance’s hearing was held on April 2, 2014:

Sen. Barbara Boxer (D-California):
…I have your timeline of when you knew – when the company knew there were problems. It starts in ’01 and ’03 as service technician of GM noted that there was a stall while driving, and it goes on. There’s a constant theme here of things getting worse and worse through the years. Now, you’re new at your job but you’ve been at GM for how many years?

Mary Barra, CEO of General Motors:
33.

Sen. Barbara Boxer (D-California):
33 years. So when this was first discovered, you were executive director of competitive operations engineering where you developed and executed strategies to improve the effectiveness of vehicle manufacturing and engineering. But you didn’t know of this?

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
Nobody told you about this?

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
Okay. And then you were plant manager of Detroit Hamtramck Assembly in ’03 to ’04, where you were responsible for day-to-day plant activities related to safety, people, and quality. And still you knew nothing about this?

Mary Barra, CEO of General Motors:
We didn’t build any of these models at the Hamtramck…

Sen. Barbara Boxer (D-California):
In that position, you knew nothing about this, correct?

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
Okay. And then in ’04 to ’05, you were executive director of manufacturing engineering, responsible for developing and implementing global builds and process and equipments to optimize capital deployment and manufacturing operating costs. And you developed and continuously improved lean cost initiatives. You knew nothing about this when you were executive director of manufacturing engineering?

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
You knew nothing. How about when you were vice president of global manufacturing and engineering, ’08 to ’09? You knew nothing.

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
And you still knew nothing when you were vice president of global human resources.

Mary Barra, CEO of General Motors:
Correct.

Sen. Barbara Boxer (D-California):
You’re a really important person to this company. Something is very strange that such a top employee would know nothing.

Now, have you seen photos of your cars that have had ignition problem and that problem led to deaths? Have you seen photos of those cars, what they look like?

Mary Barra, CEO of General Motors:
Yes.

Sen. Barbara Boxer (D-California):
I have another one for your to look at. The people are here. Mary Theresa Ruddy of Scranton, Pennsylvania [whose daughter Kelly] died at the age of 21. She was a senior at Marywood University. Her parents are here – her family.

I guess it’s somewhat shocking after the Pinto, and that goes back to when I was first an elected official. I was shocked that there was such a cold and calculating way that Ford decided not to fix a fatal flaw in the fuel tank, and we learned through lawyers – as our Chairman has pointed out – through discovery they found out there was a very careful cost-benefit analysis, and Ford decided it was cheaper for them to pay off the families of the dead than to fix a problem that would have cost them $11 a car.

Did you make that kind of calculation over at GM in this situation?

Mary Barra, CEO of General Motors:
I did not.

Sen. Barbara Boxer (D-California):
Do you know if anybody who did make it?

Mary Barra, CEO of General Motors:
That is the purpose of the investigation –

Sen. Barbara Boxer (D-California):
But you don’t know now. You haven’t asked and you don’t know. Do you know if GM ever used this kind of cost-benefit analysis in its history?

Mary Barra, CEO of General Motors:
There were documents shared with me yesterday that if they’re true if we go through the complete timeline will demonstrate that it’s completely unacceptable –

Sen. Barbara Boxer (D-California):
But I didn’t ask you that. I said do you know if GM ever used this kind of cost-benefit analysis in its history. Do you know?

Mary Barra, CEO of General Motors:
If it was used for – not for a safety item. It would be unacceptable.

Sen. Barbara Boxer (D-California):
It’s okay to do it for a safety item, is that what you’re saying?

Mary Barra, CEO of General Motors:
I said the opposite of that.

Sen. Barbara Boxer (D-California):
Well, you didn’t. So what about in 1973 when GM engineer Edward Ivey concluded it was not cost-effective for GM to spend more than $2.20 per vehicle to prevent a fire death? Do you know about that?

Mary Barra, CEO of General Motors:
I’ve heard of that.

Sen. Barbara Boxer (D-California):
You’ve heard of it? You haven’t looked into it?

Mary Barra, CEO of General Motors:
General Motors today finds anytime there’s an incident –

Sen. Barbara Boxer (D-California):
Well, you know, today and today. Yesterday I did some things that I’m accountable for. It’s not about – you have been involved in this since you became CEO. Have you not looked into this?

Look, Mr. Ivey’s study placed the value of a human life lost at $200,000 and estimated that the company can cost effectively spend only $2 for rear impact protection to prevent fewer fires and that a burned death would cost the company $2.40 a vehicle. Through this analysis, GM determined it would not be cost effective to pay more than $2.20 per car for each burned death.

So you talk about today’s GM but evidence shows that as recently as 2005 GM used a cost-benefit analysis to determine that fixing the problem was “not an acceptable business case”. Are you aware of this situation in 2005? Has that been called to your attention?

Mary Barra, CEO of General Motors:
I was aware in general of the Ivey letter. I’ve never seen it.

Sen. Barbara Boxer (D-California):
What about the 2005? Is that the new GM or the old GM in 2005?

Mary Barra, CEO of General Motors:
General Motors company was formed in 2009.

Sen. Barbara Boxer (D-California):
Okay. So the old GM in 2005. You’re not aware that they used a cost-benefit analysis to determine that fixing the problem was not “an acceptable business case”?

Mary Barra, CEO of General Motors:
Again, if it’s a safety issue, there should not be a business case calculated.

Sen. Barbara Boxer (D-California):
But you don’t know anything about this?

Mary Barra, CEO of General Motors:
That’s why we’ve hired an investigation. We’re going back over a period of a decade to understand –

Sen. Barbara Boxer (D-California):
Ms. Barra, I really hate to say this but if this is the new GM leadership, it’s pretty lacking and maybe this round you can change my mind. I’ll give you another chance to. But leadership means stepping out with a fresh start and I don’t see it.

For example, you had Sen. Blumenthal show you the recall notice and you still won’t say that everybody who has these cars should get rid of it even though the recall notice says if your key chain’s heavy or you go over rough roads. Have you seen this winter? In Vermont, they had 94 occasions of snow. You know what that does to the infrastructure? Look, you should have said, “You’re right.”

Then Sen. Markey, who’s a great leader on this, says, “Will you support just making transparent the reports of the company that if there’s a problem with a car put it out there?” Oh no, you can’t answer that either.

So then my question, in March ’05 your GM people said it costs too much to fix these cars. The code words; “none of the solutions represents an acceptable business case.” Now, that was a public document. GM gave that document over. Oh, you can’t even talk to that.

You don’t know anything about anything.

…Now, it’s my understanding you are recalling many of your cars now. Not all of them. But if people want to, they can say, “Please pay for loaners.” Is that correct?

Mary Barra, CEO of General Motors:
That is correct.

Sen. Barbara Boxer (D-California):
Well, that’s the right thing to do.

But do you support a law that says recalled cars like yours can no longer be rented or loaned? Do you support a law like that?

Mary Barra, CEO of General Motors:
If there’s a safety issue on the vehicle and we made sure on these vehicles that they’re grounded –

Sen. Barbara Boxer (D-California):
No, no. Do you support a proposed law by Sen. McCaskill and myself that will say recalled cars like yours can no longer be rented or loaned? We have a law. Do you support that law? That proposal, that bill?

Mary Barra, CEO of General Motors:
I’d like to read the whole bill before I say if I support it or not.

Sen. Barbara Boxer (D-California):
You’d like to read it? You haven’t read it?

Mary Barra, CEO of General Motors:
No, I have not.

Sen. Barbara Boxer (D-California):
Well, it’s been out a long time. Are you aware that recalled cars can be rented or loaned? Are you aware of that?

Mary Barra, CEO of General Motors:
I know –

Sen. Barbara Boxer (D-California):
So you can send your owner of one of these cars to a rental place or get a loaner and they could get a defective car. Are you aware of that? That there is no law that says –

Mary Barra, CEO of General Motors:
I know because I’ve checked for the vehicles here, that they are grounded.

Sen. Barbara Boxer (D-California):
Say that again.

Mary Barra, CEO of General Motors:
For this specific issue, one of the first things we did is make sure that the –

Sen. Barbara Boxer (D-California):
I’m not asking about that. I’m asking you do you support a law that Sen. McCaskill and I and Schumer and others have proposed that would say if a car is recalled it cannot be leased or loaned?

Mary Barra, CEO of General Motors:
My understanding is the rental community is voluntarily complying with that –

Sen. Barbara Boxer (D-California):
Do you support a law – yes or no?

Mary Barra, CEO of General Motors:
Conceptually, it makes sense. I would like to understand –

Sen. Barbara Boxer (D-California):
Well, conceptually is not the question. Do you support the bill?

Mary Barra, CEO of General Motors:
I haven’t read it.

Sen. Barbara Boxer (D-California):
Well, you should since you were the CEO of GM when we got an email from your organization that you’re a part of – the Auto Manufacturers’ Alliance – opposing the bill. So you already were CEO. This is the new GM, and you opposed a law.

Now, you should know that my constituent, Kelly [sp] Houck, lost her two daughters Rachel, 24, and Jackie, 20, in a tragic accident caused by an unprepared safety defect in a rental car they were driving. So Sen. Schumer and McCaskill – we wrote the Rachel and Jacqueline Houck Safe Rental Car Act. And you know what? The rental car people support it. But you don’t. The automobile manufacturers don’t.

So you are essentially bragging today – if I may use a word – that you’re telling your people, “Oh, go get another car” but at the same time your lobbying organization is opposing a bill that would make sure that no one – no one – would die the way they died.

…These issues run deep, and we have work to do. And I am very disappointed, really – as a woman to woman, I am very disappointed because the culture that you are representing here today is the culture of the status quo.

Thank you.

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