GM, Delphi Testify on Ignition Switch; Industry Issue May Exist

General Motors CEO Mary Barra says on Capitol Hill today the automaker takes entire responsibility for a poorly designed small-car ignition switch linked to a number of motorist deaths and injuries, likely removing scrutiny of the part supplier in the case.

The chief executive also digs in against U.S. lawmakers for the first time in four trips to Washington to testify on the ignition-switch scandal, defending her decision to keep GM chief counsel Michael Millikin on board even though bungling by his legal team slowed the recall of 2.6 million vehicles containing the defective part.

However, the most significant piece of new information comes from Delphi CEO Rodney O’Neal, supplier of the ignition switch, who reveals that of the 120,000 engineering changes requested by automakers to parts and components built by his company last year only 40% included an updated part number.

An unchanged part number was for years a key roadblock to GM investigators trying to uncover why airbags in small cars such as the Chevrolet Cobalt and Saturn Ion did not deploy in front-end crashes.

“It’s quite normal not to change the part number,” O’Neal says in a development that could trigger an industrywide review of engineering processes between OEMs and suppliers.

Asked by lawmakers if automakers other than GM commit the oversight, O’Neal replies, “Yes.” He also indicates that common industry practice puts automakers, not suppliers, in charge of part number changes.

After a decade of investigation, it was not revealed until 2013 that an engineering change was made to the GM small-car ignition switch some six years into production to beef up the torque it takes to turn cars on and off without a corresponding change to the part number. Had a new part number been issued, investigators would have likely connected ignition-switch failures to airbag non-deployments and potentially saved lives.

Delphi’s O’Neal: Automakers not making important part number changes.

There was intense scrutiny of Delphi’s role in the ignition-switch scandal leading up to the testimony today of O’Neal, Barra and Milliken. Delphi had refused to participate in an independent investigation of GM’s handling of the ignition-switch recall led by former U.S. attorney Anton Valukas, who along with victim compensation plan author Ken Feinberg also took lawmaker questions today.

“Do you feel Delphi shoulders any responsibilities here,” Sen. Dean Heller (R-NV) asks O’Neal.

The Delphi CEO answers, “That part met the requirements (GM) dictated. Our product met the requirements of the customer.”

“So no responsibility?” Heller interjects. “No,” O’Neal says.

Barra later adds in Delphi’s defense, “We’re the OEM. We’re the company that’s responsible to integrate the parts into the vehicle, so it’s our responsibility.”

O’Neal also reports during the hearing broadcast on C-SPAN that Delphi has shipped 1 million replacement switches and another 1 million will go to GM dealers by the end of August, moving the automaker closer to fixing the 2.6 million vehicles recalled by Oct. 1.

Barra also defends her decision to keep the 37-year GM veteran Millikin on staff as the automaker’s chief legal counsel after firing 15 employees over the controversy, going on the offensive for the first time in a combined four testimonies before Senate and House lawmakers.

As GM’s top lawyer, Sen. Claire McCaskill (D-MO) claims Millikin should have been made aware of multiple warnings made by GM legal staffers over several years that significant punitive damages could come from victims of the ignition switch. He denies knowledge of a defect before the first week of February 2014, including knowledge of a handful of victim settlements made related to the defect, another lapse that could have led to an earlier recall of affected vehicles.

“This is either gross incompetence or gross negligence on the behalf of a lawyer. The notion he can say, ‘I didn’t know…’” posits McCaskill, chairman of the Senate Subcommittee on Consumer Protection, Product Safety and Insurance.

“Senator McCaskill, I respectfully disagree,” Barra counters. “I need the right team and Mike Millikin is a man of incredibly high integrity. He has tremendous global experience as it relates to the legal profession. He’s the person I need on this team.”

McCaskill argues otherwise. “I think there has been a blind spot here. I really do. I think the failure of this legal department is stunning.”

GM has hired an outside firm to review the litigation processes of its legal department, and restructured the group so that serious civil cases will now fall on Millikin's desk.

With the exception of questioning against Millikin, the hearing takes on a decidedly more amicable tone than previous meetings, with lawmakers generally praising Barra for the steps she has taken since the recall began to strengthen GM’s safety processes and hold employees accountable involved in the scandal.

However, Barra admits a complete cultural change at GM where employees take greater individual initiative on company issues, which the Valukas report cited as a key stumbling block in the recall, will take time.

“Culture change happens over a long period of time and it is by leadership actions,” she tells the subcommittee, citing steps made in that direction by her predecessor, Dan Akerson. “We’re on a continuum of making that cultural change. I would frankly say we are accelerating that now.”

Pressed for an example of that change, Barra points to greater engagement with employees on safety. “I get hundreds of e-mails from employees on a weekly, monthly basis and they are engaged and that to me is the best sign because it is action not words that are going to change behaviors.”

[email protected]