Column

Starkman: GM CEO Mary Barra's Scary 'Driverless Cruise' Debacle

November 09, 2023, 2:55 PM

The writer, a Los Angeles freelancer and former Detroit News business reporter. This column first appeared in his blog StarkmanApproved.com

By Eric Starkman

From the moment she assumed command of General Motors in January 2014, CEO Mary Barra demonstrated her talent for throwing employees under the bus. It’s a skill that I perceive helped Barra, and many of the CEOs of the Business Roundtable she chairs, land their mega million paying jobs.

Within weeks of Barra becoming CEO, it was revealed that GM knowingly sold Chevrolet Cobalts and Saturn Ions with faulty ignition switches that could inadvertently shut off car engines and airbags, a problem linked to at least 97 deaths and forced the recall  of 2.6 million vehicles. Based on the finding of an investigation conducted by a former U.S. Attorney GM retained, Barra blamed mid-level underlings for the fiasco. She fired 15 unidentified persons and disciplined five others.

“Repeatedly, individuals failed to disclose critical pieces of information that could have fundamentally changed the lives of those impacted by a faulty ignition switch,” Barra said. “If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately.”

The media lionized Barra for her handling of the scandal, launching a steady parade of fawning cover stories and features that have been the hallmark of her CEO tenure. Fortune named Barra its 2014 Crisis Manager of the Year. “Somehow, though, even as GM has seen its reputation raked over the coals, Barra has come out more admired and more likely to be emulated than ever,” crowed staff writer Ben Geier.

Admittedly, I’m an outlier with this position, but I believe that when employees withhold information about damaging products from their bosses it’s because they know that sounding the alarm will get them tagged as troublemakers, and possibly disciplined, if not fired. When I owned my PR firm, I proudly represented one such employee.

His name was Darryll Bolduc, who when he worked for NationsBank, then a powerful North Carolina bank that subsequently acquired Bank of America, alleged he was fired after reporting what he regarded as questionable trading activity. Bolduc sued for wrongful dismissal, and NationsBank was putting him through the legal ringer until the Wall Street Journal reported on Bolduc’s allegations. The bank promptly settled Bolduc’s lawsuit.

Bolduc used his settlement money to go to law school and become an attorney specializing in the representation of whistleblowers. Bolduc’s death at 47 was ruled a suicide, but I’ve never believed the finding. When I last spoke with him, he was excited about taking on some very powerful corporate interests.

Barra never assumed an iota of responsibility for the faulty ignition scandal, despite holding senior positions during the 11-year period the mid-level alleged cover ups occurred.

In February 2008, Barra was named GM’s Vice President of Global Manufacturing Engineering. A year later, she became the VP of Global Human Resources, a position she held for two years. She was later named VP of Global Product Development and ultimately oversaw global purchasing and supply chain. It’s telling about Barra’s supposedly storied leadership capabilities that she never had an inkling about GM’s faulty ignitions. As head of HR, Barra was responsible for overseeing GM’s supposedly Sgt. Schultz culture.

Regardless, after the ignition scandal broke, Barra vowed that safety would forever be GM’s top priority.

“Our job is clear: To build high quality, safe vehicles,” Barra said. “In this case with these vehicles, we didn’t do our job. We failed these customers. We must face up to it and learn from it. To that end, on behalf of GM, we pledge that we will use the findings and recommendations from this report as a template for strengthening our company.”

Fast forward nine years and GM has hired a law firm to investigate how its driverless Cruise taxi subsidiary dealt with regulators, law enforcement officials, and the media in wake of California’s DMV yanking Cruise’s license because the regulator deemed Cruise’s vehicles “not safe for the public’s operation” and alleged they posed “an unreasonable risk to the public.” California’s DMV also accused Cruise of misrepresenting critical safety information.

It is said that history repeats itself, and that certainly appears to be the case with GM’s Cruise debacle. It will be a testament of Barra’s masterful corporate Houdini skills if she can escape culpability this time.

Indications are that Barra forgot – or possibly wasn’t sincere – about her pledge more than nine years ago that GM would never again unleash faulty or dangerous vehicles that could harm the public.

According to chat logs and other materials obtained by The Intercept, Cruise vehicles struggled to detect large holes in the road where work by humans was being performed and had so much trouble recognizing children in certain situations there was a reasonable statistical probability they could hit them. Yet, GM allowed its Cruise vehicles to remain on the road, maintaining the mantra of Barra and Cruise’s PR people that the company’s driverless technology was far safer than human enabled vehicles.

“This strikes me as deeply irresponsible at the management level to be authorizing and pursuing deployment or driverless testing, and to be publicly representing that the systems are reasonably safe,” Bryant Walker Smith, a University of South Carolina law professor and engineer who studies automated driving, told The Intercept.

It turns out, Cruise vehicles weren’t entirely without human guidance to begin with. The New York Times reported that Cruise’s San Francisco vehicles were supported by “a vast operations staff, with 1.5 workers per vehicle. The workers intervened to assist the company’s vehicles every 2.5 to five miles, according to two people familiar with is operations. In other words, they frequently had to do something to remotely control a car after receiving a cellular signal that it was having problems.”

The Times cited five unidentified former and current Cruise employees and business partners who said there is no easy way to fix the company’s problems, while rivals fear Cruise’s issues could lead to tougher regulations. As reported by Bloomberg Business Week, there was already considerable skepticism about the viability of driverless vehicles, with some industry experts calling them a “scam.”

What’s an especially damning reflection on Barra’s leadership is that just hours before California’s DMV announcement that it was pulling Cruise’s operating license, Barra chastised Wall Street analysts for undervaluing her Cruise business. Barra previously predicted that Cruise would generate $50 billion in annual revenues by the end of the decade.

Barra, who is chair and CEO of GM, also sits on Cruise’s board and presumably her comments were based on the considerable oversight and expertise she provided given that GM spent $1 billion to acquire Cruise and has since invested billions more to keep Cruise’s business afloat.

According to Forbes, Cruise has already racked up $6 billion in losses. GM reported that it lost $732 million on Cruise in the third quarter alone. To put that in perspective, a six-week UAW walkout at various GM plants cost the company about $800 million.

GM acquired Cruise in 2016, a move reportedly driven by then president Dan Ammann, who lost out to Barra for the CEO job. Three years later, Ammann became CEO of Cruise, signaling his belief in the company’s potential.

In December 2021, GM announced that Ammann was no longer running Cruise, and his departure wasn’t amicable. According to this Bloomberg report, Barra fired Ammann because he wanted to operate Cruise independent of GM and Barra wanted to maintain control over the company and integrate Cruise’s self-driving technology into other vehicles.

Dan Ammann/ExxonMobil

Cruise co-founder Kyle Vogt, who was CEO when Ammann took over the top job but remained with the company, was named interim CEO upon Ammann’s departure, and later was given back the job on a full-time basis. Vogt, who is in his late 30s, is cocky and was repeatedly dismissive of regulatory and first responder concerns, including a warning by San Francisco’s fire chief that it was only a matter of time before a Cruise vehicle was responsible for a fatal accident.

On October 2, a Cruise taxi hit and dragged a San Francisco pedestrian who had been struck earlier by another car, which was the final straw for California’s DMV.

GM this week recalled all its Cruise taxis, and paused plans to build a fully autonomous Cruise Origin van. Vogt’s days would seem numbered but firing him could be problematic.

It seems reasonable to expect GM will get sued for Barra’s grandiose representations of Cruise, particularly as the company’s stock is trading below $30 a share. It was trading at near $40 when Barra took over more than nine years ago.

That’s what possibly makes firing Vogt potentially risky. Lawyers suing GM for Barra’s Cruise claims likely would want to quickly establish what Barra knew and when she knew it. As an attorney once explained to me, companies facing litigation want to keep all potential witnesses in the corporate tent and under their control.

Barra’s success as CEO has been dramatically streamlining GM’s operations and making it a profitable purveyor of pricey gas guzzling trucks and SUVs. But EVs are supposedly the future, and Barra’s attempts transitioning to an electrified future have been an unmitigated disaster. An electric van plant near London, Ontario, has been shuttered till next spring because of problems at GM’s Ohio battery plant. GM has delayed the opening of a Tennessee battery plant, the rollout of its electric trucks, and the launch of its electric Equinox and Blazer vehicles, which the company proudly manufactures in Mexico.

GM’s electric Cadillac Lyriq and EV Hummer have been plagued with software and quality issues. The only EVs Barra has sold with a modicum of success are Chevy Bolts, which GM loses money on and are being discontinued. Barra’s myriad missteps have been harmful to both the EV and driverless taxi industries.

Still, Barra has her champions, including John McElroy, a highly regarded industry analyst who recently defended Barra’s compensation on LinkedIn. Barra has received more than $200 million since she was named CEO, including $29 million in 2022. McElroy suggested that attacks on Barra’s compensation were gender driven, when in fact her obscene competition is the result of her gender. Barra was paid more than 60% than her predecessor in her first year as CEO to counter gender-bias criticism, and subsequent pay increases were based off that inflated base.

Fortune remains a stalwart Barra supporter. Editor Alyson Shontell in June declared Barra “a top CEO regardless of gender.” Fortune ranked GM along with Tesla No. 1 on its recent Change the World List for Barra’s promised electrification efforts.

The recent issue already isn’t aging well.

Reach the writer at eric@starkmanapproved.com. Confidentiality is assured.


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