GM’s Cost-Cutting Measures Could Make Vehicles Less Safe

GM’s Cost-Cutting Measures Could Make Vehicles Less Safe

General Motors (GM) has announced in recent months that it plans to cut production and reduce its workforce in North America in the wake of a stagnating market for certain gas-powered cars. The company has planned for its largest restructuring exercise in a decade. This is a car company that has been mismanaged for decades which dared to fly their private jet to DC in the early part of this century and ask for a bailout which they received.

GM has not been an Impressive Company

Their top rival Ford never received nor asked for a bailout. GM is a company that has been outsmarted by Honda and Toyota more than once. GM still owes America $16 billion which is why it has been dubbed “government motors.” However and moreover, GM’s cost-cutting drive could potentially make some of its vehicles less safe in the event of an auto accident. This is a serious concern that should be scrutinized by automotive safety experts and analysts as well as the relevant government agencies responsible for road safety.

GM Cases Related to Safety 

Jernigan vs. General Motors

GM had cut down its production costs, which led to safety hazards in some of its models. The case proceedings revealed that GM had reduced the amount of steel used in both the side rails and the shotgun rail. The company had also reduced the side rail length. This resulted in a cost reduction of $2,500 per vehicle, but also led to the creation of less-safe automobiles. The case showed that the vehicles had become less crashworthy due to this 2,500 cost-cutting program.

Johnson vs. General Motors 

This case centered on the company’s “silent recalls” of certain vehicles. GM found that a defect was causing the company’s cars to stall as they traveled at highway speed. GM engineers discovered that a defective computer chip was behind this stalling problem. The case proceedings showed that GM had been silently recalling cars without notifying the NHTSA.

Melton vs. General Motors 

A defect in the ignition switch was covered up by GM for 10 years. The ignition switch vendor Delphi provided documents, which showed the defect and a decade-long cover-up by General Motors. The defective switches could potentially disable airbags and cut off engine power under some situations. The expose resulted in multi-district litigation, and GM had to settle hundreds of cases.

Watch YouTube Video: Larry Summers says GM Shouldn’t Hide from Cost-Cutting Measures. The former treasury secretary talks about the GM auto bailout in 2009 and what the car company owes the country.

Poor Safety Culture in Automotive Companies 

In some cases, critical safety issues get ignored in an auto manufacturer’s cost-cutting plans or defects in the vehicles are not recognized or recalled in time because of unawareness from the top management. According to experts, such unawareness about critical safety matters would not occur if the organization had a robust safety culture.

The singular most significant hallmark of a good safety culture in an automotive company is a timely and proactive recognition of defects and failures in production quality. The manufacturer should be willing to recognize and speak up about a vehicle defect, even though it may seem to be minor or inconsequential at the outset.

Attention to Detail Matters

When these seemingly small aberrations are intentionally or carelessly ignored or go unreported, they often result in devastating failures later on and loss of lives. It is always easy to identify large or costly failures. But a strong safety culture demands that the so-called small defects must not go unnoticed.

When restructuring of production methods for an auto manufacturer occurs at the cost of safety, the ultimate victims are the car owners who drive the vehicles without knowing that their car is less crashworthy. When news about a potential defect is concealed, safety and crashworthiness of the vehicle is often the first victim.

Appreciate any Employee Who Pinpoints a Defect 

One of the challenges in auto manufacturing companies with a poor safety culture is that employees who might have detected the defect choose to remain silent. They perhaps know from past experience that the company would ‘shoot the messenger’ instead of focusing on the message.

Unless the top management in automotive companies such as General Motors proactive embrace (and reward) messages from workers related to any potential defects or failures, this trend will not change. To encourage ‘bad news’ (which is reported early and without any fear of personal repercussions for the employee), the company should be able to appreciate and even reward the messenger.


If an employee reports about a defect (even when the defect may have occurred due to his or her own mistake), the company leaders should be appreciative of the employee’s forthright communication. If the employee receives a punitive response from the management, it would discourage other employees in the future to report mistakes.

Finding a Solution

If an employee on the assembly line decides to stop vehicle production for some reason, the management should focus on the problem rather than get obsessed with resuming production quickly to stop the bleeding.

When the auto manufacturer creates a safe environment for employees to have a frank dialogue with the management on safety issues, it helps build a climate of confidence. This constitutes the bedrock of a robust auto manufacturing safety culture where consumer safety takes precedence over cost-cutting.

Sacramento Auto Accident Attorneys 

I’m Ed Smith, a Sacramento auto accident attorney. If you have suffered a personal injury in an automobile accident, call me at 916.921.6400 or 800.404.5400.

I am honored to be a member of the National Association of Distinguished Counsel and the Million Dollar Forum.

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