There is no question that the U.S. is no longer a competitive place to have a manufacturing business. The govt constantly forces up prices with artificial, un earned wage increases and conditions “bailouts” on raising union worker benefits. Progressives argue that profits are evil. Business owners argue that their contract between their employees and them should be unhindered by politicians. The bottom line is that with every wage increase, prices for everything else go up, and thus, the need for more wage increases. In the interim, manufacturers are unable to compete with other countries that offer business friendly environments, and they make cheap junk that few people want to buy.
Case in point, General Motors recently disclosed information about the defective ignition switch in millions of General Motors cars and how early they knew about this hazard. This is disturbing, but not the first of these types of scandals for GM. Earlier they were involved in a large safety scandal involving millions of GM pickup trucks that were prone to catch fire. This was before the bailout that the American taxpayers footed to pull General Motors out of bankruptcy. GM did rebound from their financial failure, with a bailout by the administration, with American taxpayer dollars that saved the automaker. The auto company at the same time put in place new leadership, but since then there has been the ignition switch and pickup truck issues, which questions the morality of the company.
In the 1970’s the dominant auto companies were GM, Dodge and Ford for full sized pickup trucks and GM to have an advantage over the other two began offering a 40 gallon fuel tank. This was done with a reckless design of two twin 20 gallon tanks mounted on the flank of the truck. This placed them in a way that they were predisposed to vulnerabilities like exploding or being punctured during side impact crashes. There were approximately 9 million of these trucks with duel side gas tanks designed between the years of 1973 through 1987. This issue of explosive gas tanks has resulted in over 750 deaths and even more people disfigured from agonizing burns. The design defect, which resulted in many lawsuits due to the design flaws of the duel fuel tanks, is still considered the most deadly American automaker design defect.
The defect was never admitted by General Motors, even after paying out more than $500 million in settlements to victims and families. Then in 1994 Frederico Pena Transportation Secretary concluded the investigation of the pickup trucks. In his statement he said “GM was aware, possibly as early in the 1970’s and positively knew in the early 1980’s” that the design made the trucks vulnerable to side-impact fires and fatalities were occurring. He said GM decided not to alter the design of the pickup trucks for 15 years. The more recent defect in GM small cars is the ignition defect that has been linked to at least 13 deaths. This defect can result in the engine shutting down without warning, which causes the power steering to be disabled, the brakes and the airbags. There have been other vehicles that have had airbag issues that were not related to ignition shutdown.
In both of these instances GM executives and engineers knew about the defects for a number of years, but continued to produce more vehicles with the same defect design. They did not acknowledge the defects and they were not discovered by regulators. The way these design defects were brought out in the open was through lawsuits on behalf of the individuals who had been hurt and the families that had lost loved ones. When the time when the pickup trucks were still on the road the National Highway Traffic Safety Administration was set to order a recall. They backed off issuing the recall after GM placed pressure on them and their congressional allies. The agency then permitted GM to pay $51 million dollars for safety programs.
The ignition switch issue has turned out differently, with GM recalling millions of small cars, including the Cobalt model. One other difference between the ignition design problem and the duel fuel tanks is during the bankruptcy a disclosure was made about the pickup truck defect and existence of claims against the automaker. The ignition defect existed at the time and claims, but this was not disclosed during the bankruptcy filing. This places GM in a position that there could be fraud charges. The ignition defects were ignored by the automaker causing vehicle owners to be in danger and by not disclosing this issue and claims during the bankruptcy they have defrauded the American taxpayers. The question remains whether General Motors will be held responsible or not.