A Steady Stream of Recalls

When Chairman Roger Smith convenes the annual General Motors shareholders meeting on May 20th in Detroit, it is not likely that Jay Johnson will be on his mind. But Jay Johnson’s April 6th letter to Mr. Smith represents a problem that should be on the shareholders minds. GM’s quality control is in deep trouble with millions of its customers. Arid all those expensive television ads talking about “that GM feeling” and how GM is the best GM ever won’t reduce the giant auto company’s bumper lemon crop.

Jay Johnson is a businessman from Montgomery, Alabama. He writes: “Dear Mr. Smith: Last Thursday the Cutlass diesel I purchased in 1979 blew an engine. On August 18, 1982, my Oldsmobile 98 diesel blew an engine. I have a file folder full of letters that I have written to GM about problems with these two automobiles and I have received no positive action from your company or from the local dealer.”

“Since I could riot get any assistance from your company on the 98 diesel, I paid for the engine replacement of $2900 myself -­the local dealer wanted to charge approximately $700 over the original estimate… I do want to make one thing perfectly clear, and that is that I am riot going to replace this engine at my expense without a legal battle.”
There are GM diesel owners in 14 states who have organized to take on GM over just this type of vehicle defect. Lawsuits are spreading. Many of these cars live in repair shops when they are not suddenly stalling on highways. One million consumers paid top dollar for these new diesels, only to join millions of other GM customers burdened with deficient transmissions and switched engines.

And these motorists are not alone. Buyers of GM’s X-cars have long had that special kind of GM feeling. Recalled five times from their dealers before the X-car even went on sale, the vehicle has been recalled eight more times since September 1979 for defects ranging from fatigue cracks in the steering gear mounting plate to what the company calls “possible rear-wheel lockup.” Raymond Peck, outgoing auto safety administrator for Ronald Reagan says that GM has about 2 1/2 million cars (1978 to 1980 models) with rear axle defects which should be recalled.

In late March and early April GM recalled almost 1.4 million 1978 to 1979 model cars for excessive pollution emissions. Last October GM recalled 609,000 1978 cars for similar reasons. A short time afterward, GM recalled about half a million 1980-82 cars for possible fire hazards. Two years ago GM recalled 5.8 million for possible fracture of rear suspension lower control arm bolts resulting in loss of control.

This listing is by no means exhaustive but it is a telling – commentary on the quality of GM’s top management as well as its. cars. More than once GM officials have conceded that the Japanese and Europeans have made inroads into GM sales because of superior “fit and finish” among other quality controls.

GM sales and profits have been lost. Yet the owners of the company — the shareholders — have no leverage over the managers who control the automaker. One only has to attend a GM shareholders meeting to observe the culmination of a system so rigged that it invites satire as well as a reminder of the separation between ownership and control that characterizes large corporations.

What is remarkable is that Roger Smith need not be concerned in the slightest that his job on the line if he does not stop producing more Jay Johnson type grievances. High up in executive suit, he is insulated from the failures of the products he so handsomely profits from in salary, bonuses and perquisites.

Maybe a greater system of accountability to make sure that quality control starts with management before it reaches the shop floor will do more, riot just for consumers, but for that new industrial policy that more politicians are talking about in their vague speeches and abstract exhortations.