Monday, November 23, 2015

General Motors: A Recall Nightmare (2014)

General Motors logo
General Motors has been a major leader in the car manufacturing industry for centuries. Despite their successes, the company has been under investigation for their defective ignition switches for the past year and a half. The defective ignition switches would cause vehicles to suddenly loose power, disable a car's airbags, lose power steering and lose break control. Ignition problems first started in 2001 and on many occasions the company claimed they've been fixed. Since then, a recall was announced in 2014. 2.6 million cars were recalled, 124 deaths and 273 injuries were reported. GM was brought to federal court and reached a settlement for $900 million-no individuals were convicted due to lack of evidence. The company has set up a $600 million compensation fund for those affected. GM is offering $1 million to families who lost their loved ones but it waives the families rights to sue. An example of GM's negligence would be in 2003-Jean Averill was the 1st reported death linked to GM's faulty ignition switches. Her car failed, hit a tree and airbags failed to deploy. GM never contacted the family to let them know about the defective switches. However, in 2014, a reporter contacted the Averill family to let them know the truth about Jean's death. In a report, GM admitted Jean's death was the 1st death linked to the ignition problems. Since then, the family claims GM has offered a payment from their compensation fund but has never issued an apology (Glor, Family: GM payment not enough for decade long cover-up, 2015). In 2004, a woman named Candice Anderson was driving her car with her fiancé. Her vehicle failed, hit a tree, airbags failed to deploy resulting in her fiancés death. Anderson was convicted of negligent homicide, had to serve community service, pay a find, serve 5 years of probation and lost her job. Anderson sued GM for the airbags not deploying but in court, GM never mentioned anything about the ignition defects. To this day, Anderson is still fighting to get her name cleared (Harlow & Hobor, 2014). By 2005, more cars were reported to be defective and more deaths/injuries were reported. In a May 2005 email between GM engineers, it was mentioned that it would cost the company 90 cents per car to fix the ignition switches and a one time cost of $400,000 to change its equipment and installation processes (aka tooling cost). GM chose to ignore the issues because it would be too costly. Instead, the company issued a service bulletin stating not to have excess weight on key rings because it could cause cars to stall out. Years went on and the company kept trying to avoid a recall. In the end of 2013, the new CEO Mary Barra, became aware of the problems through an engineer and finally issued a recall in February of 2014.

Mary Barra, CEO of General Motors

Stakeholders are anyone affected by General Motors actions. In this case it would be customers, families and stockholders. Customers who are GM owners probably feel betrayed by the company because GM took so long to announce a recall. Before the recall was announced, many customers have spend money out of their own pockets to fix their defective cars. GM put millions of customer's lives in danger by not issuing a recall. Families of the injured or ones who died would be stakeholders. As mentioned, in many cases, GM never tried to contact families to admit GM was at fault or issued an apology. Finally, stockholders would be considered as well. Before the recall, GM's stocked were low to begin with but after the recall was announced, their stocked hit a year-to-date low of $31.93.

Milton Friedman created a law that focuses on individualism which states "the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders." Friedman agreed that a company must follow the laws and "stay within the rules of the game" (Salazar, pp. 17-19). An individualist might argue that GM had the right business intentions but, the company failed to follow the laws, therefore GM acted unethical. It would've cost the company about $2.34 million dollars (2.6 million recalls multiplied by 90 cents) plus another $400,000 for tooling costs to issue a recall. However, when federal laws come into play, GM violated federal laws by failing to issue a proper recall when it was necessary.

General Motors 2014 recall items

The goal of utilitarianism is to maximize overall happiness and minimize overall pain. A utilitarian measures the costs and benefits of ones actions and considers all stakeholders who could possibly be affected. In addition, it is a general rule to consider that death is a worse outcome rather than an increase in profit. Applying the views of utilitarianism, GM is unethical. The company was concerned with maximizing their overall profit. They didn't consider the how the lives of their stakeholders could be affected. The deaths and injuries of almost 400 people and counting is much worse than the company maximizing their profit.

Founded by Immanuel Kant, he believed it was wrong to manipulate, exploit or use people. Kantianism views lying, cheating and stealing to be wrong even if there are positive outcomes. People and businesses should be motivated by "Good Will" which meaning doing the right things simply because it is right. Applying Kantianism, GM is unethical because as a leader in the auto industry, they failed to act with honesty. They lied and manipulated their stakeholders for over a decade in order to avoid a massive recall. They disrespected millions of individuals by denying the fact that their ignition switches were faulty.The irrational decisions made as a company affected millions of people.

Virtue Theory
GM headquarters in Detroit, MI

The virtue theory was first developed by the Greek philosopher, Aristotle. It focuses on individuals and businesses possessing good character traits called virtues. Virtues would traits such as honesty, wisdom, courage, intelligence, care, leadership, and many more. The opposite of virtues would be called vices. Vices would include traits like greed, dishonesty and selfishness. Applying the virtue theory, GM is unethical. GM was greedy, dishonest and selfish. The company had more vices than virtues. The company lacked leadership because they prolonged their decision to issue a recall. They didn't posses honesty, especially in the Candice Anderson case where the company had an opportunity to come clean about the ignition problems. As mentioned before, there has been cases where the company never issued an apology to families, therefore they lack the virtue of care.

Justified Ethics Evalutation

In my opinion, this whole ignition switch issue could've been easily prevented. When the company started seeing ignition problems, deaths and injuries, the company should've took the initiative to issue a recall. It was selfish, irresponsible and dishonest of GM to wait so long to address the issues. I think the new CEO, Mary Barra, did the right thing by reporting the defects to the National Highway Traffic Safety Administration once she was aware of the problem. Before she was CEO, I think it was wrong how the company repeatedly denied the link between the ignition switches and deaths and injuries. I think it is wrong how there are cases where the company never issued an apology to those affected. Lastly, I do not agree with the $900 million settlement and the millions of dollars of fees/fines GM had to pay throughout the trial. Although there is "not enough evidence" to personally convict anyone in this case, I think if there is any possible evidence of executives of the company knowing about this situation should be brought to trial.


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Gates, G. (2014, June 5). The Fault in the Cobalt Ignition Switch. Retrieved from NY Times:

Glor, J. (2015, May 11). Family: GM payment not enough for decade long cover-up. Retrieved from CBS News:

Glor, J. (2015, September 17). GM CEO. Retrieved from CBS News:

Harlow, P., & Hobor, A. (2014, August 15). 10 years of guilt over GM crash that killed her boyfriend. It may not have been her fault. Retrieved from CNN:

McGrath, M. (2014, June 5). GM Stock Turns Negative As Automaker Receives 'Deeply Troubling' Report On Ignition Switch Failure. Retrieved from Forbes:

Plungis, J., & Higgins, T. (2014, June 5). Former GM CEO Wagoner May Have Seen Cobalt Slide in 2009. Retrieved from Bloomberg:

Salazar, H. (n.d.). The Business Ethics Case Manual: The Authoritative Step-by-Step Guide to Understanding and Improving the Ethics of Any Business.

Welsh, T. (2014, April 2). GM's Deadly 'Cost Culture'. Retrieved from US News:

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