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GM CEO Mary Barra Moves to Take Command

DETROIT ( TheStreet) -- Thursday conceivably will be recalled as the day Mary Barra emerged as a leader.

The GM (GM - Get Report) CEO took on a full day of disclosure, apology, exhortation and pledging that GM will never again repeat the mistakes surrounding its ignition switch problems, which led to at least 13 deaths, 47 crashes, the recall of 2.6 million cars and then to a worldwide recall of 15.8 million cars with more to come, Barra said Thursday.

Barra's public events were accompanied by the release of a highly critical 300-page report detailing the results of an internal investigation by former U.S. attorney Anton Valukas. He reviewed 41 million pages of documents and conducted 350 interviews with 230 people.

Barra took over as GM CEO in January, becoming the first woman to head a major automaker. The scandal involving the ignition switch recall began to unfold on Feb. 7, when GM announced it would recall about 800,000 cars.

In April, Barra made two appearances before accusatory congressional committees. Two weeks later, she made two appearances accompanying the New York Auto Show, where she was one more taciturn CEO playing defense. In all four cases, she was one more taciturn CEO playing defense.

On Thursday morning, she appeared before 1,200 GM employees. It was not quite that moment on Sept. 14, 2001, when George Bush stood next to an elderly firefighter, grabbed a bullhorn and said "the people who knocked these buildings down will hear all of us soon." Rather, Barra remained resolutely on script. However, she did seem to take control in a way she had not before the report was released.

Early on, she declared: "As I lead GM through this crisis, I want everyone to know that I am guided by two clear principles: First, that we do the right thing for those who were harmed; and, second, that we accept responsibility for our mistakes and commit to doing everything within our power to prevent this problem from ever happening again."

She noted that Valukas' report as "extremely thorough, brutally tough and deeply troubling. For those of us who have dedicated our lives to this company, it is enormously painful to have our shortcomings laid out so vividly. 

"But this isn't about our feelings or our egos," she said. "This is about our responsibility to act with integrity, honor and a commitment to excellence."

Barra's task is eased significantly because consumers seem willing to give the automaker's new cars a chance. GM sales gained 13% in May, two points ahead of the industry's sales pace. She could have been a CEO racing to save the company as sales fell. Instead, she is being given the opportunity to mold an image of a safety-oriented company willing to recall too early rather than recall too late.

GM has also chosen to compensate victims when it could attempt to hide behind bankruptcy law, which erased prior claims. It still faces investigation and most likely years of lawsuits, but its position is going to be defensible.

Investors, so far, have not been forgiving. In early afternoon, GM shares were up 15 cents to $36.67. GM shares are down 11% year to date, but analysts are generally positive about the company's future. 

As for the investigation, it uncovered "a pattern of incompetence and neglect," but not a conspiracy, Barra said. It was more that "individuals failed to disclose critical pieces of information" and that "numerous individuals did not accept any responsibility to drive our organization to understand what was truly happening. The report highlighted a company that operated in silos, with a number of individuals seemingly looking for reasons not to act.

"Nobody took responsibility," she said. "Throughout the entire 11-year history, there was no demonstrated sense of urgency, right to the very end." She added: "This is not just another business crisis for GM. We aren't simply going to fix this and move on. We are going to fix the failures in our system."

Of the 15 individuals who have left the company, Barra said that "some were removed because of what we consider misconduct or incompetence." While " others have been relieved because they simply didn't do enough: They didn't take responsibility; didn't act with any sense of urgency." Additional disciplinary actions were taken against five other people, she said.

In the future, Barra said, any GM employee who becomes aware of a safety problem should inform their supervisor. She added, "If you still don't believe it's being handled properly, contact me directly."

Written by Ted Reed in Charlotte, N.C.

To contact this writer,
click here.

Follow @tedreednc



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