[UPDATED: 8:13AM EDT] General Motors said this morning that its profit fell 86 percent, its worst quarter since came out of bankruptcy in 2009. A series of recalls hurt the auto giant, but excluding these one-time items, profits radically beat expectations.
GM is suffering not just from bad weather during the winter months — but also from bad PR over its handling of faulty ignition switches going back ten years.
The problem has caused at least 13 deaths, and the belated recall — in February 2014 — could cost the company $1.3 billion. GM faces ongoing inquiries into its knowledge and handling of the defect, as well as lawsuits from consumers.
Since emerging from bankruptcy at the end of the recession in June 2009, GM has gone from a message of redemption to an acknowledgment of mistakes.
“We will not shirk from our responsibilities now and in the future,” new CEO Mary Barra told a Congressional hearing earlier this month about the ignition-switch recall. “Today’s GM will do the right thing.”
That appears to include heads moving and rolling. Several top executives, in HR, communications and engineering, are out, says Paul Eisenstein of the Detroit Bureau, an auto-industry news service.
“Since the recall we have been seeing more and more changes in mid- to upper-management,” says Eisenstein, and he adds that company executives have signaled to expect more of the same.
Meanwhile, GM plans to staff up two new engineering divisions — one specifically to deal with safety and quality problems.
“The image of the company as a huge lumbering company where management holds back on innovation and change is an image that the company’s going to have to rid itself of very quickly,” says Gary Chaison, a professor of industrial relations at Clark University who studies the auto industry. And he says HR shuffles alone aren’t likely to accomplish that goal.
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