Reuters has an incredible, depressing report that GM refuses to honor suspension warranties on 2007 and 2008 Impalas (http://www.reuters.com/article/2011/08/19/gm-impala-lawsuit-idUSN1E77I0Z820110819). It seems that, despite frequent and very loud claims to the contrary, America’s corporate heads still don’t understand quality and consumer perceptions. The story has eerie and troubling overtones of the 1970′s quality crisis that almost destroyed the U.S. auto industry and opened the door to brutal foreign competition.
Reuters says some 400,000 Impalas have faulty rear spindle rods (no, don’t ask me to explain what they are – I’m just a soldering guy – but apparently they are very important) that can cause exceptionally rapid rear tires wear. A class action suit seeking damages claims that the rear tires of an Impala owned by Donna Trusky of Pennsylvania wore out after 6,000 miles because of faulty spindle rods. The suit claims that GM replaced the rods on police vehicles but not cars of private owners.
GM says it isn’t responsible because the entity that the vehicles were manufactured and warranties were issued by “old GM” that went into bankruptcy in 2009 and is now legally known as “Motors Liquidation Co.” The GM now making and selling vehicles styles itself “New GM” and accepts no responsibility for anything done by Old Good Morning.
It turns out this isn’t the first time “new” GM has hidden behind the “old” GM entity. Reuters reports that an earlier suit concerning problems with OnStar in pre-bankruptcy vehicles was dismissed on the same grounds alleged here.
Of course, companies go broke all the time and use bankruptcy to escape responsibility for past acts. But GM is (we thought) different. After all, U.S. taxpayers collectively own more than 25% of “new” Good Morning, and some of those vehicles were sold after President Obama told prospective GM buyers before the bankruptcy:
“Let me say this as plainly as I can. If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always,” Obama said in a speech. “Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty.” (http://www.autoweek.com/article/20090330/CARNEWS/903309977 )
More fundamentally, vehicles are the biggest purchase after a house that most consumers ever make. Will they trust a company now, after seeing it hide behind a legal nicety? Will they buy GM when Ford hasn’t turned to courts for protection? For that matter, will they even buy American?
It took more than 20 years for Detroit automakers to dig out from the rubble of the 1970’s rust scandal. This story has the potential to set the industry back another 20 years. Ultimately, I expect the federal government will end up paying these claims and the public will (rightly) be very angry.
American companies have been talking a great quality line in recent years. But actions show that, for many of those companies, the claims have no substance. In electronics, major U.S. corporations have closed down there in-house manufacturing and outsource production to cheap labor countries where cost always trumps reliability. Even companies that continue to produce here endorse rework and touchup as valid ways of meeting the visual requirements of A-610 and J-STD-001, knowing perfectly well that a reworked connection translates into premature failures.
Also this past week, HP pulled the plug on its TouchPad tablet, only six weeks after bringing it to market. TouchPad owners – people who trusted HP’s claim that there would be ongoing support – are out of luck. There will be no software updates, no well-stocked apps store. Most retailers are refunding the purchase price if owners return their TouchPads, but many of those buyers probably invested considerable time customizing the programs and getting familiar with the operating system; a refund doesn’t restore their lost time and it certainly won’t make those people line up to buy HP’s Next Great Thing. (Many people did line up for TouchPads when HP slashed the price by 75%, so many that HP’s computer service infrastructure crashed under the weight of the buying frenzy. Now HP wants to concentrate on business IT, but what IT manager is going to trust HP to run the manager’s bits & bytes when HP couldn’t keep its own system running.)
Think about it: this is HP, onetime star of America’s technical equipment universe, not Joe’s Garage and Computer Outlet. But it’s also the HP equivalent of “new” GM; it wants out of the consumer market and seems determined to burn those consumer bridges. It’s the world’s largest computer equipment company and it wants out of the computer business! Who do we trust after such betrayal?
America has fallen into the trap of confusing bureaucracy and paperwork (think much ISO activity and not a little of “certifying” employees who memorize but do not understand the meaning of A-610 and J-STD-001 requirements). “Supplier quality” management has deteriorated to mindless comparison of ISO paperwork to actual process. Only occasionally (and, I sometimes think, only by happenstance) do the supplier quality people actually get their hands dirty with production people.
Right now, America is getting by with this sorry excuse for “quality” systems. But, sooner or later, one of those developing countries currently noted for providing American companies with cheap but shoddy products, will undergo a transformation like Japan in the 1970’s. (And whatever happened to the legendary Japanese quality? Many Japanese companies have been sending work to underdeveloped Asian countries, much like American companies, with the corresponding fall in reliability.)
Western companies face enough problems trying to compete with dirt-cheap foreign competitors. The only hope for survival is to make and stand behind better products. The news from GM and HP isn’t promising.