The Detroit News has attempted to reconstruct how and why General Motors has issues with its ignition switches. It takes a point of view that is different from the usual testimony and gossip we’ve seen so far.
Delphi was a division of General Motors until it was spun off in 1999. As often is the case with these business propositions (remember the “merger of equals” with Chrysler and Daimler-Benz?), everyone was talking about how the move would benefit both companies. But a funny thing happened afterwards—Delphi became one of the many suppliers to GM, being on the receiving end of penny-pinching, strong-arm bargaining for which the auto maker is famous. One consequence of this process is that the winning bidder may have quoted costs so low that corners may be cut to meet the agreed upon price.
Moving forward, both parties eventually knew about a defective part. Why wasn’t it caught and fixed properly? Fixing meant production delays, as the United Auto Workers (UAW) contract stipulates they are paid whether the line is moving or not. If the line was down to address the ignition switch, the money paid to the UAW during this respite would have nixed any savings made during the bargaining process with Delphi. “There were unquestionably times when parts were accepted that did not meet GM’s specifications. But you had to keep the production lines running at all costs,” said one analyst to The Detroit News.
Meanwhile, Delphi filed for bankruptcy in 2005, once having the luxury of General Motors’ support but eventually a victim of the business practices that kept margins low combined with huge legacy benefits.
To read the whole story, head over to The Detroit News.