Category Uncategorized

Nicholas Kachman on the Culture of Resistance and Failure at General Motors

Nicholas Kachman worked as an engineer at General Motors for 35 years.

During that time, he witnessed what he calls a culture of resistance and failure – resistance to life saving auto safety and pollution control regulations that caused the automaker to fail in the marketplace.

Kachman is the author of GM Paint it Red: Inside General Motors Culture of Failure.

“When I look at the failure of GM, I look at all of those great engineers they had,” Kachman told Corporate Crime Reporter in an interview last month. “You go to school to learn all of the disciplines. And you take tests to see if you understand chemistry or physics. And it is all with the goal of solving problems, making things better, improving humanity. GM was paying billions of dollars over the years for PhDs and math degrees and regular engineers. And GM was telling them –  develop reasons not to do something.”

“That was one of the greatest reasons why GM went bankrupt. It was a terrible loss of talent and a waste of money. I know engineers at the corporate level that have a file full of letters that say why certain regulations are not reasonable and why we can’t meet these standards. That is a horrible waste. Instead of solving problems. And for every pollution problem that was finally solved, GM made money at it.”

“It was a waste to discharge chromium in water and materials out the stack, pollution in the plant where it was hurting the employees. Every pollution regulation made money for GM in the long run.”

“From the 1950s, when Roger Smith said – we are not going to have government tell us what to do, all the way through the 1990s, they fought the regulations.”

How does meeting regulations make corporations money?

“Let’s take the foundry. They were handling 100 million gallons of water a day. When they finally faced the water pollution laws, they made up a chart and found out they could get by with one million gallons a day. That means less pollution, less energy, fewer pumps, less water and chrome.”

“The biggest thing was paint. They usually told management that in the painting systems in all of the 40 or some plants – only about 50 percent of the paint went onto the cars. The California pollution laws forced GM to test the efficiency of the painting operations – and we found out it was only 25 percent of the paint made it onto the cars. You had to spray over four gallons of paint to get one gallon on the car.”

“They used to worry that as a result of the regulations, the price of dumping waste in landfills was going to go up from $15 to $25 a cubic yard. I told management in the cubic yard full of sludge, you have $2,000 worth of paint in there. Don’t worry about the cost to bury the waste. You have to worry about the paint that is in the waste. Back then, the paint used to be $6 a gallon. Now it’s $100 a gallon for some of these colors.”

“Every pollution law that I can think of ended up saving GM money. Yet, to think, all of those years, they fought the laws.”

Where did GM’s culture of resistance come from?

“GM was the leader in the 1950s and 1960s. Chevrolet sold over half the cars in the United States. They were the number one most profitable, biggest company in the world. Then the regulations started to come out, especially the pollution laws in California. And Roger Smith made the calculation –  we are the greatest company in the world, we got there without government interference, and we are not going to have these outsiders tell us what to do.”

“That set the tone. And it spread like a disease throughout the corporation. And it stayed there. The word was out – we are not going to listen to the outside government officials telling us what to do.”

“The Japanese thought – better fuel economy, better safety, better economy of cars was a good thing. GM had 50 percent of the market. By the 1980s, GM was down to 25 to 30 percent. And the Japanese were already up to 14 to 20 percent by meeting these regulations.”

“GM was the leader in technology until the 1950s. And then the attitude changed. How did the change across the whole management system happen? Roger Smith by himself couldn’t have done it. And that is a mystery to me. But it spread and the culture of resistance was still in place when I retired in 1993.”

During the interview we did with you in 2016, you said that the management had blinders on. You said that if managers read the New York Times, they were considered liberals.

“Some of them were criticized for reading the New York Times. We were having brunch with a vice president. And he said – don’t read the Detroit Free Press, they are too liberal. Only read the Detroit News. Only read papers that support our thinking. That’s a sickness. It’s like people just watching Fox News today. It supports what they originally believe. It is something that should be studied. It happened at GM and everybody fell in line.”

“Everybody wanted to be on the team. And the team slogan was – we are not going solve problems, we are going to fight the government. I knew some engineers who did some things to solve problems. And they bragged about it for the rest of their lives. It was just a slight improvement. But engineers go to school to solve problems.

And when they do, they brag about it for the rest of their lives – to their families, to their friends, to everyone. But then we stopped solving problems and we became part of the problem.”

Why did the engineers buy into GM’s culture of resistance and failure? Didn’t they have a professional duty to act in the public interest?

“Pollution was causing so many deaths. Car accidents were causing injuries and deaths. In about 1987, the head of safety retired. He was building up a chart showing that the number of deaths in car accidents were going down. Imagine this fellow trying to find a reason why we didn’t have to do any more. I was told at one time, by George Smith, who was head of the program, that they had 100 Chevrolet cars with airbags – from 1964 to 1973 – in public hands. I asked this engineer – how did they work? And he said – fine.”

“In 1974, they knew these 100 airbags worked with no public complaints. And yet they waited until Chrysler’s Lee Iacocca said a number of years later – we’re going to have to put airbags in cars.”

“After Iacocca made his announcement, the head of safety at GM came down to lunch and said –  I’m going to retire. I asked – why? You are healthy, you are well paid. Why retire now? And he said – the fight is over.”

“That is the cancer going through the corporation. You would think GM, once the technological leader, would brag that they were making the safest cars in the world, the cleanest in the world. They didn’t do that. That is what caused GM’s bankruptcy. Not some model car that didn’t work or this program didn’t work. It was the culture. It was the sickness.”

You are suffering now with an illness?

“Yes. I have cancer in the lining of my right lung. It’s not in the lungs. It’s in the lining of the lung. And it’s incurable. There is no cure. They said I am six months over my time. I’ve lost a lot of weight. Some time when I was in GM plants, looking at pipes being insulated and pumps being taken apart, I was exposed to asbestos. It has affected me.”

“I’m sure I would have lived to 93 or 94. I’ve been hunting and fishing and was vigorous. This thing just takes over your body. The thing about this disease is you feel pretty good until it really grabs hold of you and then within a week or two you are gone. Until then, I’m taking care of my wife and family. And my mind is still pretty sharp.”

“There are two trials for drugs. But they haven’t proven effective. There is no cure whatsoever. I’ve been to two cancer experts.”

What did they tell you about your prognosis?

“About a year ago, they said six months. I’ve kept very busy, very active. Things like this phone interview.”

“But if you take off my clothes and you look at me, it looks like I came out of a Nazi concentration camp. I’m very thin. It hits your lymph nodes and deteriorates your body all over. I have tumors on my back and my sides. And they are growing. They don’t hurt, but they are growing. And one day they will grab me a bit more and it will go very quickly.”

Were there other engineers at GM that shared your point of view?

“Well, I did get support from the EPA. They are great supporters. There was a fellow who worked for me who went on to sell paint robots across the country. He is still close with me. He’s a former GM engineer. He became a top robot salesman in the United States.”

“This new woman who is head of GM, Mary Barra, fired fifteen engineers. First time that has ever been done. But more importantly, she fired five lawyers. And she forced the head of the legal staff into retirement.”

You say there is a lack of ethics in modern society, even in the church.

“I was raised a Catholic. Went to Catholic Church. Listened to sermons. When I married, my wife and I got married in the Lutheran Church. And I did take the kids and got them all baptized in the Lutheran Church. Listened to sermons. And not during that whole time did I hear – did you read the paper where this executive or this company did this? That doesn’t meet our religious standards, our Christian values. That’s bad. Churches are failing as a result.”

What companies had a culture different from GM?

“Let’s look at 3M for example. I visited a 3M plant, saw their incinerators and how they treat their employees. When the environmental laws came out, 3M had 55 plants across the world putting out adhesive solvents hazardous to the environment. They made a commitment to control all of them. And within a year or two, they had them all controlled. Their motto was – let’s get out of the pollution business and concentrate on the product. Look at their stock price. It went from $30 a share in the 1970s up to $200 a share today.”

“Another company was Cummins Engine. They got rid of noise and oil mist. They give money to libraries and schools and hospitals, not just to politicians looking to get a tax break or something else. Lincoln Electric stands out because I heard they treat their workers well.”

“The Japanese came in and knew that GM was making poor quality cars. The Japanese had cars that were more fuel efficient. And they saw that. They provided those cars with better fuel economy and lower emissions. GM went from having 46 percent of the market to maybe 16 percent now.”

“My daughter only buys Japanese cars because the quality of the Camrys are so great. And Consumer Reports rarely gives top ratings to GM cars. Quality and safety go together. Japanese cars are rated high all the time. Honda is an excellent company.”

“GM, Ford and Chrysler have twenty goals – return on investment, stock market price and the others.”

“Honda has only two – take care of the employee, take care of the customer. And as a result, Honda has really done well.”

While you were at GM, were you in touch with Ralph Nader?

“No.”

When did you first meet him?

“Ralph was inducted into the Automotive Hall of Fame in Detroit. And he was kind enough to invite me to that event. And that was the first time I met him.”

How did he know about you?

“He read my book and endorsed it. He sent me a copy and signed it – to Nick Kachman – for saving lives – Ralph Nader. That brought tears to my eyes. I worked my life to improve in-plant environment, without bragging about it, closing plants, putting on pollution controls. And I’m proud of it. But in my book, that comes out. That is what I was doing throughout my career. But for Ralph Nader to say it and put his name on it, it really had an impact on me.”

There are probably more than 1,000 engineers at GM. Of those, how many had your point of view – with an ethical moral compass that you took to work?

“There are a handful.”

“GM doesn’t require engineers to be registered professional engineers. If you are an architectural engineer, you must be registered because you are building a building for public use. When you put your stamp on it, you are saying – I did everything possible to make the building as safe as possible for public use. I don’t understand why that isn’t done for cars, for plant pollution, for things like that. They cause as much harm and engineers don’t have to put their stamp on it. There should be an oath of office.”

“The automotive engineering societies are controlled by industry.”

You are a mechanical engineer. I just looked up the National Society of Professional Engineers’ code of ethics. They have five fundamental canons. The number one canon is – hold paramount the safety, health and welfare of the public.

Aren’t those engineers at GM professional engineers?

“No. Very few of them are registered professional engineers.”

Why not?

“GM doesn’t require it. I don’t know exactly why.”

[For the complete q/a format Interview with Nicholas Kachman, see 32 Corporate Crime Reporter 48(12), December 10, 2018, print edition only.]

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress