We now know that GM chose not to fix a deadly defect to increase profits. GM’s behavior is not unique. Today, such scandals in corporate America seem commonplace. But why?
The answer can be found be looking closely at GM and its history. In 1973, GM did a cost analysis that concluded it was cheaper to pay money in lawsuits than to eliminate fuel-fed fires. GM then used its substantial resources to hide its cost analysis from judges, juries and the public. Decades later, a jury in Fort Lauderdale finally saw the GM cost analysis and ordered GM to pay $60 million. Wouldn’t that verdict eliminate any cost savings for GM? Testimony by a single GM engineer revealed that GM saved almost $1 billion dollars by not adding a safety device to just the cars he worked on. Even with the $60 million verdict, it was cheaper to pay lawsuits than to eliminate fuel-fed fires.
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