Corvair versus Ralph Nader
Ralph Nader's criticism of the GM Corvair was a watershed moment in consumer advocacy. His public campaign against the car that was "unsafe at any speed" had profound consequences: it fanned consumer resentment against business practices and compelled auto makers to consider consumer safety, a dramatic shift from their position that blamed drivers, not vehicles, for auto accidents.
At the heart of the case was the General Motors Covair, which had a design defect that would cause the car to go out of control and flip over. Several cases arose, and in each instance GM was either able to cast aspersions on the driver's abilities or settle the claim out of court.
GM's engineers discovered the design flaws, and reported that the car would perform under most normal driving conditions, but that there were "frequently" conditions such as slippery pavement or emergency maneuvering which would cause the vehicle to fail.
Still the company pressed forward, and there were a rash of suits against it for the car. It was even discovered taht the modification to correct the tendency of the car to flip would cost about $15 per vehicle to implement, but it was rejected by the company as being "too expensive" (though the sum total for all vehicles outstanding was less than half a day's operating profit for the company).
Ralph Nader was a journalist, who was particularly interested in automobile safety, who used the Corvair as a foil to criticize the auto industry of failure to protect the public from poorly-designed vehicles. Gm, in return, hired investigators in an attempt to get some dirt on Nader and, failing that, tried to intimidate him into being silent. Neither was effective - and their attempts to harass and intimidate Nader eventually came to light, which added credibility to his claims.
Some of the key blunders of general motors in this debacle were:
- The company sought to offer a moderate performance automobile at a specific price point, and cut corners to make the numbers work.
- The company considered vehicle safety to be unimportant, and a source of unnecessary production cost.
- Their injudicious investigation and intimidation of an outspoken critic only served to tarnish their reputation and add to the credibility of their critics.
- The corporate management completely ceded the handling of the matter to their legal counsel, whose primary focus was on winning the cases rather than addressing the source of the problem
In the end, much financial and PR harm was done to general motors, and the federal government put into place extensive legislation and oversight onto the automobile industry.
Lessons Learned
Primarily, that one person can make a difference. While Nader is not single-handedly responsible of the changes in product safety regulations, it's fair to say that he started the ball rolling, and it was a poor decision on GM's part to ignore him until he began to gather national attention.
Apathy toward society welcomes government regulation. If GM had made safety a concern, and had taken proactive steps to amend the issue, even at the cost of settling lawsuits and performing a recall, it could have saved itself a lot of cash and effort, and would remain in control of its own products rather than being subject to government regulators.
Emphasis on short-term profit leads to long-term problems. Again, their desire to save $15 per vehicle led the company to face grater expense in the long run.
Top management must take responsibility. While the GM management turned over the situation to legal counsel and claimed no knowledge or participation, it is ultimately the reputation of the company that suffered. While they may have delegated tasks, they should not have turned a blind eye to a problem that could have a significant effect on their business.