It’s classic tale from the convoluted and mysterious world of the global supply chain. Crain’s Business [via Automotive News [sub]] explains how GM was forced to recall heated windshield washers not once, but twice. And we take a look at why GM took the extraordinary measure of blaming customers and GM technicians for “misdiagnosing” the problem, a strategy that makes for an interesting counterpoint to the recent Toyota recall hoopla. After all, like Toyota’s pedal problems, GM’s heated windshield washer woes are rooted in a complicated relationship with one of its suppliers… and one of its regulators.
Founded by an Israeli law student and a Russian aerospace engineer, Microheat became the classic story of good idea turned big business when it landed a GM contract in 2003. Microheat’s so-called “HotShot” design was refined with help from GM’s engineers until the 2006 model-year, when the technology debuted on the Buick Lucerne and Cadillac DTS. The technology soon moved to various other GM models, and soon Microheat was supplying hundreds of thousands of HotShot modules to GM.
By 2008, NHTSA was receiving reports of spontaneously combusting Tahoes, and ordered an investigation. GM found 41 fires in the 2.5m full-size trucks and SUVs investigated, three of which appeared to be caused by HotShot failures. GM recalled 850,000 HotShot-equipped vehicles in 2008, and canceled its contract with Microheat. Ford also canceled an early stage supply contract, and Microheat filed for bankruptcy.
As happens in these situations, Microheat and GM both sued each other. GM (now Motors Liquidation) is seeking $21m for recall costs, MicroHeat is seeking $11.4m for unpaid receivables. One lawsuit, filed by MicroHeat in 2008, has been administratively closed due to GM’s bankruptcy. That suit is best described by the Crain’s Ryan Beene:
In that lawsuit, which also charged GM with defamation, Microheat argued GM is responsible for “nonconforming high voltage transients” that caused the short circuit. Voltage transients are bursts of electricity that occur randomly and circulate throughout a vehicle’s electrical system and overload components.
The jolts were so high that they caused the HotShot unit to short-circuit, Microheat claimed. That short-circuit overheated a grounding wire connecting the component to the wiring harness. Microheat contended that harness was “undersized,” citing internal tests conducted to evaluate conditions in which the HotShot unit would short-circuit, according to court documents.
Microheat also pointed to GM’s initial fix for the recall in 2008, which connected a fuse to that grounding wire. The fix was designed to prevent a HotShot short-circuit from overheating the grounding wire and causing other components to fail, but it did not address the HotShot unit itself.
“If the HotShot truly had a safety defect, it would have been removed from the vehicle,” Microheat said in court documents.
GM insists that the short-circuits were not caused by voltage transients.
“Our electromagnetic compatibility expert has explained that the testing Microheat did to create a fault in their module was nearly 300 times more severe than could actually occur on a vehicle,” GM spokesman Alan Adler said in an e-mail.
The initial fix was chosen to mitigate the risk of a short-circuit in the heated wash unit crossing over into other electrical components via the wiring harness, Adler said. In GM’s analysis of 80,000 trucks and SUVs, performed before the first recall, the automaker found 36 confirmed cases of a short-circuit in the heated wash unit.
Because of the relatively low occurrence of shorts, GM opted for a fix that prevented the short from spreading, rather than fixing the HotShot unit for the recall.
But GM installed a later-generation HotShot module that was designed by Microheat to handle higher-voltage currents on about 77,000 vehicles.
GM found no cases of failure in those specific units but said it found other cases of melting and saw the potential for fires caused by another part within the HotShot module. That finding prompted the June 8 recall of 1.5 million vehicles.
Voltage Transients: the new cosmic rays? What makes this drama all the more interesting is the fact that GM did what Toyota refused to do: it summarily dismissed problems with warranty-returned HotShot units by stonewalling NHTSA and blaming customers. Carquestions explains:
Why would GM blame its own technicians, dealers and customers? Because they were locked in a legal dispute with the supplier who had a reasonably plausible argument for GM being at fault. More importantly though, this was before Toyota had opened NHTSA’s eyes to the realities of a supplier-driven auto industry. In other words, it could. Will the same people who demanded Akio Toyoda be publicly dressed down in DC ever ask why GM had such an easy time convincing NHTSA that warranty-returned HotShots weren’t a problem? Not with a government-backed GM IPO coming up, they won’t.
Speaking of which, the supplier in question isn’t exactly going away either. Again, we’ll let Beene explain:
[Post-bankruptcy] a core team of former Microheat employees is working to get the technology behind HotShot back on the market under a new company, AlphaTherm USA. They are using Microheat’s intellectual property and operating out of the same offices the defunct company used.
AlphaTherm has signed its first deal to get the product into new cars, a contract that could be a steppingstone to deeper re-entry into the market.
Last February, AlphaTherm signed a long-term technology licensing agreement with KCW Corp., of South Korea. KCW is a member of the Kyung Chang Industrial Group and a major supplier of windshield wiper products in Korea, with 2007 revenues of more than $67 million.
KCW bought one of the two assembly lines formerly owned by Microheat and shipped the systems to South Korea, where it plans to manufacture AlphaTherm’s latest-generation heated washer system for Korean automakers beginning next year.
AlphaTherm’s General Manager, who still dreams of his re-start-up being bought by a Tier 1 supplier, blames GM to this day. He insists:
There’s something else in the vehicle that is causing this, and there could be other parts in the vehicle that could be subject to this failure mode
An investor in the now-bankrupt Microheat blames NHTSA, saying:
Whatever GM tells them, they’re OK with that
A dangerous component. A disgraced supplier. A giant automaker. An incompetent regulator. Does any of this sound familiar?