GM CEO Mary Barra: Here’s Why We’re Suing FCA for Racketeering

General Motors CEO Mary Barra says she is OK with the prospect of FCA owning GM’s former Opel and Vauxhall brands but she is not OK with the idea that fraudulent bargaining by FCA and the UAW resulted in higher labor costs over many years.

The two positions show how complicated, competitive, and incestuous the auto industry is.

GM has filed a federal racketeering lawsuit that accuses FCA of years of bribery and corruption and that payoffs to the UAW gave Fiat Chrysler a competitive advantage in terms of labor contracts dating back to 2009. Both FCA and the UAW have denounced the allegations and say past negotiations and agreements were not compromised. Personnel from both FCA and the union implicated in payoffs to UAW leaders have been charged.

“It was a decision that was carefully made,” Barra said of the lawsuit in an exclusive interview with MotorTrend. It goes to her long-standing stance: “Give General Motors a level playing field and we’ll compete and we’ll win. When we find out actions were taken that caused that not to happen, we felt in the best interest of all of our stakeholders, our employees, our dealers, our suppliers and our shareholders, we felt that we had a responsibility to take action.”

Unions use a tactic called pattern bargaining where a general agreement is reached with one of the three Detroit-based automakers that the other two are expected to match. The basic agreement is then tweaked to the individual companies. Barra says facts GM has gathered show the historic manipulation of the last three contracts is more than pattern bargaining differences.

“There’s a difference between pattern bargaining and then pattern bargaining that’s based on briberies and corruption,” adds GM spokesman Tony Cervone. GM’s case intends to show fraudulent representation resulted in advantageous agreements.

The lawsuit comes as FCA is in negotiations for a new four-year agreement. And it also lands with a thud as FCA finalizes a $50 billion deal to merge with PSA Group of Europe to create what would be the fourth-largest automaker in the world.

The irony of the merger is that in 2017, GM sold its Opel and Vauxhall brands in Europe to PSA which has turned them from money losers into profitable operations. With the merger, technically FCA would own GM’s former brands.

Barra stands by the decision to sell Opel and Vauxhall. “We still think the basic premise of the Opel PSA transaction was a win, win, win,” she said. “It was great for Opel because combining with PSA secured their future. For PSA it was great because it made them the number two in Europe. And for General Motors, we have benefited from the success of that deal and the cost savings that we identified. So I think on all three fronts it was the right decision and continue to believe it was and it is.”

No regrets over the strange turn of events. “It’s a dynamic world and you have to stay ready for change,” says the pragmatic CEO.

GM has all but exited Europe—it still sells Camaro and Corvette—and has pulled out of other regions such as India and Russia. The automaker has also pared the car lineup by dropping the Chevrolet Volt, Cruze, and Impala. Still, Barra sees GM as a full-line, global automaker and a good steward of shareholder capital with the nimbleness to invest strategically.

“Every place has to earn their right to exist, every segment has to earn their right to exist,” she says bluntly. Barra has made tough decisions over the years to strengthen the company and been rewarded with the three most profitable years since bankruptcy in 2009. This puts GM in a position to seize opportunities in an industry under transformation as it pivots to electric and autonomous vehicles.

“So I very much consider General Motors to be a global company,” Barra says. “And we’ll continue to strengthen the company.”

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