The Ford Pinto Case Study

Overview
How much does a human life cost? Even though we may not be able to come up with a value for this question Ford indeed had the answer. In the late 1960s, American automobile industry was dominated by the Japanese imports. To battle the competition in the small car market, Lee Iacocca VP ford recommended introducing a subcompact car- Ford Pinto. Pinto was targeted to be priced at $2000, weighing less than 2000 lbs, and was to roll out in 23 months as against the normal manufacturing timeline of 45 months. In 1971, Pinto made a debut and in less than 5 months its sales touched the 100,000 mark i. Only to be known today as one of the worst cars ever built.ii In 1978, 1.5 million cars were recalled after causing approximately 500-900 burn deaths.iii

Ethical Concerns
From the case it is clear that the cars design was flawed, possibly due to quick production, where a rear-end impact over 20 mph could cause the fuel tank to burst and at 40 mph the doors would be jammed causing the trapped passengers to burn to death. This could have been prevented if a baffle was installed between the bumper and the fuel tank. Ford however, decided not to rectify the design which would have cost $11 per car and would have resulted in 180 less deaths. Ford argued that it used the accepted risk/benefit analysis to determine if the monetary cost of making the change were greater than the benefits. Based on the numbers that Ford used, the cost would have been $137 MN vs $49.5 MN price tag put on the deaths, injuries and car damages.ivUsing this standard cost/benefit analysis, Ford

reached the decision that no production changes were to be made.

Key Players involved and in depth Analysis

The question is who was responsible for this historical catastrophe and even though it was legal for Ford to use this kind of cost-benefit analysis, was it ethical? I believe that the people instrumental in this case were: 1. Head of the Ford Company including Lee Iacocca, CEO Henry Ford II. 2. Fords product planning committee. 3. Fords engineers 4. National Highway Traffic Safety Administration (NHTSA) and the Government According to the utilitarian approach, one would have to act in a way that would maximize the total collective utility of ones action.v In the class we discussed that conducting a cost benefit analysis is implicit in our daily lives. While taking the decision to buy a car we would undergo a cost- benefit analysis and trade-off between the price and the utility that the car provides us. Some trade-offs of this kind are inevitable as we seek to strike an appropriate balance and make personal decisions that confer sufficient benefits to outweigh the associated risks. Ford looked at it the same way; they assessed the risk of fatal car accidents and weighed it with the millions of dollars lost in recalls. This was a smart business practice. At the end of the day, Ford decided that the money that would be lost in the recall would be worth much more than the lives lost due to their design flaw.

A problem with this idea is that this attempts to put a monetary value on human life and misuses the spirit of using utilitarianism in business which states that when analyzing costs-benefits consequences are to favor more people overall. These include harm, honesty, justice and rights. So no harm should be done to others, people should not be deceived and their rights to

life, free expression, and safety should be acknowledged. Ford clearly abandoned these principles, and used the utilitarian theory to suit its own needs. I believe that Fords actions speak of greed and selfish motives as it failed to take any corrective measures. The top management at Ford did not set the right Tone at the Top for its employees. However, the engineers at Ford did not fulfill their moral duty either, which is to do everything that is possible within his/her power to ensure that the company provides a safe product to their customers. Rawlsian Approachvi, states that one should make those choices that affect others under a veil of ignorance regarding whether or not one will in fact end up being one of those others. Would any of the employees who knew about the crash test, bought the Pinto? The answer is that its highly unlikely, and therefore it was unethical conduct on their part to do nothing. Further analyzing the dynamics of this case, even the government and NHTSA played some role in this catastrophe. In 1970, government safety standards of today were non-existent; Ford was not obligated to adhere to the safety standards in question regarding the Ford Pinto. This may have contributed to the business decision made by Ford management to produce, market, and sell the Ford Pinto. NHSTA already had reports that showed the accident fatalities attributed to rearend fuel tank leakages. This figure went from 17 in 1971-1975 to 27 in 1975-1977. This shows that NHSTA was lax in incorporating stricter standards and in taking actions earlier. It was not until 1978, when NHSTA instructed to recall the Pinto.vii

Conclusion
In conclusion, I believe that it was not just the controversial risk/benefit analysis that was at the root cause of this tragedy. Also Ford was not the only one who was doing this kind of analysis; many other auto manufacturers were following this practice. In the Jimenez v. Chrysler Corp. case which led to a $250 million punitive damages award against Chrysler Corporation. The company was faulted not only for the defective door latch, but also for trading off risk against cost. In Chrysler's view, the defect posed no significant risk, but the cost would have been $100,000 for a one-time tooling cost, plus $0.50 per vehicle for the new part.viii Yet another instance is the famous McDonald Douglas and Challenger space shuttle case. In 1974, the first fully loaded DC-10 jumbo jet exploded over the suburbs of Paris, killing 346 people, a record at that time for a single-plane crash. This was said to be an accident waiting to happen because it was known to the designers that the design of the plane was defective and the cargo door could burst open during flight.ix The top management decided to do nothing in this case. Once again their decisions were clouded by monetary considerations which led to the eventual loss of the craft and the lives of the occupants. In my view Ford should have voluntarily recalled the faulty cars. The voluntary recall would have cost Ford less than $20.9 million estimated by the company. Because all the customers who purchased a Ford Pinto would not have brought the cars into have the baffle added. However, the voluntary recall would have limited Fords responsibility over future legal claims and would not have harmed Fords reputation to this extent. Had Ford considered the cost of legal suits and the

damage caused to its reputation, they might have taken a different decision and many lives may have been saved.

How stuff works.com http://www.theglobeandmail.com/globe-drive/car-life/the-12-worst-cars-everbuilt/article4392663 iii Pinto Madness- Article from Mother Jones iv Pinto Madness- Article from Mother Jones v Mihnea, Moldoveanu. Managerial Models and Methods for Moral Reasoning (Foundations for Business Ethics, 2012) vi Mihnea, Moldoveanu. Managerial Models and Methods for Moral Reasoning (Foundations for Business Ethics, 2012) vii http://www.pointoflaw.com/articles/The_Myth_of_the_Ford_Pinto_Case.pdf viii http://www.wfu.edu/~palmitar/Law&Valuation/chapter%202/Attachments/ViscusiStanfordArticle.html ix http://www.articlesbase.com/ethics-articles/profit-must-not-be-allowed-to-overrule-productsafety-330787.html
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