Ford Pinto Case

Agenda
Ford Motor Company in the 1970s
The Pinto
Problem
Cost Benefit Analysis
Ethical Issues
Change
Alternatives
Recommendation

Ford Motor Company in the

70s
Young and ambitious new president
Foreign competitors entering N.A. market
No small car to compete with VW Beetle and others

The demand for results and

profits are the most

important aspect of
business

The Pinto
The Ford Pinto a small car to compete with

foreign car company competitors

Pinto weighed 2000 lbs and cost $2000
Rushed project led by Lee Iacocca
Planning took 25 months compared to the

industry norm 43 months

Problem
Testing found several safety defects
@ 25mph+ the gas tank would rupture in an

accident
@ 30mph+ rear endings would cause the gas

tank to leak and the rear of the car to be folded

up into the back seats
@ 40mph+ the car doors would jam

Gas Tank Configuration

Behind Rear-Axle Tank

Pros:

Cons:

More Luggage space

collisions

Industry standard
felt it was safer

Not as safe in rear-end

Gas Tank Configuration

Over-the-Axle Tank

Pros:

Cons:

Performed well in rear-end

collisions

Long round-about filler pipe

Closer to passengers in back seat

Higher center of gravity
Reduced trunk space

Cost Benefit Analysis

With Current Gas Tank

With Safety Alteration

180 burn deaths

Cost = $11 per vehicle

180 serious burns

Total = $137 million

2100 Pintos burned

Costs = $200 000 per death
$67 000 per serious injury

Second alternative = Rubber

Bladder

$700 per car

Cost = $5.08 per vehicle

Total = $49.5 million

Total ~= $64 million

Ethical Issues
Ford employees
Lee Iacocca
Henry Ford II

Ford Employees
Were they morally responsible to

refuse to produce a car they knew

would hurt the customer?
Should they have put more effort

into convincing Iacocca that this

car was unsafe?
Should they follow Iacoccas

commands regardless of their

opinions since he is their superior
in the company

Lee Iacocca
Is Iacocca responsible for the

safety of his customers?

Safety?
What
safety.

Should he maximize profits for

the company at any costs?

If safety defects are found after

production, does he have a

moral obligation to inform all his
customers?
Should Iacocca have established a working
environment where his employees did not feel
that they would lose their jobs for disagreeing
with him?

Henry Ford II
Should Ford have trained his managers and presidents

in safety?
Does Ford have a responsibility to design a culture that

encourages employees to bring up safety defects?

Does Ford need to have a new policy that puts the has

safety of their products more important than

maximizing profits?
Does Ford have a moral responsibility to do what is

best for his shareholders

Assignment
Its 1973 and you are the Recall Coordinator:
Field reports are coming in reporting the
following:
Rear end collisions
Fires, and
Fatalities
You must decide whether to recall the Pinto

Six Relevant Facts

1. Before the Pinto, Ford was immersed in an

intense, internal struggle between Bunky

Knudson and Lee Iacocca over the
companys product line
Major pressure to compete with German &

Japanese compact cars

2. Iacocca and the compact car won the

struggle
The Pinto debuted in 1971 after the shortest

(the most rushed) production in history

3. Ford is fully aware of the faulty fuel tank

design; crash testing after debut revealed

the fuel tank often ruptured during rear-end

Six Relevant Facts

4. The companys president, Iacocca, insists:
Keep the original gas tank design; costs need to

be kept down for the cost conscious Pinto

buyer
Besides, safety doesnt sell.
5. Colleagues, other Ford engineers, agree with

Iacoccas opinion about the faulty gas tank

Safety isnt the issue, trunk space is.

6. Reports show, The Cost of Dying in a Pinto

outweigh the benefits by almost three times

$137.5M cost vs. $49.5M benefits

Pertinent Ethical Issues &

Points of Ethical Conflict
The Pintos production was rushed and

mistakes were clearly made:

Do I ignore the field reports coming in?
Do I recommend changes to current production?
Do I recommend a total recall?

According to the National Highway Traffic

Safety Administration standards, the Pinto

meets safety requirements
However, reports are not bumps and bruises,

the reports are fatal explosions

There is a tremendous amount of pressure

placed on Recall Manager to agree with the

consensus of the company that Safety is not

Pertinent Ethical Issues &

Points of Ethical Conflict
As the Recall Manager, will you be able to look

at yourself in the mirror if more consumers are

killed in their Pintos if you do not place the
recall?
As the Recall Manager, you were hired to
determine when a product is too dangerous to
the public due to defect and needs to be
returned to the factory
Which obligation comes first obligation to Ford

or the general public?

With the intense pressure to make the Pinto a
success, will you lose your job if you recall the
car?

Relevant Affected Parties

Recall Coordinator
Ford Motor Company
Ford Pinto Consumers
Ford Employees
Ford Pinto Consumers Passengers
Members of the General Public involved in

Ford Pinto Accidents

General Public

Possible Consequences
If you recall the Pinto, you could lose your job
If you recall the Pinto, you may save lives
Consumers, passengers, and general public

According to The Cost of Dying in a Pinto

report, costs outweigh the benefits

Will the benefits of recalling the Pinto now

outweigh the costs in the long term both in

financial and saved human life revenue?
What type of reputation will Ford have once

the general public finds out the company

knew of the Pintos glaring defect, did not
recall, and continued production?

Possible Consequences (cont)

If you recall the Pinto, your fellow employees

may lies their jobs

Will the general public accept the message
Ford is sending
Ford does not care if we kill you and your

family?

Relevant Obligations
To Ford to ensure our products sustain a certain

level of quality after purchase even if the

product was poorly designed and produced
To Fords consumers to ensure their safety when
using our products especially when the product
was poorly designed and produced
To the general public to ensure Fords products are
safe
To myself to do the job I was hired to do
To myself to be honest, especially when saving
peoples lives are involved
To my fellow coworkers
Correcting manufacturer defects now ill uphold Fords

Ethical Guides
3 Levels of Ethical Guides
1. Professional: Fod believes safety doesnt sell;

buyers buy because of price point and special

features
2. Community: The general public wants safe
automobiles on the road
3. Personal: Do I believe my companys stance
on the Pintos safety? Would I allow my own
family to drive Pintos without the recall?

What would you do?!?!?

Lawsuits
Grimshaw v. Ford Motor Company
EVIDENCE Mrs. Gray, accompanied by 13-year old Richard Grimshaw, set out
in the familys new Pinto from Anaheim for Barstow to meet Mr. Gray in
Barstow. As Mrs. Gray approached the Route 30 off-ramp where traffic was
congested, she moved from the outer fast lane to the middle lane of the
freeway. Shortly after this lane change, the Pinto suddenly stalled and coasted
to a halt in the middle lane. A Ford Galaxie traveling immediately behind the
Pinto was unable to avoid colliding with it. The Galaxie had been traveling
from 50 to 55 miles per hour but before the impact had slowed to a speed of
from 20 to 37 miles per hour. At the moment of impact, the Pinto caught fire
and its interior was engulfed in flames. According to plaintiffs expert, the
impact of the Galaxie had driven the Pinto gas tank forward and caused it to
be punctured by the flange or one of the bolts on the differential housing so
that fuel sprayed from the punctured and entered the passenger
compartment When the occupants emerged from the vehicle, their clothing
was almost completely burned off. Mrs. Gray died a few days later of
congestive heart failure as a result of the burns. Richard Grimshaw managed
to survive but only through heroic medical measures. He underwent
numerous and extensive surgeries and skin grafts and faced additional
surgeries over the next ten years. He lost portions of several fingers on his
left hand, portions of his left ear, and his face required many skin grafts from

Grimshaw v. Ford Motor

Company
Richard Grimshaw
13-year old passenger in 1971 Ford Pinto
Struck from behind; exploded; badly burned

over 90% of his body; 20 years reconstructive

surgery
Awarded $125 million in punitive damages
$124 million profits made since Ford Pintos
introduction
Judge reduced to:
$2.5 million compensatory damages
$3.5 million punitive damages

After Grimshaw
On 1/15/80, Ford went on trial on charges of

reckless homicide in the 1978 death of 3

Indiana teenagers who burned to death after
their 1973 Pinto was hit from behind by a van
Indiana state prosecutors alleged that Ford
knew Pinto gasoline tanks were prone to catch
fire during rear-end collisions but failed to
warn the public or fix the problem out of
concern for profits.
The trial marked the 1st time that an American
corporation was prosecuted on criminal
charges

How it Ends?
Ford was first urged to recall the Pinto in 1974

by the nonprofit Center for auto Safety

Late in 1978, Ford recalled all 1971-1976 Pinto
models (1.5 million cars)
Modifications made:
Longer fuel filler neck
Plastic shields
Protected from rear differential
Protected from rear shock absorber