Please read the attached file “Ford Pinto Fires case.pdf”.
Then, write four-five pages analysis of the Ford Pinto Fires case.
In your paper, you should:
1. Apply the 8-Steps To Sound Ethical Decision Making framework to the case
2. List the key lessons learned from the case
3. Identify the relevant facts and obligations
4. Identify what are/were some possible courses of action
5. A reflection of how this event, and its aftermath, can help you improve your ethical decision making skills
Your paper must be written using APA style, and make sure that you have refer to the chapter 1 and chapter 2.
E1C02 07/09/2010 Page 64
Action orientation Freed om
Altruis m Harm ony
Re sponsibility
Author ity Helpf ulness
Risk taking
Compa ssion Hone sty/Integ rity
Secur ity
Compe tence Hono r
Self -discipline
Confor mity Humi lity
Status
Creativ ity Initiat ive
Su ccess
Customer satisfact ion Innova tion
Team work
Diver sity Moder ation
Tradi tion
Equal ity Nove lty
Wealt h
Excitem ent Obe dience
Win ning
Experim entation Order
Fairness /Justice Powe r
Famil y well-being Prom ise keeping
Flexibi lity/ada ptability Respec t
Introducing the Pinto Fires Case. Nex t, you’re going to read a case that chronicles an
event that took place over 30 years ago. You may ask, why study such an old case ?
We study this case because it is extrem ely important in Amer ican business h istory. In
2005,Fo rtune Magazine called it one of the 20 busi ness decisi ons that ‘‘helped create
the busi ness wor ld as it is toda y’’
25
Acc ording toFortu ne, the case and ensuing legal
ba tt les co ntr ibu ted to th e d ev elo p men t of c on su me r act ivi s m as we ll as to th e co n -sum er prot ec
tio ns and cla ss a cti on law suit s that we no w tak e fo r g rant ed . We have
also seen aspects of the case play out in produc t safe ty case s that have arisen mor e
re c e n t ly , in c lu d i n g F o r d Ex p l o r e r r o ll o v e r s a f te r F ir e s to n e ti r e f a il u r e s ,
a c a s e t h a t
was settled in 2001.
CASE
PINTO FIRES
by Dennis A. Gioia (used with permi ssion)
On August 10, 1978, three teenage g irls di ed horribly in an automobile accide nt.
Driving a 1973 Ford Pinto t o their church volleyball practice in Goshen, Indiana,
they wer e struck from behind by a Chevrolet van. The Pint o’s fuel tank rupture d and
the car expl oded in flames. Two passenger s, Lynn Mar ie Ulrich, 16, and h er cousin,
Don na Ul ric h , 1 8, we re tra p ped insi d e the in fer n o an d b urn ed to d eat h . Af te r th ree
attempts, Lynn Mar ie’s sister, 1 8-year-old Judy Ann, was dragg ed out alive from the
driver’s seat, but died in agony hours later in the h ospital.
They were mer ely the latest in a long list of people to burn to death in accident s
involving the Pinto, which Ford had begun selling in 1970. By the time of the acci-dent, the car had been the subj ect of
a great deal of public outcry and debate about its
64 SECTION II ETHICS AND THE INDIV IDUAL
E1C02 07/09/2010 Page 65
safety, especially its susceptibi lity to fire in low-s peed rear-end colli sions. Th is par-ticular acci dent, however ,
resulted in more media attent ion than any othe r auto acci-dent in U.S. histor y. Why? Becaus e it led to an unpre ceden
ted court case in which the
pros ecu ti on b rou ght ch arge s of reck les s h omi cid e aga inst the Fo rd Mo tor Co. —th e
first time that a corpo ration had been char ged with criminal conduc t, and the char ge
was not negligence but murder . At stake was much more than the max imum penalty
of $ 30 , 00 0 in fin e s. Of im med ia te co nc e rn , a gu il t y v e rd ict c o ul d h av e af fec te d 4 0
pendi n g ci vi l cases nat ionw ide and r esu lted in hundreds of m illi ons o f d ol lars in
punitive d amage a wards. Of perhaps g reat er concern, however, were larger i ssues
involving c orporate social responsi bi lit y, ethical decision making b y i n d i v i d u a l s
within corpo rations, and ultimat ely, the prope r conduct of busi ness in the modern era.
How did Fo rd get into this situat ion? The chron ology begi ns in early 1968 when
the decisi on was made to battl e the fore ign competition in the small car market , spe-cific ally the Germ an s, b ut
als o the g row ing thr eat from the Ja panes e. Th is dec ision
cam e a fter a hard- fo ugh t, tw o-y ear int erna l s tru ggle betw een the n-pr es iden t Se mon
‘‘ B u n k y ’ ’ K n u d s e n a n d L e e I a c o c c a , w h o h a d r i s e n q u i c k l y w i t h i n t h e c o m p
a n y
be c a u s e o f hi s s u c c e s s w i t h t h e M u s t a ng . Iacocca strongl y s upported fig hting the
competition at their own game, while Knudsen argued instea d for letting them have
the small car market so Ford cou ld conce ntrate on the more profit able med ium and
large models. T he final decision ultima tely was i n the ha nds of then-CEO Henry
Ford II, who not only agre ed with Iaco cca but also promot ed him to preside nt after
Knudsen’ s subsequent forced resigna tion.
Iac oc ca w an ted t h e Pinto i n t he s ho w roo m s b y t he 1 97 1 mo de l i n t ro du ctio ns,
which would require the shortes t production planning period in auto motive history to
that time . Th e typical time span from conception to produc tion of a new car was mor e
than three and a half yea rs ; I ac occa, howev er , w a nt ed t o l a u n ch t h e P i n t o i n j u s t
over two year s. Unde r normal condi tions, chass is design, styli ng, produc t plan ning,
advance engineering, component testi ng, and so on w ere al l either completed or
nearly comp leted prior to toolin g of t he production factorie s. Ye t, because to oli ng
had a fixed time frame of about 18 months, some of these othe r processe s were do ne
more or less concur rently . As a conse quence, when it was disc overed thr ough crash
testing that the Pinto’s fuel tank often rupture d during rear-e nd impact, it was too late
(in other wor ds, too cost ly) to do muc h about it in terms of redesig n.
A closer look at the crash-test reports reve als that Ford was aware of faulty fuel
tank design. Eleve n Pintos were subj ected to rear-end colli sions with a barrie r at av-erage speed s of 31 miles per
hour to dete rmine if any fuel would be lost after impact.
All eigh t of the Pintos equipped with the standard fuel tank faile d. The three remai n-ing cars, however , survived the
test b ecause special measur es had been taken to pre-ven t ta nk rup t ure o r fue l l e ak age . T hes e meas ure s inc
l ud ed a p lastic b affle pla ced
between the axle housing and the gas tank, a steel plate between the tank and the rear
bumper, and a rubbe r lining in the gas tank.
It should be noted t ha t these tests were done under guidelines e stablished by
Fe d e r a l M o t o r V e h i c l e S a f e t y S t a n d a r d 3 0 1 , w h i c h w a s p r o p o s e d i n 1 9 6 8 b y
t h e
National Highw ay Traffic Safety Adm inistratio n (NHTSA), but not official ly adopt ed
CHAPTE R 2 DECIDI NG WHAT’S RIGHT: A PRESCRIPTIVE APPROACH 65
E1C02 07/09/2010 Page 66
unti l the 1977 model y ear. Therefore, at the t ime o f the tests, the Pi nt o m et t he
required standar ds. Stand ard 301 had been strenuou sly oppose d by the auto industry,
and specifica lly Ford Motor Co. In fact, the lobby ing effort s were so strong that nego-tiations continue d until 1976,
d espite stud ies showing that hundre ds of thous ands of
cars burned ever y y ear, taking 3,000 lives annual ly; the adoption of the sta ndard was
projected to reduc e the death rate by 40 percent . Upon appro val of Standard 30 1 in
1977, all Pintos were provi ded with a rupture -proof fuel tank design.
But f or the P into’s 1971 debut, F ord d ecided to go w ith it s o riginal gas tank
design despite the crash-t est resu lts. Be cause the typical Pinto buyer was assumed to
be extr emely price conscious , Iacocca set an important goal kn own as ‘‘the limit s of
2, 0 0 0 ’’ : th e Pi n to c ou ld n o t c o st m o re th an $2 , 0 00 a n d c o u ld no t wei g h m or e th an
2,000 pounds. Thus, to be compet itive with foreign man ufacturers , Ford felt it could
not spend any mone y on improv ing the gas tank. Be sides, during the late 1960s and
early 1970 s, Amer ican consumer s demonst rated little conce rn for safe ty, so it was not
considered good busi ness sense to promot e it. Iaco cca echoe d these sentiments when
he said time and time again ‘‘Sa fety doesn’t sell,’’ a lesson he h ad learned a fter a
failed attem pt to add costly safety featur es to 195 0s Fords.
Fo r d h ad ex pe rim e nt ed w it h p lac in g th e g as tan k in dif fe ren t lo cat ion s, b ut a ll
al te rn a t iv e s re d u c ed u s a b le t ru n k s p a ce . A d es i g n si mi la r to th a t o f t h e Fo rd C ap r i
wa s s u c c e s s f u l i n ma n y c r a s h t e s ts a t s p e e d s o v e r 5 0 m i l e s p e r h o u r , b u t F o r
d f e l t
that lost trunk space would hurt sales too much. One Ford e ngineer, when asked
about the dangerou s gas tank said, ‘‘Safety isn’ t the issue, trunk space is. You have
no idea how stiff the compet ition is over trunk space. Do you realize that if we put a
Capri-type tank in the Pint o, you coul d only get one set of golf clubs in the trunk?’’
The last of Ford’s reasons for not making adjustments to the fuel tank design, how-ever, was unquestionably the most
controversial. After strong lobbying efforts, Ford and
the auto industry in general convinced NHTSA regulators that cost/benefit analysis
would be an appropriate basis for determining the feasibility of safety design standards.
Such an analysis, however, required the assignment of a value for a human life. A prior
study had concluded that every time someone died in an auto accident there was an esti-mated ‘‘cost to society’’ of
$200,725 (detailed in Table 1: What’s Your Life Worth?).
1
Ha v i n g t h is v a l u e in h a n d , Fo r d c a lc u l a te d t h e c o s t o f ad d in g a n $1 1 g a s ta n k
improvem ent versus the benefits of the project ed 180 lives that would be saved (vi a
an int ern al mem o enti tl ed ‘‘Fa tal itie s Ass oc iat ed wi th Cr ash- Indu ced Fu e l Le ak age
and Fires’’). Th is is present ed in Table 2: The Cost of Dying in a Pinto.
2
As is dem -onstrated, the costs outweigh the benefit s by almost thr ee time s. Thus, the cost/be ne-fit anal ysis
indicat ed that no improv ements to the gas tanks wer e warrante d.
Ford decided to go ahead with normal producti on plans, but the Pinto’s problem s
so o n s ur f a c e d . B y e a r l y 19 7 3 , F o r d ’ s r e c a l l c o o r d i n a t o r r e c e i v e d fi e l d r e
p o r t s
1
M. Dowie, ‘‘How For d Put Tw o M illion Fire Tr aps on Wheels,’’ Business and Soc iety
Review 23 (1977): 51–55.
2
Ibid.
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suggesting that Pint os were susce ptible to ‘‘explodi ng’’ in rear-e nd collisio ns at very
low speeds (unde r 25 mile s per ho ur). Report s continue d to indi cate a similar trend in
subsequent year s, but no reca ll was initiat ed despi te the moun ting evid ence. At every
internal review, thos e responsi ble deci ded not to reca ll the Pint o.
Prior to the Indiana accident, the most publicized case concerning the Pinto’s gas
tank was that of Richard Grimshaw. In 1972, Richard, then 13, was riding with a
Table 1 What’s Your Life Worth?
The chart below, from a 1971 study by the National Highway Traffic Safety
Administration, is a breakdown of the estimated cost to society every time someone is
killed in a car accident. The Ford Motor Company used the $200,725 total figure in its
own cost-benefit analysis.
Component 1971 Costs
Future productivity losses
Direct $132,300
Indirect 41,000
Medical costs
Hospital 700
Other 425
Property damage 1,500
Insurance administration 4,700
Legal and court 3,000
Employer losses 1,000
Victim’s pain and suffering 10,000
Funeral 900
Assets (lost consumption)
5,000
Miscellaneous accident cost 200
Total per fatality $200,725
Table 2 The Cost of Dying in a Pinto
These figures are from a Ford Motor Co. internal memorandum on the benefits and costs
of an $11 safety improvement (applicable to all vehicles with similar gas tank designs)
that would have made the Pinto less likely to burn.
Benefits
Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles
Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle
Total Benefit: (180 ! $200,000) + (180 ! $67,000) + (2,100 ! $700) = $49.5 million
Costs
Sales: 11 million cars, 1.5 million light trucks
Unit Cost: $11 per car, $11 per truck
Total Cost: (11,000,000 ! $11) + (1,500,000 ! $11) = $137.5 million
CHAPTE R 2 DECIDI NG WHAT’S RIGHT: A PRESCRIPTIVE APPROACH 67
E1C02 07/09/2010 Page 68
neighbor on a road near San Bernardino, California, when they were hit from the rear.
The Pinto’s gas tank ruptured, causing the car to burst into flames. The neighbor was
burned to death in a crash that would have been survivable if there had been no fire.
Richard suffered third-degree burns over 90 percent of his body and subsequently
underwent more than 60 operations, with only limited success. A civil suit was settled
in February 1978, when a jury awarded a judgment of over $125 million against Ford,
most of which consisted of punitive damages (later reduced to $6 million by a judge
who nonetheless accused Ford of ‘‘callous indifference to human life’’). This judgment
was based on convincing evidence that Ford chose not to spend the $11 per car to
correct the faults in the Pinto gas tanks that its own crash testing had revealed.
The Pinto sold well until the media called special attention to the Pinto fuel tank
story. As a consequence, in June 1978, in the face of pressure from the media, the gov-ernment, pending court cases, and
the potential loss of future sales, Ford ordered a com-plete recall of all 1.5 million Pintos built between 1970 and
1976. During the 1980
Indiana trial that resulted from the fatal accident of 1978, differing views continued to
be expressed about the Pinto fires case. Ford representatives argued that companies must
make cost/benefit decisions all the time. They claimed that it is an essential part of busi-ness, and even though
everyone knows that some people will die in auto accidents, buy-ers want costs held down; therefore, people implicitly
accept risks when buying cars.
In a scathi ng art icle accus ing Ford of criminal ly mismanag ing the Pinto problem ,
investigative reporter Mark D owie fram ed the ca se i n a di ff er ent and r at he r more
sensational way, with t hi s often-quoted speculation: ‘‘ One w on ders how long the
Ford Motor Company would continue to market lethal cars were Henry Fo rd II and
Lee Iacocca serving twent y-year terms in Leaven worth for consumer homicide.’’
3
Case Questions
1. Put yours elf in the role of the recall coordina tor for Ford Motor Co. It’s 1973,
and field reports have been com ing in about rear-end colli sions, fires, and fatali-ties. You mus t deci de whethe r to
reca ll the auto mobile.
a. Ident ify the relevant facts.
b. Ident ify the pertinent ethical issues and po ints of ethical confli ct.
c. Ident ify the relevant affect ed parties.
d. Ident ify the possible conse quence s of alternat ive cours es of act ion.
e. Ident ify relevan t obligatio ns.
f. Ident ify your relevan t commun ity sta ndards that should guide you as a person
of integr ity.
g. Che ck your gut.
What will you decide?
3
M. Dowie, ‘‘How Ford Put Two Million Fire Traps on Wheels,’’ Business and Society Review
23 (1977): 51–55.
68 SECTION II ETHICS AND THE INDIV IDUAL
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