Case: The Ford Pinto | Business Ethics (2022)

Contents

  • 1 The Ford P​into
    • 1.1 Benefits
    • 1.2 Costs
    • 1.3 The End

The Ford P​into

From: Moral Issues in Business 8th ed. Shaw & Barry (pp. 83-86)

There was a time when the “made in Japan” label brought a predictable smirk of superiority to the face of most Americans. The quality of most Japanese products usually was as low as their price. In fact, few imports could match their domestic counterparts, the proud products of Yankee know-how. But by the late 1960s, an invasion of foreign-made goods chiseled a few worry lines into the countenance of the U.S. industry. In Detroit, worry was fast fading to panic as the Japanese, not to mention the Germans, began to gobble up more and more of the subcompact auto market.

(Video) Case Study: Ford Pinto

Never one to take a back seat to the competition, Ford Motor Company decided to meet the threat from abroad head-on. In 1968, Ford executives decided to produce the Pinto. Known inside the company as “Lee’s car,” after Ford president Lee Iacocca, the Pinto was to weigh no more than 2,000 pounds and cost no more than $2,000.

Eager to have its subcompact ready for the 1971 model year, Ford decided to compress the normal drafting-board-to-showroom time of about three-and-a-half years into two. The compressed schedule meant that any design changes typically made before production-line tooling would have to be made during it.

Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met a safety standard proposed by the National Highway Traffic Safety Administration (NHTSA) to reduce fires from traffic collisions. This standard would have required that by 1972 all new autos be able to withstand a rear-end impact of 20mph without fuel loss, and that by 1973 they be able to withstand an impact of 30 mph. The prototypes all failed the 20-mph test. In 1970 Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dangerous leaks. The only Pintos to pass the test had been modified in some way–for example, with a rubber bladder in the gas tank or a piece of steel between the tank and the rear bumper.

Thus, Ford knew that the Pinto represented a serious fire hazard when struck from the rear, even in low-speed collisions. Ford officials faced a decision. Should they go ahead with the existing design, thereby meeting the production timetable but possibly jeopardizing consumer safety? Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? Ford not only pushed ahead with the original design but stuck to it for the next six years.

What explains Ford’s decision? The evidence suggests that Ford relied, at least in part, on cost-benefit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing something. There were various ways of making the Pinto’s gas tank safer. Although the estimated price of these safety improvements ranged from only $5 to $8 per vehicle, Ford evidently reasoned that the increased cost outweighed the benefits of a new tank design.

(Video) Case: Ford Pinto

How exactly did Ford reach that conclusion? We don’t know for sure, but an internal report, “Fatalities Associated with Crash-Induced Fuel Leakage and Fires,” reveals the cost-benefit reasoning that the company used in cases like this. This report was not written with the pinto in mind; rather, it concerns fuel leakage in rollover accidents (not rear-end collisions), and its computations applied to all Ford vehicles, not just the Pinto. Nevertheless, it illustrates the type of reasoning that was probably used in the Pinto case.

In the “Fatalities” report, Ford engineers estimated the cost of technical improvements that would prevent gas tanks from leaking in rollover accidents to be $11 per vehicle. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the relatively low figure of 180 deaths per year. But given that number, how can the value of those individuals’ lives be gauged? Can a dollars-and-cents figure be assigned to a human being? NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, today’s figure would, of course, be considerably higher). It broke down the costs as follows:

Future productivity losses
Direct$132,000
Indirect$41,300
Medical costs
Hospital$700
Other$425
Property damage$1,500
Insurance administration$4,700
Legal and court expenses$3,000
Employer losses$1,000
Victim’s pain and suffering$10,000
Funeral$900
Assets (lost consumption)$5,000
Miscellaneous accident costs$200
Total per fatality$200,725

Putting the NHTSA figures together with other statistical studies, the Ford report arrives at the following overall assessment of costs and benefits:

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 X $200,000) + (180 X $67,000) + (2,100 X $700) = $49.5 million

Costs

Sales:11 million cars, 1.5 million light trucks
Unit cost:$11 per car, $11 per truck
Total cost:12.5 million X $11 = $137.5 million

Thus, the costs of the suggested safety improvements outweigh their benefits, and the “Fatalities” report accordingly recommends against any improvements–a recommendation that Ford followed.

(Video) The Ford Pinto Case Study - Guild 12

Likewise in the Pinto case, Ford’s management whatever its exact reasoning, decided to stick with the original design and not upgrade the Pinto’s fuel tank, despite the test results reported by its engineers. Here is the aftermath of Ford’s decision:

  • Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. Ford puts the figure at 23; its critics say the figure is closer to 500. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles).
  • NHTSA finally adopted a 30-mph collision standard in 1976. The pinto then acquired a rupture-proof fuel tank. In 1978 Ford was obliged to recall all 1971-76 Pintos for fuel-tank modifications.
  • Between 1971 and 1978, approximately fifty lawsuits were brought against Ford in connection with rear-end accidents in the Pinto. In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. The judge reduced punitive damages to 3.5 million.
  • On August 10, 1978, eighteen-year-old Judy Ulrich, her sixteen-year-old sister Lynn, and their eighteen-year-old cousin Donna, in their 1973 Ford Pinto, were struck from the rear by a van near Elkhart, Indiana. The gas tank of the Pinto exploded on impact. In the fire that resulted, the three teenagers were burned to death. Ford was charged with criminal homicide. The judge in the case advised jurors that Ford should be convicted if it had clearly disregarded the harm that might result from its actions, and that disregard represented a substantial deviation from acceptable standards of conduct. On March 13, 1980, the jury found Ford not guilty of criminal homicide.

For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. The company also points out that in every model year the Pinto met or surpassed the government’s own standards. But what the company doesn’t say is that successful lobbying by it and its industry associates was responsible for delaying for seven years the adoption of any NHTSA crash standard. Furthermore, Ford’s critics claim that there were more than forty European and Japanese models in the Pinto price and weight range with safer gas-tank position. “Ford made an extremely irresponsible decision,” concludes auto safety expert Byron Bloch, “when they placed such a weak tank in such a ridiculous location in such a soft rear end.”

Has the automobile industry learned a lesson from Ford’s experience with the Pinto? Some observers thought not when, in February 1993, an Atlanta jury held the General Motors Corporation responsible for the death of a Georgia teenager in the fiery crash of one of its pickup trucks. At the trial, General Motors contended in its defense that when a drunk driver struck seventeen-year-old Shannon Moseley’s truck in the side, it was the impact of the high-speed crash that killed Moseley. However, the jury was persuaded that Moseley survived the collision only to be consumed by a fire caused by his truck’s defective fuel-tank design. Finding that the company had known that its “side-saddle” gas tanks which are mounted outside the rails of the truck’s frame, are dangerously prone to rupture, the jury awarded $4.2 million in actual damages and $101 million in punitive damages to Moseley’s parents.

What undoubtedly swayed the jury was the testimony of former GM safety engineer Ronald E. Elwell. Although Elwell had testified in more than fifteen previous cases that the pickups were safe, this time he switched sides and told the jury that the company had known for years that the side-saddle design was defective but had intentionally hidden its knowledge and had not attempted to correct the problem. At the trial, company officials attempted to paint Elwell as a disgruntled employee, but his testimony was supported by videotapes of General Motors’ own crash tests. After the verdict, General Motors said that it still stood behind the safety of its trucks and contended “that a full examination by the National Highway Traffic Safety Administration of the technical issues in this matter will bear out our contention that the 1973-1987 full size pickup trucks do not have a safety related defect.”

Since then, however, the Department of Transportation has determined that GM pickups do pose a fire hazard and that they are more prone than competitors’ pickups to catch fire when struck from the side. Still, GM has rejected requests to recall the pickups and repair them. Meanwhile, the Georgia Court of Appeals has thrown out the jury’s verdict in the Shannon Moseley case on a legal technicality–despite ruling that the evidence submitted in the case showed that GM was aware that the gas tanks were hazardous but did not try to make them safer to save the expenses involved.

(Video) Dilemma: Ford Pinto (Monetized Utilitarianism)

The End

Previous

Next

(Video) The Story of the Ford Pinto

FAQs

What are the ethical issues in Ford Pinto case? ›

Another moral issue in this case is the reason as to why Ford never decided to improve the placement of the gas tank at the rear of the Pinto. Ford's decision relied a on cost-benefit analysis which put a monetary value on a human life and compared it to the money Ford would save by keeping the original design.

What was the outcome of the Ford Pinto case? ›

The lawsuit involved the safety of the design of the Ford Pinto automobile, manufactured by the Ford Motor Company. The jury awarded plaintiffs $127.8 million in damages, the largest ever in US product liability and personal injury cases.

What is consensus of Ford Pinto case? ›

Based on the test results, NHTSA declared that the Pinto gas tank was a safety defect. Ford then agreed to “voluntarily” recall all 1971-1976 Pintos—the largest automobile recall campaign ever up to that time.

Which type of ethical theory does it appear Ford applied in its decision not to rectify the design of the Ford Pinto? ›

According to the Mills-Consequentialism, this theory focus on the end result or consequence. Therefore, the company should change the Ford Pinto design and try to make new plan, because there is some problem for this company.

What was the problem with the Ford Pinto? ›

The Pinto, a subcompact car made by Ford Motor Company, became infamous in the 1970s for bursting into flames if its gas tank was ruptured in a collision. The lawsuits brought by injured people and their survivors uncovered how the company rushed the Pinto through production and onto the market.

Why did Ford not fix the Pinto? ›

There's a reason the Pinto was one of our 10 cars that deserved to fail. Ford neglected to add reinforcements to protect the easily ruptured fuel tank, endangering drivers while earning the Pinto a reputation for catching fire that persists today. The automaker's public relations black eye lasted for years.

How much did Ford lose because of the Pinto? ›

In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. The judge reduced punitive damages to 3.5 million.

Is Ford an ethical company? ›

DEARBORN, Mich., March 13, 2017 – With its focus on being a good corporate citizen, Ford Motor Company has been named one of the World's Most Ethical Companies for the eighth straight year – the longest streak for any auto manufacturer.

How much did Ford pay for a Pinto case? ›

Last week, jury foreman Quinn read in state Superior Court here a verdict assessing $125 million in punitive damages against Ford in a case involving the rupour and explosion of the fuel tank on a 1975 Pinto.

Was the Ford Pinto a good car? ›

While reliability was decent, the 20 MPG fuel consumption was good for the time. The Ford Pinto is far from the single worst car ever made, but the thoroughly mediocre quality, an abundance of cost cutting, and a fatal flaw that was willingly ignored make it hard to think of it as anything but one of the worst.

What is a Ford Pinto? ›

The Ford Pinto was a subcompact car built in the 1970s. The vehicle was marketed under Ford Motor Company in the States and Canada. It was made from the 1971 to 1980 model years. Pinto was the smallest American Ford car since 1907. It was Ford's first subcompact vehicle in North America.

How much is a Ford Pinto? ›

Q: What is the average sale price of a Ford Pinto? A: The average price of a Ford Pinto is $9,273.

Can something legal be considered unethical? ›

Legality means an act is in accordance with the law. Ethics is about concepts of right and wrong behaviour. Some actions may be legal but in some people's opinion not ethical. For example, testing medicines on animals is legal in many countries but some people believe it is not ethical.

What type of ethics is utilitarianism? ›

Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes. It is a form of consequentialism. Utilitarianism holds that the most ethical choice is the one that will produce the greatest good for the greatest number.

What are examples of utilitarianism in society? ›

For example, if you are choosing ice cream for yourself, the utilitarian view is that you should choose the flavor that will give you the most pleasure. If you enjoy chocolate but hate vanilla, you should choose chocolate for the pleasure it will bring and avoid vanilla because it will bring displeasure.

How many people were killed in Ford Pintos? ›

Deaths and Injuries Lead to Litigation

Before long, the Pinto's defective design began causing serious injuries — and fatalities. An official total of 27 deaths was tied to the vehicle, though some estimates are far higher.

How many Ford Pintos actually blew up? ›

Schwartz methodically determined the actual number of Pinto rear-end explosion deaths was not in the thousands, as commonly thought, but 27.

How many Ford Pintos are left? ›

Once among the most popular cars in America, the Pinto is an endangered species. Of the 3 million Pintos manufactured, experts estimate that fewer than 10,000 are still on the road.

How much is a human life worth Ford? ›

In contrast, Ford figured that 2,100 accidents would result in 180 burn deaths. They then determined that out of court settlements would amount to $200,000 for each life lost, $67,000 per serious injury, and $700 for each lost vehicle.

Who won the Pinto case? ›

An Indiana farm country jury in the 10-week landmark trial found Ford "not guilty" in the deaths of three teen-age girls whose 1973-model Pinto exploded when a speeding van struck it in the rear Aug. 10, 1978.

How is Ford environmentally friendly? ›

Ford's sustainability goals include becoming carbon neutral globally by 2050, using 100 percent locally-sourced renewable energy for all manufacturing plants globally by 2035, and eliminating single-use plastics from its operations by 2030.

What is Ford's mission? ›

OUR PURPOSE AS A COMPANY

To help build a better world, where every person is free to move and pursue their dreams. We believe in the power of creating a world with fewer obstacles and limits, where people have the freedom to build a better life and pursue their dreams.

What is Ford's innovation strategy? ›

In 2020, the Ford Motor Company unveiled a new plan to revitalize the company as the world economy comes out of the COVID-19 pandemic. The strategic plan focuses on creating a sustainable line of vehicles through the development of new electric cars, trucks, and vans.

When did Ford stop making the Pinto? ›

The final production year was 1980, as Ford Escort replaced Pinto in the Blue Oval lime-up. But for 10 years, Pinto was a huge part of American automotive consciousness, with 3,173,491 models built, but cut from the line well before its predicted 11-million-unit build-and-sale.

How much did a Ford Pinto cost in 1972? ›

The popular Ford compact Runabout models carried a base price of just $2,078 brand new.

What does word Pinto mean? ›

adjective. marked with spots of white and other colors; mottled; spotted: a pinto horse. noun, plural pin·tos.

Do they still make Pinto cars? ›

The Ford Pinto is a subcompact car that was manufactured and marketed by Ford Motor Company in North America from the 1971 to the 1980 model years. The Pinto was the first subcompact vehicle produced by Ford in North America. United States: Edison, New Jersey (Edison Assembly)

How much did a Ford Pinto cost in 1971? ›

Rebadged versions of the Pinto were offered by Mercury, which sold the vehicle under the Mercury Bobcat nameplate. The first version of the Pinto released in 1971 had a brand new platform and borrowed the powertrain from the European Ford Escort model, costing around $2000.

How much is a Pinto horse? ›

Because Pinto horses can be any breed, their prices can range drastically. On the lower end of the spectrum, you can find some Pintos available for as cheap as $400-$600. But if you choose a Pinto with more expensive bloodlines, such as Thoroughbreds, you could easily pay $10,000 or even more.

Is Ford an ethical company? ›

DEARBORN, Mich., March 13, 2017 – With its focus on being a good corporate citizen, Ford Motor Company has been named one of the World's Most Ethical Companies for the eighth straight year – the longest streak for any auto manufacturer.

How much money did Ford lose on the Pinto? ›

wishes he had stayed on the links. Last week, jury foreman Quinn read in state Superior Court here a verdict assessing $125 million in punitive damages against Ford in a case involving the rupour and explosion of the fuel tank on a 1975 Pinto.

What do you mean by unethical practices? ›

Definition of unethical

: not conforming to a high moral standard : morally wrong : not ethical illegal and unethical business practices immoral and unethical behavior.

Videos

1. The Ford Pinto Case: An Ethical Analysis
(chlouie gaetos)
2. Rise and Fall of The Ford Pinto [Complete Story]
(Classic Car Channel)
3. 7: Case Studies: Finish Challenger Case; Ford Pinto Case
(MIT OpenCourseWare)
4. The Ford Pinto Criminal Trial (1980) | American Corp. Prosecuted Criminally for Exploding Fuel Tank
(State Bar of Georgia)
5. Ford Pinto Case
(Aaron Burgess)
6. PINTO MADNESS: A Case Study in Ethics
(Cosmo Song)

Top Articles

You might also like

Latest Posts

Article information

Author: Zonia Mosciski DO

Last Updated: 10/24/2022

Views: 5592

Rating: 4 / 5 (71 voted)

Reviews: 94% of readers found this page helpful

Author information

Name: Zonia Mosciski DO

Birthday: 1996-05-16

Address: Suite 228 919 Deana Ford, Lake Meridithberg, NE 60017-4257

Phone: +2613987384138

Job: Chief Retail Officer

Hobby: Tai chi, Dowsing, Poi, Letterboxing, Watching movies, Video gaming, Singing

Introduction: My name is Zonia Mosciski DO, I am a enchanting, joyous, lovely, successful, hilarious, tender, outstanding person who loves writing and wants to share my knowledge and understanding with you.