bus 303 group n. "you don't want to talk about the pinto," said a ford official....
TRANSCRIPT
Bus 303
Group N
"You don't want to talk about the Pinto," said a Ford official. "Leave that one in the cemetery."
When people talk about how bad American small cars created an opportunity for the Japanese to come in and clean house in the 1970s and '80s, they are referring to vehicles like this.
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
““We are a global, diverse family with a We are a global, diverse family with a proud heritage, passionately proud heritage, passionately committed to providing outstanding committed to providing outstanding products and services that improve products and services that improve people’s lives.”people’s lives.”
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
Behind Rear-Axle Tank
Pros:
More Luggage space
Industry standard – felt it was safer
Con:
Not as safe in rear-end collisions
Over-the-axle-tank
Pro: Performed well in rear-end collisions
Cons:
Long “round-about” filler pipe
Closer to passengers in back seat
Higher center of gravity
Reduced trunk space
Of 40 tests, 37 resulted in ruptured gas tanks. The three that succeeded had:
--a plastic baffle between the tank and the differential bolts
-- a piece of steel between tank and bumper
-- a rubber “bladder” inside the gas tank
More crash tests showed that a one-pound, one-dollar piece of plastic stopped the puncture of the gas tank.
The idea was thrown out as extra cost and extra weight.
Besides, tooling was already well under way.
If you ran into that Pinto you were following at over 30 miles per hour, the rear end of the car would buckle like an accordion, right up to the back seat.
The tube leading to the gas-tank cap would be ripped away from the tank itself, and gas would immediately begin sloshing onto the road around the car.
The buckled gas tank would be jammed up against the differential housing (that big bulge in the middle of your rear axle), which contains four sharp, protruding bolts likely to gash holes in the tank and spill still more gas.
Now all you need is a spark from a cigarette, ignition, or scraping metal, and both cars would be engulfed in flames.
If you gave that Pinto a really good whack—say, at 40 mph—chances are excellent that its doors would jam and you would have to stand by and watch its trapped passengers burn to death.
Meant to require vehicles to withstand rear-end collision of 28 MPH
Henry Ford II lobbied relentlessly against.Official auto industry line–cars don’t cause
accidents; people and road conditions do.Tactic: last-minute documents; challenges to
test results; lawsuits; private negotiating.The standard was delayed for 8 years.
ComponentComponent 1971 1971 CostsCosts
Future Productivity LossesFuture Productivity Losses Direct Direct
$132,000 $132,000 Indirect $41,30Indirect $41,30
00Medical Costs Medical Costs
Hospital Hospital $700 $700 Other Other $ 425 $ 425TotalTotal $1,125 $1,125
Property Damage $ 1,500Property Damage $ 1,500Insurance Administration $ 4,700Insurance Administration $ 4,700Legal and Court $3,000Legal and Court $3,000Employer Losses $ 1,000Employer Losses $ 1,000Victim's Pain and Suffering $10,000Victim's Pain and Suffering $10,000Funeral $900Funeral $900Assets (Lost Consumption) $5,000Assets (Lost Consumption) $5,000Miscellaneous Miscellaneous
$200 $200 Total Per Fatality $200,725Total Per Fatality $200,725
Benefit AnalysisBenefit AnalysisSavings:Savings:
180 burn deaths, 180 180 burn deaths, 180 serious burn injuries, serious burn injuries, 2100 burned vehicles2100 burned vehicles
Unit CostUnit Cost$200,000 per death, $200,000 per death,
$67,000 per injury, $67,000 per injury, $700 per vehicle$700 per vehicle
Total BenefitTotal Benefit(180 X $200,000) + (180 X $200,000) +
(180 X $67,000) + (180 X $67,000) + (2,100 X $700) = $49.5 (2,100 X $700) = $49.5 millionmillion
Cost AnalysisCost AnalysisSalesSales
11 million cars, 11 million cars, 1.5 million light 1.5 million light truckstrucks
Unit CostUnit Cost$11 per car, $11 $11 per car, $11
per truckper truckTotal CostTotal Cost
12.5 million X $11 12.5 million X $11 = $137.5 million= $137.5 million
CostsCosts $137.5 Million$137.5 MillionBenefitBenefit - - $49.5 $49.5 MillionMillion
DifferenceDifference $ 88.0 $ 88.0 MillionMillion
Richard GrimshawRichard Grimshaw13-year old passenger in “Sandra Gillespie’s” 13-year old passenger in “Sandra Gillespie’s”
1971 Pinto1971 PintoStruck from behind; exploded; badly burned Struck from behind; exploded; badly burned
over 90% of his body; 20 years reconstructive over 90% of his body; 20 years reconstructive surgery.surgery.
Awarded $125 million in punitive damagesAwarded $125 million in punitive damages$124 million profits made since Ford Pinto’s $124 million profits made since Ford Pinto’s
introductionintroductionJudge reduced to $3.5 millionJudge reduced to $3.5 million
On January 15, 1980, the Ford Motor Company On January 15, 1980, the Ford Motor Company went on trial on charges of reckless homicide in the went on trial on charges of reckless homicide in the 1978 death of three Indiana teenagers who burned 1978 death of three Indiana teenagers who burned to death after their 1973 Fort Pinto was hit from to death after their 1973 Fort Pinto was hit from behind by a van. behind by a van.
Indiana state prosecutors alleged that Ford knew Indiana state prosecutors alleged that Ford knew Pinto gasoline tanks were prone to catch fire during Pinto gasoline tanks were prone to catch fire during rear-end collisions but failed to warn the public or rear-end collisions but failed to warn the public or fix the problem out of concern for profits. fix the problem out of concern for profits.
The trial marked the first time that an American The trial marked the first time that an American corporation was prosecuted on criminal charges—in corporation was prosecuted on criminal charges—in this case, reckless homicide.this case, reckless homicide.
Ford was acquitted in March; the case was too Ford was acquitted in March; the case was too complex.complex.
The Pinto was discontinued in fall 1980.The Pinto was discontinued in fall 1980.
Ford was first urged to recall the Pinto in Ford was first urged to recall the Pinto in 1974, by the nonprofit Center for Auto 1974, by the nonprofit Center for Auto Safety.Safety.
Late in 1978, Ford recalled all 1971-1976 Late in 1978, Ford recalled all 1971-1976 Pinto models (1.5 million cars) Pinto models (1.5 million cars)
Modifications Modifications Longer fuel filler neckLonger fuel filler neckPlastic shieldsPlastic shields
Protected from rear differentialProtected from rear differentialProtected from rear shock absorberProtected from rear shock absorber
Ford employees
Lee Iacocca
Henry Ford II
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 Iacocca’s commands regardless of their opinions since he is their superior in the company
Is Iacocca responsible for the safety of his customers?
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?
Safety? What
safety.
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
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
1. Pay the $11 per vehicle
2. Explore different safety features
3. Restart the project from the planning process
4. Continue with production of the Pinto
Repairs the safety defect
Saves Ford from potential lawsuits
Protects Ford’s reputation
High cost
Slight delay before launch
Cons
A cheaper alternative could be found
Profit margin could be higher than first alternative
Repairs the safety defect before launch
Pinto release would be delayed indefinitely
Still decreases total profit
Cons
Design can be more focused on safety
Improve Ford’s reputation
Significant delay of launch
Most costly alternative
Cons
Releases the Pinto to the customers immediately
The largest profit margin is obtained from each Pinto sale
Selling unsafe products to customers – could lead to serious injuries and deaths
High chance of lawsuits against the company
If/When injuries occur, loss of reputation
Cons
Explore Other Safety Measures Repair the Pinto so that it is a cheap, safe car
that will please the customers
Act as a responsible company and not expose customers to unknown risks
Implement a more cost effective option than adding the $11 safety addition
Save lives by not releasing unsafe Pintos
Ford workers were afraid to talk to Iacocca about the safety defects
In Feb. 1978, Ford was sued for $128 million – more then 3 times the amount they had predicted
May 1978 – Department of Transportation announces defects with the Ford Pinto – Ford recalls 1.5 million Pintos
Mar. 1980 – Ford was charged with reckless homicide – acquitted of charges, however they stopped all Pinto production
