Case Study on "Pinto Fires"

Case Study 5 pages (1720 words) Sources: 6 Style: APA

[EXCERPT] . . . .

Pinto Fires

The occurrence of Ford Pinto fires due to rear-end collisions, and the company's subsequent recall of more than a million vehicles, is known to most. It is an ethical dilemma that will continue to be discussed for generations to come. To fully understand the case, however, one must determine all of the facts surrounding the case, including: symptoms of problems, root problems, and unresolved issues. The roles key participants played also must be analyzed, along with the ethical issues involved, with the Ford Pinto. Once these facets are explored, the alternatives to the case can be analyzed and evaluated, and a decision made which alternatives are most valid. Recommendations will then be made regarding how this situation could have been handled more effectively.

Ford Pinto Fires Facts:

There are a variety of facts that are presented in the Ford Pinto fires case study that are relevant to the situation. The situation began in 1968 with the increasing competition being felt by Ford Motor Company, by German and Japanese auto manufacturers. In order to remain competitive, the decision was made that the Ford Pinto would be brought to market for the 1971 model release. This would be the "shortest production planning period in automotive history to that time" (Gioia, n.d.). Instead of taking the average three and a half years to produce, the Pinto was released in under 2 years from concept to production. This escalated time schedule meant that many design and production facets had to be performed concurrently.

Testing performed by Ford found that the fuel tank was faulty, prior to its production release to the public. Eleven Pintos were tested with rear-end collisions. All 8 that had standard gas tanks were found to rupture or have fuel leakage. The other three found that fuel leakage and rupture could be prevented by either including a plastic baffle, a steel plate or rubber tank lining. The unprotected tanks met transportation standards of the time (Gioia, n.d.). Numbers too are important facts in the case.

Iacocca had set a goal known as 'the limits of 2,000' for the Pinto, as a means of ensuring its competitiveness in the market against imports. This goal meant that the car could not cost more than $2,000 and could not weigh more than 2,000 pounds. Ford experimented with a variety of solutions to the rupturing gas tank. They could place the tank in a different location, similar to the Ford Capri, however that would reduce the usable trunk space. It was determined that to improve the gas tanks, it would cost Ford $11 per tank. Costly safety features added to 1950s Fords did not improve sales. Using a cost/benefit analysis it was determined that it would cost Ford $137.5 million to improve the gas tanks on 11 million cars and 1.5 million light trucks. This would reap the benefits of the prevention of 180 deaths, 180 serious injuries and 2,100 burned vehicles, valued at a total of $49.5 million. Following multiple pending court cases and with much consumer pressure, Ford recalled all 1.5 million Pintos, built between 1970 and 1976, in June 1978 (Gioia, n.d.). The Pinto fires resulted in the first case where corporate deviance resulted in a criminal homicide charge, in State of Indiana v. Ford Motor Co. (Becker, Jipson, & Bruce, 2000).

Symptoms of the Problem, Root Problems, Unresolved Issues, and Roles of Key Players in the Case:

The root problem in this case is an organization struggling to remain competitive in an increasingly globalized marketplace. Ford was losing market share to German imports, and the growing Japanese import segment was having a negative effect on the company as well. The symptoms of this problem can be seen in Ford's development of the Pinto. First, they were desperate to get a vehicle to market that they felt could compete directly with these two forces. Second, they felt price and vehicle size were the two most important components in being competitive and were willing to sacrifice safety for these features. This resulted in the primary unresolved issue for this case.

Ford knew that there was a problem with the gas tanks in the Pinto. All 8 unimproved tanks ruptured or leaked upon test impact. Rather than fixing the problem, they decided to ignore it, figuring the consequences of this action were less costly than the costs to make the tanks safe. This unresolved issue was facilitated by the key players at Ford Motor Co..

In 1968, Semon 'Bunky' Knudsen was president of Ford. Knudsen believed that Ford should let the Germans and Japanese have the small car market and instead focus on market segments where the company could be competitive and profitable. Lee Iacocca, on the other hand, felt that Ford needed to quickly produce a vehicle that could compete in the small car segment. Then CEO Henry Ford II made the final decision by forcing Knudsen out and appointing Iacocca as president. Although these are the named key players, others factored into the case strongly as well.

Ford engineers who originally designed the Pinto's gas tank placement did not properly design for safety in this area. Ford engineers consulted for possible solutions to this design flaw are also key players as they dismissed the need for safety, believing features such as trunk space to be more important than human life. Other key players include all those who died or were injured during rear end impacts, such as Richard Grimshaw. The court system and attached juries factored into helping Ford see that their unethical actions would be far more costly, in dollars and cents, than they anticipated, especially with awards such as Grimshaw's original reward of $125 million.

The Ethical Issues Involved in the Case:

The ethical issues involved in this case center on one critical decision Ford Motor Company made -- placing a dollar value on a human life. Can such a value be determined? Whereas Ford determined each human life to be worth approximately $200,000, if one were to ask the parents of the three teenage girls who died in 1978, it is almost certain that they would feel quite differently and in fact would likely argue that their lives were truly priceless. It was this valuation of human life that then allowed Ford to make a quantifiable decision using a cost/benefit analysis to determine whether or not to make the improvements to the gas tank. As Halpern (1982) notes, short-term profit decisions were made without consideration for long-term effects.

Alternatives:

There are several alternatives that Ford Motor Co. could have considered when they discovered that their was a faulty design in the Pinto gas tank. They could have improved the gas tank in one of the three ways they found to be effective in preventing rupturing and fuel leakage. Given the 1.5 million Pintos that were recalled, this would've only added $16.5 million in costs. Although adding this improvement to other vehicle lines could also be of benefit, for the sake of this case, the Pinto should have been the only vehicle considered in the cost/benefit analysis. The organization could have changed the placement of the gas tank to the more Capri-style placement, losing some of the trunk space. Although trunk space was a significantly important feature for many consumers, in the 1970s, it is questionable whether or not it would've have significantly impacted the competitiveness of the Pinto. Ford could've allowed for more design and engineering time and pushed back the release date, giving the engineers time to come up with other engineered solutions. Although bringing a product to market quickly is important, skimping on quality of design in favor of timely market delivery often costs the organization more in the long run, as Ford eventually found out in the case of the Pinto. The company could have scrapped the car design altogether, deciding it was too dangerous a design to produce. This, of course, would have resulted in a substantial loss of R&D and production dollars already spent, but may have been less costly than the lawsuits that followed. Lastly, the organization could have done nothing about the design flaw and simply sold the car as designed, as it met the standards at the time and was determined to be the most cost effective decision. This is a legally viable solution. However, it is a morally reprehensible solution.

Recommendations:

It is recommended that Ford spend the extra $11 per Pinto and improve the gas tanks to make their vehicles safe for their consumers. What Ford failed to quantify in their $200,725 number is the loss of customers due to each accident and the negative effect each accident would have on the general Ford brand, as well as the Pinto model. Not only would the person who died not ever purchase a Ford vehicle again, but likely their family and friends would no longer buy the Ford brand. News stories about the crashes would affect the buying decisions of millions, who would be looking for a safer… READ MORE

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