case study report on ford company who made a car named as pinto. the presentation tells the summary of design issue and the flaws in the car and ethical issues

1. CASE STUDY
“FORD PINTO”
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2. INTRODUCTION
• Demand for sub-compact
cars
• Designed in May of 1968
by the vice-president of
Ford Motor Company, Lee
Iacocca
• Weighed 2000 pounds,
cost $2000 and
manufactured in 2 years
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3. COUNTERPARTS
Volkswagen Beetle
Ford Pinto
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4. SAFETY DOESN’T SELL?
There was a corporate belief, attributed to Lee
Iacocca himself, which stated "safety doesn't sell.”
“This became a corporate belief what we can see where it led the Ford
motor company, i.e. towards a hasty design of Ford Pinto which
eventually came out as being hugely defected”.
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5. THE ACCIDENTS
• In May 1972, Lily Gray was traveling with thirteen
year old Richard Grimshaw in a 1972 Pinto car.
• Their car was struck by another car traveling
approximately thirty miles per hour.
• The impact ignited a fire in the Pinto
• Killed Lily Gray and left Richard Grimshaw with
devastating injuries.
• Jury awarded $560,000 to the Gray family and $2.5
million to Grimshaw in compensatory damages.
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6. THE ACCIDENTS
• It was observed that
collisions from the back
at over 30 miles per
hour would cause the
rear of the car to buckle
up, right up to the back
seat.
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7. THE ACCIDENTS
• Ford was involved in yet another controversial case
involving the Pinto.
• The automobile's fuel system design contributed to
the death of three women on August 10, 1918
• Their car was hit by another vehicle traveling at a
relatively low speed by a car driven by a drunk man.
• The fact that Ford had chosen earlier not to upgrade
the fuel system design became an issue of public
debate.
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9. THE ACCIDENTS
• On August 10, 1978, on U.S Highway 33, a van
weighing over 400 pounds traveling at fifty five miles
an hour stuck the stopped Pinto, resulting in the
death of two teenage girls, one severely injured, when
the car burst into flames.
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10. THE ACCIDENTS
• Colliding with the Pinto at 31 mph or above
• There were chances that its doors would jam and the
trapped passengers would get burned to death.
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11. QUESTIONABLE DESIGN
The design of Pinto was questionable. The design
problems first came into public attention in
August,1977 in an article of “Mother Jones
Magazine”. This article condemned the Ford Motor
Company and the author was later given a “Pulitzer
Prize”
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13. THE PROBLEMS
• The controversy surrounding the Ford Pinto concerned the
placement of the automobile's fuel tank. It was located behind
the rear axle, instead of above it.
• The problem with this design was that it made Pinto more
vulnerable to rear-end collisions.
• The gas tank and the rear axle were separated by only nine
inches.
• There were bolts that were positioned in a manner that
threatened the gas tank.
• Finally, the fuel filler pipe design would disconnect from the
tank in the event of an accident, causing gas spillage that
could lead to dangerous fires.
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14. HOW FORD DEFENDED ITSELF ?
After these accidents, the Ford motor company decided to do a
risk/benefit analysis based on the improvement of the fuel tank.
Ford stated that its reason for doing a risk/benefit analysis was
that the National Highway Traffic Safety Administration
(NATSA) required them to do so..
The risk/benefit approach excuses a defendant if the monetary
costs of making a production change are greater than the
"societal benefit" of that change.
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15. THE BPL FORMULA
Ford used the BPL formula to carry out a cost/benefit analysis.
Back-end story:
This formula was based on a case of Anna C who lost cargo in a
river. She appealed for the recovery of lost cargo in court. The
loss was also due to her negligence so the court defined
some boundaries, and Judge Learned Hand presented the
theory of negligence down to an algebraic equation
B<PL
Where
B = Burden of adequate precautions
P= probability that the defendant’s actions will result in an
accident
L= loss/cost of accident if it occurred.
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16. DEFINITION OF BPL
If the expected harm exceeded the cost to take precaution,
the defendant was obligated to take the precaution, and if
they did not, would be held liable. If the cost was larger than
the expected harm, the defendant was not expected to take
the precaution. If there was an accident, he was not found
liable.
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17. COST BENEFIT ANALYSIS
The first cost benefit analysis showed the cost per vehicle = $11
Ford's Cost/Benefit Analysis
Benefits and Costs Relating to Fuel Leakage
REFERENCE :
From Ford Motor Company internal memorandum: "Fatalities Associated with
Crash­­Induced Fuel Leakage and Fires." Source: Douglas Birsch and John H.
Fielder, THE FORD PINTO CASE: A STUDY IN APPLIED ETHICS.
BUSINESS, AND TECHNOLOGY. p. 28.1994.
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18. COST BENEFIT ANALYSIS
One document that was not sent to Washington by Ford was a
"Confidential" cost analysis Mother Jones has managed to obtain,
showing that crash fires could be largely prevented for considerably
less than $11 a car.
•The cheapest method involves placing a heavy rubber bladder
inside the gas tank to keep the fuel from spilling if the tank ruptures
•On December 2, 1970 (two years before Echold sent his cost­
benefit memo to Washington), Ford Motor Company ran a rear­end
crash test on a car with the rubber bladder in the gas tank. The tank
ruptured, but no fuel leaked.
•On January 15, 1971, Ford again tested the bladder and again it
worked. The total purchase and installation cost of the bladder would
have been $5.08 per car.
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19. COST BENEFIT ANALYSIS
Ford's Cost/Benefit Analysis at
$5.08 Per Fuel Tank Replacement
REFERENCE :
Mark Dowie, Pinto Madness, Mother Jones, Sept./Oct. 1977, at 20.
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20. ETHICAL ISSUES
• Evidence indicated that cost of making
improvements to gas tank could have been
as low as $5.08 per vehicle.
• If the costs were around $5.08 per vehicle,
the Ford motor company would not have
had as strong a risk/benefit argument as
with the $11 figure provided.
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21. ETHICAL ISSUES
• Ford made decision not to make improvements to the
gas tank after completion of the risk/benefit analysis.
• Ford did not make adjustments to the Pinto design
because the $11 cost was too high
• Ford did not consider the lives which would be saved
if the adjustment was made.
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22. ETHICAL ISSUES
• Ford set “limits for 2000” for Pinto.
• The car was not to exceed $2000 in cost and 2000
pounds in weight.
• After crash testing, it was revealed that fuel tank burst
at 31 mph collision (internal design issue)
• Ford must have considered internal design issues,
“limits for 2000” cost the lives of people.
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23. • The company chose not to implement the
design, which would have cost $11 per car
(according to Ford) even though it had done
an analysis showing that the new design
would result in 180 less deaths.
• The company defended itself by saying that
it used the accepted risk/benefit analysis
to determine if the monetary costs of
making the change were greater than the
societal benefit.
RISK BENEFIT ANALYSIS VS ETHICS
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24. Some things just can't be measured in terms of dollars, and that
includes human life.
RISK BENEFIT ANALYSIS VS ETHICS
• Based on the numbers Ford used, the cost would
have been $137 million versus the $49.5 million price
tag put on the deaths, injuries, and car damages, and
thus Ford felt justified not implementing the design
change.
• It is unethical to determine that people should be
allowed to die or be seriously injured because it would
cost too much to prevent it .
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25. NHTSA STANDARD
• The "benefit side" of the equation contains the most
controversial number of the analysis--the value of a
human life.
• The number quantifying the price of a value life
($200,000) is what makes this problem so difficult. It
is hard to decide what a life is worth, but most people
feel the value of theirs is greater than $200,000.
While this $200,000 figure was the most
controversial of the equation, it was not determined
by Ford.
• In 1972, the National Highway Traffic Safety
Administration (NHTSA) provided the auto industry
with the number $200,725 as the value to be utilized
in risk/ benefit analysis. 25

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27. RESPONSIBILITY OF FORD EMPLOYEES
• Were the employees 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?
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28. MORE ETHICAL QUESTIONS
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? 28

29. ALTERNATIVE SOLUTIONS
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
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30. EXPLORING OTHER SAFETY MEASURES
• A cheaper alternative could be formed.
• Profit margin could be higher than first alternative.
• Repairs the safety defect before launch of product.
• Design can be more focused on safety.
• New design -> more safe -> Improve Ford’s reputation.
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31. FORD PINTO CASE: VIDEO
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