Ford Pinto: A Fiery ControversyBE1200 Team 8 | Quiz 7

Is it ethically permissible to put a dollar value on human life? In a business environment like the automotive industry where profits matter over everything else. Should the engineering community find it morally permissible to employ such strategies as Cost-benefit analysis when weighing a decision between profits and public safety?

During the early 1970’s the very profitable Ford Pinto was the largest selling subcompact car in America. It also was a time where the automotive industry saw more safety improvements to cars than any other period in history. Despite industry trends towards safety, crashes involving the Pinto frequently caused its gas tank to rupture. By conservative estimates these crashes had caused 500 burn deaths to people who would not have been seriously injured if the car had not burst into flames. Ford spent millions to lobby against stricter government safety standards even though they already possessed the technology to improve the gas tank design. After pressure from Ford the National Highway Traffic Safety Administration reported their cost value of a human life. Using this new formula Ford conducted its own internal cost-benefit analysis, which placed a dollar value on human life, and decided it wasn’t profitable to make the changes to the fuel tank design.

Since the behind-the-axle design model provided more trunk space and could be utilized in a hatchback or wagon models, Ford decided to build the Pinto with this design even though it was not considered as safe.

Ford engineers had discovered in pre-production crash tests that rear-end collisions would rupture the Pinto’s fuel system extremely easy. Fighting strong competition from Volkswagen, and the fact that assembly line machinery was already tooled when the defect was discovered. Ford Motor Company rushed the Pinto into production anyway. Finally in 1977 new models incorporated a few minor alterations necessary to meet new federal standards that Ford had managed to hold off for eight years.

BEHIND-THE-AXLE DESIGN

PROPOSED SAFER LOCATION

The playersArjay Miller

• President of the Ford Motor Company in the mid-1960’s• Involved in an accident in which his Continental burst into flames upon impact• In 1965, recounted his incident to the U.S. Senate, and passionately called for better control over fuel-fed fires in

auto accidents

Robert McNamara• President of Ford Motor Company in 1960 who eventually became the Secretary of Defense.• Champion of cost/benefit analysis• Because of his strong business background, he held cost/benefit analysis higher than anything else, even human

life.

J.C. Echold• Director of Automotive Safety (essentially an anti-safety lobbyist)• Wrote a memorandum to the Department of Transportation that in effect says that even though a fix exists for

$11 per car, it is still acceptable for 360 people to die or get injured by fire each year.• Turns out neither of these facts are true. A bladder that cost $5.08 was developed by Goodyear was tested by

Ford two times before the memo was ever sent. The bladder was shown to be effective.

The ethical issues• Cost/Benefit analysis out of business realm

• For pure business decisions that have no effect on human life, the cost/benefit analysis is an effective tool

• Applying the cost/benefit to issues in which human life is involved is an ethical dilemma must put a value on human life.

• The auto industry didn’t want to be so brazen as to come up with a figure themselves, so they pressured the NHTSA to decide on a figure.

• Lobbying the government • Because of Robert McNamara’s influence on government, Ford had gotten federal

regulators to agree to talk auto safety in terms of cost/benefit analysis.• J.C. Echold used this mindset to lobby the government to agree that human lives

aren’t worth saving for a few dollars per car.

Section III – Protagonists’ actions compared to NPSE Code of Ethics

The Whiz Kids, 1946 --Group of US Army Air Force veterans that produced two presidents and six vice-presidents for Ford Motor and ended decades of unprofitable business for the Ford Motor Company and became “one of the most celebrated success stories in all of American business.”1

Robert McNamara, Ford Motor Co. President, 1960 – Secretary of Defense for the United States 1960-1968 - - advocate of Cost-Benefit Analysis

1 http://www.automotivehalloffame.org/inductee/arjay-miller/726/ - accessed December 1, 2015.

Arjay Miller, Ford Motor Co. President, 1963 – Member of the Board of Directors 1962 - 1969 Lee Iacocca, Ford Motor Co. President,

1970-1978 – Developer of the Ford Mustang and later President of Chrysler

Where did Ford Executives act unethically?

1. Hold paramount the safety, health, and welfare of the public• Ford engineers estimated that technical improvements to the fuel system would cost about $11 per vehicle

(or 0.55% of the sale price of $2000).• Benefits – 180 burn deaths at $200,000 per death

– 180 serious burn injuries at $67,000 per injury– 2, 100 burned vehicles at $700 per vehicle

Total Benefit -- $49.5 Million• Costs – 11 million cars at $11 per car

– 1.5 million light trucks at $11 per truck Total Costs -- $137.5 Million• $88 Million Dollars made the decision• 50 lawsuits were filed against Ford between 1971 and 1978. In one case a jury awarded the plaintiff $125

million in punitive damages against Ford (Award was reduced by judge to $3.5 Million).

2Moral Issues in Business, 8th ed. Shaw & Barry (pp83-86).

Does this represent a flaw in logic as well as ethics? Was the unethical choice truly a cost savings?• Ford has always rejected that the Pinto was unsafe when compared with other cars of its type• Ford consistently stated that the Pinto consistently exceeded government standards

They neglected to state that the company lobbied heavily with success to delay adoption of new crash standardsThese associated lobbying costs are also outside the scope of the Cost-Benefit Analysis justifying the decisions made by Ford

3. Issue public statements only in an objective and truthful manner• While truthfulness is debatable, Ford statements failed to meet an objective and truthful condition• Ford executives acted under the Cost-Benefit Analysis to preserve the best interests of their company –

objectivity and full disclosure were the antithesis of these interests4. Act for each employer or client as faithful agents or trustees

• Would a stronger lobby by Ford engineers toward fixing the fuel tank issues have been more faithful to their employers in the long run?

5. Avoid deceptive acts

• While Ford motor was never held criminally liable, the Pinto Fuel Tank problems have become a poster-child for corporations valuing profits over public safety. The car buying public and press saw Ford actions as untrustworthy.

6. Conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession

• The Pinto became a national joke, mocked by comedians and parodied in movies which did little to enhance Ford Motor’s reputation

3”Pinto Madness” Mother Jones 2(8) (Sept/Oct 1977) by Mark Dowie