ford pinto full details and analysis report with references

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CASE STUDY “FORD PINTO” 1

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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

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Page 1: Ford pinto full details and analysis report with references

CASE STUDY

“FORD PINTO”

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Page 2: Ford pinto full details and analysis report with references

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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Page 3: Ford pinto full details and analysis report with references

COUNTERPARTS

Volkswagen Beetle

Ford Pinto

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Page 4: Ford pinto full details and analysis report with references

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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Page 5: Ford pinto full details and analysis report with references

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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Page 6: Ford pinto full details and analysis report with references

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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Page 7: Ford pinto full details and analysis report with references

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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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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Page 10: Ford pinto full details and analysis report with references

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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Page 11: Ford pinto full details and analysis report with references

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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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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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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Page 15: Ford pinto full details and analysis report with references

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<PLWhere

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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Page 16: Ford pinto full details and analysis report with references

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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Page 17: Ford pinto full details and analysis report with references

COST BENEFIT ANALYSISThe 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 Crash -Induced 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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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 rear-end 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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Page 19: Ford pinto full details and analysis report with references

COST BENEFIT ANALYSISFord'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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Page 20: Ford pinto full details and analysis report with references

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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Page 21: Ford pinto full details and analysis report with references

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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Page 22: Ford pinto full details and analysis report with references

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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• 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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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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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.

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Page 27: Ford pinto full details and analysis report with references

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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Page 28: Ford pinto full details and analysis report with references

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?

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Page 29: Ford pinto full details and analysis report with references

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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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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FORD PINTO CASE: VIDEO

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