Professionalism/The Ford Pinto Gas Tank Controversy

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The Ford Pinto was a cheap subcompact car released in 1970 under the tagline “the little carefree car”. How did this harmless vehicle become synonymous with death and corporate greed? This chapter explores the environment in the automotive market and at Ford at the time, the Pinto’s design flaw and discovery, and the fallout that resulted. Much of the negative sentiment toward Ford was in response to their use of an economic risk-benefit decision making analysis which found that the cost of a recall would outweigh the value of the lives it would save. This chapter will also discuss the ramifications of using this type of analysis in the Pinto case and beyond.

Background[edit]

Ford Pinto

Subcompact cars emerged during the 1960s. Foreign companies like Volkswagen and Toyota found great success in Europe and Japan, and demand began to rise in the United States. Lee Iacocca, the president of Ford at the time, recognized this new demand for smaller cars, and led the initiative to design a Ford model called the Pinto. The typical time frame for getting a car from conception to production was 43 months, Lee Iacocca set the Pinto's at 25 months. Competition from foreign subcompacts and domestic companies like General Motors and their Chevrolet Vega can be attributed to this ambitious time frame. Iacocca also stressed that the car must be under 2000 lbs and cost less than $2000.[1] The faster Ford could get the Pinto into production, the more market share they could attain.

Design Flaw[edit]

The Pinto controversy centered on a single design flaw which made this “carefree car” a potential deathtrap. Despite owning a patent on an alternative tank design, Ford engineers chose to place the fuel tank at the back of the car, directly between the rear bumper and rear axle. This fuel tank placement was common for domestic and foreign cars at the time and was considered a conservative choice compared to the untested above-axle design. However, the potential dangers of this placement were exacerbated by other decisions made in the design process. For instance, due to Iacocca's cost constraints, the walls of the fuel tank were exceptionally thin. Additionally, the fuel tank design incorporated four poorly arranged bolts, which protruded from the rear differential directly adjacent to the tank. As a result of these poor design choices, rear-end collision tests showed that, in collisions over 25 mph, the protruding bolts punctured the thin walls of the fuel tank, resulting in fuel leakage. The danger of the Ford Pinto stems from this fuel leakage, for a single spark could ignite the leaked gas, potentially culminating in fatal consequences.

While this flaw was discovered quickly during testing, the short timeframe of the Pinto’s development meant that final tooling had already begun. Tooling normally begins after product design and quality control are completed. However, the short production time of the Pinto required that tooling be completed while product design and development were finishing.[1] If an error was found during testing, unless it was a major error, it would likely be overlooked. Otherwise the production machinery would have to be retooled, making it impossible to reach the 25 month production timeframe. Evidently, Ford did not deem this fuel leakage as a major design flaw because they did not undertake the efforts to retool the machinery.

Grimshaw v. Ford Motor Co.[edit]

In May of 1972, Lily Gray was driving a 1972 Ford Pinto with thirteen year old passenger Richard Grimshaw. The car stalled and was rear ended by another. Upon impact, the fuel tank of the Pinto ruptured, leaked fuel, and quickly ignited, killing Lily Gray hours later after the accident and severely burning Richard Grimshaw. As a result of the burns, Richard Grimshaw had to have over 90 surgeries. The families sued Ford Motor Company, and, in 1978, a judgment was given against Ford, awarding the Gray family $560,000 and the Grimshaw family $2.5 million in compensatory damages. The jury also went on to award $125 million in punitive damages; although, this was later reduced to $3.5 million by the judge.[2] The reason for such a large judgement was the troubling mix of rumors and facts that emerged during this case, which sparked a media frenzy. The most notable of these is the document which came to be known as the “Pinto Memo”.

The Pinto Memo and Its Risk-Benefit Analysis[edit]

The Pinto Memo was a short document which included a cost-benefit analysis weighing the cost of an $11 per car fix against the cost of settling cases where the flaw caused death or injury. The breakdown of the risk-benefit analysis is as follows:

Benefit:

Burn Deaths Burn Injuries Burn Vehicles
Savings 180 180 2100
Unit Cost $200,000 $67,000 $700
Sub-Totals $36,000,000 $12,060,000 $1,470,000
Total Cost $49 million

Risks:

Car Sales Light Truck Sales
Sales 11,000,000 15,000,000
Unit Cost $11 $11
Sub-Totals $121,000,000 $16,500,000
Total Cost $137 million

After the release of the memo, critics of Ford found several points of contention with Ford’s risk-benefit analysis. For starters, while calculating the benefits, Ford claimed that the incidence of burn injuries would equal the incidence of burn deaths. In reality, experts say that the ratio between burn injuries to burn deaths would be more along the lines of 10:1.[3] If Ford had estimated the incidence of burn injuries to be 1800, ten times greater than the incidence of burn deaths, then the total cost of the benefit would have risen to $158 million, trumping the total cost of the risk. As a result, Ford’s risk-benefit analysis would have indicated that it would be more cost effective for Ford to make changes to the Pinto’s fuel tank.

Additionally, Ford received flak for their low value of the human life. In order to help them determine an appropriate value, the National Highway Traffic Safety Administration (NHTSA) suggested that Ford use $275,000, which in-and-of-itself is a relatively low estimate considering that most other federal agencies at the time set the value of human life at $350,000. However, Ford ignored both of these estimates and chose a much lower value of human life: $200,000.[4] By choosing a number so low as $200,000, Ford consciously cut the apparent benefits of fixing the car, eliminating the burden of implementing changes to the fuel tank.

Finally, critics also faulted Ford for inflating the unit cost of the repair to the car, claiming that it would cost $11 per vehicle. At the time, several companies heard of Ford’s fuel tank issues and proposed several quick and cheap fixes to the car manufacturer. For instance, Goodyear proposed a rubber bladder that would completely encase the fuel tank, preventing leakage in the event of a fuel tank rupture.[5] The total cost of this fix would have been less than $5. However, Ford disregarded these cheap and simple solutions and, instead, claimed that the cost of the fix would be $11. As a result, this inflation of the unit cost of the fix consequently inflated the total cost of the risks.

Thus, if Ford had heightened the likeliness of burn injuries occurring, had increased their value for human life, and had used a cheaper unit cost of the repair fix, then Ford's risk-benefit analysis would have indicated that it would be more cost effective to implement the repairs than to risk human life. While each of these individual critiques irked the public, ultimately, what led to the media frenzy and public outcry was Ford's implementation of the value of human life in its risk-benefit calculations. Prior to the release of the Pinto memo in the Grimshaw v. Ford Motor Co. lawsuit, the public was predominantly unaware of the widespread use of the value of human life in cost analysis - companies typically kept this practice under wraps. Therefore, when this practice was revealed and put in the limelight, the American public was shocked by its morbid nature. After all, is not human life priceless? Ultimately, the Pinto memo instigated the debate over the assignment of a dollar value to the human life.

While the controversy behind the use of the value of human life in risk-benefit analysis still persists, it has become not only a common practice but an expected practice. In fact, most federal agencies actually require companies to carry our risk-benefit analysis using their predetermined values of human life. For instance, the Food and Drug Administration requires pharmaceutical companies to conduct risk-benefit analysis on the safety of their drugs; the Environmental Protection Agency requires chemical companies to conduct risk-benefit analysis on the extent of the effects of their air pollution. Nowadays, the controversy behind its usage does not revolve around its ethical implications but around the precise dollar amount assigned to the human life. The debate asks: how exactly we are to determine this monetary value? Are some lives worth more than others? Is the college graduate worth more than the high school drop-out?

Further Backlash[edit]

Future investigations would put Ford in hot water for their actions related to the Pinto. In 1974, Federal Motor Vehicle Safety Standard (FMVSS) 301, legislation that was intended to tighten the standards for fuel system integrity in accidents, was ready to be released. If this legislation passed, it would have necessitated a change in the Pinto design. Ford lobbied to delay this legislation and succeeded in delaying it for two years. Ford managers voted to delay a fix for new models until it was legally required.[6]

Not long after the Grimshaw case concluded, Ford was headed back to the courtroom. An Elkart County, Indiana public prosecutor charged Ford Motor Co. with reckless homicide and criminal recklessness after three women died when their Pinto was rear-ended on the freeway. Although the charges were dropped, this was the first time ever that a company faced criminal charges in a product liability case. This is certainly indicative of the public anger at Ford's seemingly callous attitude toward its customers' safety. Mounting pressure from the public and regulatory agencies finally led to a voluntary recall in 1978.

The Ford Pinto Myth?[edit]

The Ford Pinto is constantly brought up as an example of poor business ethics. However, later studies have made the claim that the case was a misunderstanding, blown out of proportion by the media. For instance, in regards to the Pinto memo, the public was lead to believe that this was an internal Ford document meant to weigh the cost of court settlement versus redesign of the Pinto. In actuality, the memo was prepared for the NHTSA to investigate the problem of fuel-system fires from rear-end impact, lateral collisions, and vehicle rollover. The memo was also not prepared only for Ford vehicle predictions, but for the cost of tort liability to be taken by all American car companies from fuel-system fires. In the Grimshaw court case the defendants lawyers knew of this, but tried to use the document as a way to show Ford's lack of concern for safety. The judge in the case ruled against admissibility, a fact that was little known to the public at the time.[7] Public perception was also skewed by the Mother Jones article that first released the Ford Pinto memo. The article used emotional terms such as "firetrap", "death trap", and "lethal car" that, along with the Pinto Memo, left people with a distrust in the Pinto and in Ford. The Mother Jones article also estimated that 500 to 900 persons were killed in fires attributed to the fuel tank design. This was followed by a 60 minutes segment where they accused Ford of buying 2000 deaths and 10000 injuries because they wanted to build a cheaper car. However, a NHTSA study indicated that only 27 deaths and 24 nonfatal burn injuries were attributed to rear-end fuel tank leakages.[7] There was a difference between the facts and the public perception of the Ford Pinto, but Ford executives did know of a safety issue with their fuel tank design and decided against a redesign. This leaves the question, does the Ford Pinto case represent poor ethical decision making or how bad publicity can affect a company?

References[edit]

  1. a b Birsch, D., & Fielder, J. (1994). The ford pinto case: a study in applied ethics, business, and technology. Albany: State Univeresity of New York Press.
  2. Legget, C. (1999). The ford pinto case: the valuation of life as it applies to the negligence-efficiency argument . Retrieved from http://www.wfu.edu/~palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html
  3. Birsch, D. & Fielder, J.H. The Ford Pinto Case. Albany, NY: The State University of New York Press. Retrieved from http://books.google.com/books?id=qIlPURPTx30C&pg=PA29&lpg=PA29&dq=Andrew+McGuire+ford+pinto+burn+injuries&source=bl&ots=z-PrAx1rng&sig=hAHxQe8eHGl2NVgSL5Rsf44B6tE&hl=en&ei=vde6TYjBDJG5tgewzKC0BQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBwQ6AEwAA#v=onepage&q=Andrew%20McGuire%20ford%20pinto%20burn%20injuries&f=false
  4. SafetyXChange Staff (2008). Cost-Benefit Analysis: The Ford Pinto Example. Retrieved from http://www.safetyxchange.org/tools/cost-benefit-analysis-the-ford-pinto-example
  5. Samuel, A. & Weir, J. (1999). Introduction to Engineering Design. Burlington, MA: Elsevier Butterworth-Heinemann. Retrieved from http://books.google.com/books?id=xxuyvQR34O4C&pg=PA347&dq=ford+pinto+goodyear+bladder&hl=en&ei=adi6TeL9M8bcgQeN16TdBg&sa=X&oi=book_result&ct=result&resnum=3&ved=0CGsQ6AEwAg#v=onepage&q=ford%20pinto%20goodyear%20bladder&f=false
  6. Dowie, Mark (September/October, 1977). "Pinto Madness". Mother Jones,. http://motherjones.com/politics/1977/09/pinto-madness?page=1. 
  7. a b Schwartz, G.T. (1990). The myth of the Ford Pinto case. Rutgers Law Review, 43, 1013-1068.