FORD PINTO CASE:

THERE WAS A TIME WHEN THE MADE IN Japan label brought a predictable smirk of superiority to the face of most Americans. The quality of most Japanese products usually was as low as their price. In fact, few imports could match their domestic counterparts, the proud products of Yankee know-how. But by the late 1960s, an invasion of foreign-made goods chiseled a few worry lines into the countenance of U.S. industry. In Detroit, the worry was fast fading to panic as the Japanese, not to mention the Germans, began to gobble up more and more of the subcompact auto market. Never one to take a backseat to the competition, Ford Motor Company decided to meet the threat from abroad head-on. In 1968, Ford executives decided to produce the Pinto. Known inside the company as Lees car, after Ford president Lee Iacocca, the Pinto was to weigh no more than 2,000 pounds and cost no more than $2,000.20

Eager to have its subcompact ready for the 1971 model year, Ford decided to compress the normal drafting-board- a to-showroom time of about three-and-a-half years into two. The compressed schedule meant that any design changes typically made before production-line tooling would have to be made during it.

Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met a safety standard proposed by the National Highway Traffic Safety Administration (NHTSA) to reduce fires from traffic collisions. This standard would have required that by 1972 all new autos be able to withstand a rear-end impact of 20 miles per hour without fuel loss and that by 1973 they be able to withstand an impact of 30 miles per hour. The prototypes all failed the 20-miles-per-hour test. In 1970, Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dangerous leaks. The only Pintos to pass the test had been modified in some wayfor example, with a rubber bladder in the gas tank or a piece of steel between the tank and the rear bumper. Thus, Ford knew that the Pinto represented a serious fire hazard when struck from the rear, even in low- speed collisions. Ford officials faced a decision. Should they go ahead with the existing design, thereby meeting the production timetable but possibly jeopardizing consumer safety? Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? Ford not only pushed ahead with the original design but also stuck to it for the next six years.

What explains Fords decision? The evidence suggests that Ford relied, at least in part, on cost-benefit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing something. There were various ways of making the Pintos gas tank safer. Although the estimated price of these safety improvements ranged from only $5 to $8 per vehicle, Ford evidently reasoned that the increased cost outweighed the benefits of a new tank design.

How exactly did Ford reach that conclusion? We dont know for sure, but an internal report, Fatalities Associated with Crash-Induced Fuel Leakage and Fires, reveals the cost-benefit reasoning that the company used in cases like this. This report was not written with the Pinto in mind; rather, it concerns fuel leakage in rollover accidents (not rear-end collisions), and its computations applied to all Ford vehicles, not just the Pinto. Nevertheless, it illustrates the type of reasoning that was probably used in the Pinto case.

In the Fatalities report, Ford engineers estimated the cost of technical improvements that would prevent gas tanks from leaking in rollover accidents to be $11 per vehicle. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the relatively low figure of 180 deaths per year. But given that number, how can the value of those individuals lives be gauged? Can a dollars-and-cents figure be assigned to a human being? NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, todays figure would, of course, be considerably higher). It broke down the costs as follows:

Thus, the costs of the suggested safety improvements outweighed their benefits, and the Fatalities report accordingly recommended against any improvementsa recommendation that Ford followed.

Likewise in the Pinto case, Fords management, whatever it's exact reasoning, decided to stick with the original design and not upgrade the Pintos fuel tank, despite the test results reported by its engineers. Here is the aftermath of Fords decision:

Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. Ford puts the figure at 23; its critics say the figure is closer to 500. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles).

NHTSA finally adopted a 30-miles-per-hour collision standard in 1976. The Pinto then acquired a rupture-proof fuel tank. In 1978, Ford was obliged to recall all 19711976 Pintos for fuel-tank modifications.

Between 1971 and 1978, approximately fifty lawsuits were brought against Ford in connection with rear-end accidents in the Pinto. In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford (later reduced by the judge to $3.5 million).

On August 10, 1978, the 1973 Ford Pinto that eighteen-year-old Judy Ulrich, her sixteen-year-old sister Lynn, and their eighteen-year-old cousin Donna were riding in was struck from the rear by a van near Elkhart, Indiana. The gas tank of the Pinto exploded on impact. In the fire that resulted, the three teenagers were burned to death. Ford was charged with criminal homicide. The judge in the case advised jurors that Ford should be convicted if it had clearly disregarded the harm that might result from its actions, and that disregard represented a substantial deviation from acceptable standards of conduct. On March 13, 1980, the jury found Ford not guilty of criminal homicide.

For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. The company also points out that in every model year, the Pinto met or surpassed the governments own standards. But what the company doesnt say is that successful lobbying for it and its industry associates was responsible for delaying for seven years the adoption of any NHTSA crash standard. Furthermore, Fords critics claim that there were more than forty European and Japanese models in the Pinto price and weight range with a safer gas-tank position. Ford made an extremely irresponsible decision, concludes auto safety expert Byron Bloch, when they placed such a weak tank in such a ridiculous location in such a soft rear end.

QUESTION:

Please draw a conceptual model for the Ford Pinto Case and explain it.