For this second case response, consider the case of the FordPinto. As the CEO of Ford, what would you have done in thissituation? Do you keep the flawed design? Allow the engineers toredesign the car? Something else? In writing your answer, make sureyou: - determine who the stakeholders are in the situation. -consider a couple of alternative courses of action. - brieflyexamine the ethics of those alternatives. An extra-good answer tothis assignment will relate your decision to one of the theories ofresponsibility that we studied in this module.

There was a time when the “made in Japan” label brought apredictable smirk of superiority to the face of most Americans. Thequality of most Japanese products usually was as low as theirprice. In fact, few imports could match their domesticcounterparts, the proud products of Yankee know-how. But by thelate 1960s, an invasion of foreign-made goods chiseled a few worrylines into the countenance of the U.S. industry. In Detroit, worrywas fast fading to panic as the Japanese, not to mention theGermans, began to gobble up more and more of the subcompact automarket.

Never one to take a back seat to the competition, Ford MotorCompany decided to meet the threat from abroad head-on. In 1968,Ford executives decided to produce the Pinto. Known inside thecompany as “Lee’s car,” after Ford president Lee Iacocca, the Pintowas to weigh no more than 2,000 pounds and cost no more than$2,000.

Eager to have its subcompact ready for the 1971 model year, Forddecided to compress the normal drafting-board-to-showroom time ofabout three-and-a-half years into two. The compressed schedulemeant that any design changes typically made before production-linetooling would have to be made during it.

Before producing the Pinto, Ford crash-tested variousprototypes, in part to learn whether they met a safety standardproposed by the National Highway Traffic Safety Administration(NHTSA) to reduce fires from traffic collisions. This standardwould have required that by 1972 all new autos be able to withstanda rear-end impact of 20mph without fuel loss, and that by 1973 theybe able to withstand an impact of 30 mph. The prototypes all failedthe 20-mph test. In 1970 Ford crash-tested the Pinto itself, andthe result was the same: ruptured gas tanks and dangerous leaks.The only Pintos to pass the test had been modified in some way–forexample, with a rubber bladder in the gas tank or a piece of steelbetween the tank and the rear bumper.

Thus, Ford knew that the Pinto represented a serious fire hazardwhen struck from the rear, even in low-speed collisions. Fordofficials faced a decision. Should they go ahead with the existingdesign, thereby meeting the production timetable but possiblyjeopardizing consumer safety? Or should they delay production ofthe Pinto by redesigning the gas tank to make it safer and thusconcede another year of subcompact dominance to foreign companies?Ford not only pushed ahead with the original design but stuck to itfor the next six years.

What explains Ford’s decision? The evidence suggests that Fordrelied, at least in part, on cost-benefit reasoning, which is ananalysis in monetary terms of the expected costs and benefits ofdoing something. There were various ways of making the Pinto’s gastank safer. Although the estimated price of these safetyimprovements ranged from only $5 to $8 per vehicle, Ford evidentlyreasoned that the increased cost outweighed the benefits of a newtank design.

How exactly did Ford reach that conclusion? We don’t know forsure, but an internal report, “Fatalities Associated withCrash-Induced Fuel Leakage and Fires,” reveals the cost-benefitreasoning that the company used in cases like this. This report wasnot written with the pinto in mind; rather, it concerns fuelleakage in rollover accidents (not rear-end collisions), and itscomputations applied to all Ford vehicles, not just the Pinto.Nevertheless, it illustrates the type of reasoning that wasprobably used in the Pinto case.

In the “Fatalities” report, Ford engineers estimated the cost oftechnical improvements that would prevent gas tanks from leaking inrollover accidents to be $11 per vehicle. The authors go on todiscuss various estimates of the number of people killed by firesfrom car rollovers before settling on the relatively low figure of180 deaths per year. But given that number, how can the value ofthose individuals’ lives be gauged? Can a dollars-and-cents figurebe assigned to a human being? NHTSA thought so. In 1972, itestimated that society loses $200,725 every time a person is killedin an auto accident (adjusted for inflation, today’s figure would,of course, be considerably higher). It broke down the costs asfollows:

Futureproductivity losses
Direct	$132,000
Indirect	$41,300
Medicalcosts
Hospital	$700
Other	$425
Propertydamage	$1,500
Insuranceadministration	$4,700
Legal and courtexpenses	$3,000
Employerlosses	$1,000
Victim’s pain andsuffering	$10,000
Funeral	$900
Assets (lostconsumption)	$5,000
Miscellaneousaccident costs	$200
Total perfatality	$200,725

Putting the NHTSA figures together with other statisticalstudies, the Ford report arrives at the following overallassessment of costs and benefits:

BENEFITS

Savings:	180 burn deaths,180 serious burn injuries, 2,100 burned vehicles
Unit cost:	$200,000 perdeath, $67,000 per injury, $700 per vehicle
Totalbenefit:	(180 X $200,000) +(180 X $67,000) + (2,100 X $700) = $49.5million

COSTS

Sales:	11 million cars,1.5 million light trucks
Unit cost:	$11 per car, $11per truck
Total cost:	12.5 million X $11= $137.5 million

Thus, the costs of the suggested safety improvements outweightheir benefits, and the “Fatalities” report accordingly recommendsagainst any improvements–a recommendation that Ford followed.

Likewise in the Pinto case, Ford’s management whatever its exactreasoning, decided to stick with the original design and notupgrade the Pinto’s fuel tank, despite the test results reported byits engineers. Here is the aftermath of Ford’s decision:

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

NHTSA finally adopted a 30-mph collision standard in 1976. Thepinto then acquired a rupture-proof fuel tank. In 1978 Ford wasobliged to recall all 1971-76 Pintos for fuel-tankmodifications.

Between 1971 and 1978, approximately fifty lawsuits were broughtagainst Ford in connection with rear-end accidents in the Pinto. Inthe Richard Grimshaw case, in addition to awarding over $3 millionin compensatory damages to the victims of a Pinto crash, the juryawarded a landmark $125 million in punitive damages against Ford.The judge reduced punitive damages to 3.5 million.

On August 10, 1978, eighteen-year-old Judy Ulrich, hersixteen-year-old sister Lynn, and their eighteen-year-old cousinDonna, in their 1973 Ford Pinto, were struck from the rear by a vannear Elkhart, Indiana. The gas tank of the Pinto exploded onimpact. In the fire that resulted, the three teenagers were burnedto death. Ford was charged with criminal homicide. The judge in thecase advised jurors that Ford should be convicted if it had clearlydisregarded the harm that might result from its actions, and thatdisregard represented a substantial deviation from acceptablestandards of conduct. On March 13, 1980, the jury found Ford notguilty of criminal homicide.

For its part, Ford has always denied that the Pinto is unsafecompared with other cars of its type and era. The company alsopoints out that in every model year the Pinto met or surpassed thegovernment’s own standards. But what the company doesn’t say isthat successful lobbying by it and its industry associates wasresponsible for delaying for seven years the adoption of any NHTSAcrash standard. Furthermore, Ford’s critics claim that there weremore than forty European and Japanese models in the Pinto price andweight range with safer gas-tank position. “Ford made an extremelyirresponsible decision,” concludes auto safety expert Byron Bloch,“when they placed such a weak tank in such a ridiculous location insuch a soft rear end.”

Has the automobile industry learned a lesson from Ford’sexperience with the Pinto? Some observers thought not when, inFebruary 1993, an Atlanta jury held the General Motors Corporationresponsible for the death of a Georgia teenager in the fiery crashof one of its pickup trucks. At the trial, General Motors contendedin its defense that when a drunk driver struck seventeen-year-oldShannon Moseley’s truck in the side, it was the impact of thehigh-speed crash that killed Moseley. However, the jury waspersuaded that Moseley survived the collision only to be consumedby a fire caused by his truck’s defective fuel-tank design. Findingthat the company had known that its “side-saddle” gas tanks whichare mounted outside the rails of the truck’s frame, are dangerouslyprone to rupture, the jury awarded $4.2 million in actual damagesand $101 million in punitive damages to Moseley’s parents.

What undoubtedly swayed the jury was the testimony of former GMsafety engineer Ronald E. Elwell. Although Elwell had testified inmore than fifteen previous cases that the pickups were safe, thistime he switched sides and told the jury that the company had knownfor years that the side-saddle design was defective but hadintentionally hidden its knowledge and had not attempted to correctthe problem. At the trial, company officials attempted to paintElwell as a disgruntled employee, but his testimony was supportedby videotapes of General Motors’ own crash tests. After theverdict, General Motors said that it still stood behind the safetyof its trucks and contended “that a full examination by theNational Highway Traffic Safety Administration of the technicalissues in this matter will bear out our contention that the1973-1987 full size pickup trucks do not have a safety relateddefect.”

Since then, however, the Department of Transportation hasdetermined that GM pickups do pose a fire hazard and that they aremore prone than competitors’ pickups to catch fire when struck fromthe side. Still, GM has rejected requests to recall the pickups andrepair them. Meanwhile, the Georgia Court of Appeals has thrown outthe jury’s verdict in the Shannon Moseley case on a legaltechnicality–despite ruling that the evidence submitted in the caseshowed that GM was aware that the gas tanks were hazardous but didnot try to make them safer to save the expenses involved.