In his January 1971 review of the Ford Pinto, New York Times car reviewer John Radosta stated that Ford had finally developed a car to compete with the compact cars coming from Europe and Japan. Listed at just over $2,000, the Pinto was going to help Ford recapture its lost consumers who had moved to higher-quality, more fuel-efficient foreign competitors. Price was a driving force because of the stiff competition from overseas. In an incredible prophesy worthy of Shakespeare, Radosta complained about the braking of the Pinto as being very abrupt and forcing the car to shift to the left or right, which requires “alert countersteering by the driver.” This foreboding statement came back to haunt Ford because the Ford Pinto was designed with its fuel tank in the center of the back of the car. In this position, a low-speed rear-end accident could result in the leaking and explosion of the Pinto gas tank. The Pinto was rushed into production because Ford was falling farther and farther behind its European and Japanese competitors. In 1977, Mother Jones magazine printed an article titled “Pinto Madness” in which the first national exposure took place identifying the design flaw in the Pinto. The Mother Jones article described an accident in which the driver of the Pinto stalled in a merge lane and another car rearended hers at an impact speed of 28 miles per hour. The impact of the collusion ruptured the gas tank of the Pinto, and gas vapors quickly filled the car. A spark from the car ignited the gas, and the car exploded into flames. The driver died hours later. The details were told because a passenger in the car had survived despite horrendous burns all over his body. The article in Mother Jones magazine stated that Ford engineers knew there was a design flaw with the gas tank because its own preproduction crash tests showed the gas tank rupturing after a rear-end collision. The article also explained that because the assembly-line machinery had already been tooled for the flawed gas tank, Ford planned to continue manufacturing the Pinto with the flawed gas tank even though Ford also owned the patent for a much safer gas tank. The Pinto was intended to be a special car to reverse the declining market share for Ford, and it was “Lee’s car.” Lee Iacocca, president of Ford, wanted the car to be in the showrooms in 1971, so Ford sped up the whole production process. The traditional time span at that time for a new car to be introduced was 43 months from conception to production. The Pinto accomplished that goal in less than 25 months.

The Pinto Memo

The article in Mother Jones magazine identified a chilling document that is still difficult to comprehend: an internal Ford memo that contained a cost-benefit analysis of replacing the Pinto’s gas tank with a safer one. In 1972, the National Highway Traffic Safety Administration (NHTSA) calculated the worth of the life of a person who has died in a traffic accident. Considering future salary losses, medical costs, legal costs, pain and suffering, property damage, funeral costs, and other associated costs, the NHTSA concluded that the value was $200,725 per victim. Ford then used that figure to compare the “benefits” of not correcting the flaw with the “costs” of correcting the flaw. The cost of correcting the flaw was $11 per unit. Yes, to correct the problem, Ford would need to spend $11 to retrofit the existing cars with a safer gas tank. There were 11 million cars and 1.5 million light trucks, so the total cost would have been $137 million. The “benefits” were based on an estimated 180 burn deaths at a payout of $200,000 per death; 180 serious burn injuries with a payout of $67,000 per injury; and 2,100 burned vehicles with a payout of $700 per vehicle. The total cost of the “benefits” was $49.5 million, so Ford would “save” $87.5 million by letting its customers burn to death. On June 9, 1978, as a result of investigations by the NHTSA and the negative publicity generated by the Mother Jones article, Ford recalled 1.5 million Pintos for “modifications” to their fuel systems to reduce the risk of leaking gas tanks. All Pintos from 1971 through 1976 were recalled except station wagons. In addition, Ford had to recall 1975 and 1976 Mercury Bobcats, which had the same gas tank. The estimated cost of the recall was between $12 and $20 million.

Questions

1. What issues do you think the managers and engineers faced while developing a cost-benefit analysis of replacing the Pinto gas tank?

2. How could this cost-benefit analysis be implemented in the United States at the end of the 20th century?

3. If you were working at Ford when the Pinto gas tank issue was discovered, what would you say to your boss if he or she told you this is what Ford was going to do to “correct” the problem?