Reference no: EM133330908

The Ford Pinto Case

In the late 1960s American automobiles were losing market share to smaller Japanese imports. Lee Iacocca, then CEO of the Ford Motor Company, wanted a 1971 model to meet the competition. He reportedly ordered that Ford produce a car for 1971 that weighted less than 2000 pounds and that would be priced at less than USD 2000. That meant that the car had to be designed and produced in 25 months rather than the usual 43 months for a new car line. The resulting car was the Pinto. Because of the accelerated production schedule, the Pinto was not tested for rear-end impact until after it was produced. There was no National Highway Traffic Safety Administration rear-end impact standard at the time. Ford engineers knew that testing for rear-end impact is a standard safety procedure. The car was tested after production, and it failed the test, meaning that it fell below the state of the art for cars of that size. The design of the car placed the fuel tank such that if the car was hit from the rear at a speed above 20 miles per hour, it would be punctured by a bold from the bumper and could possibly burst into flame. Ford did a study and determined that if a baffle (estimated at costing between USD 6.65 and USD 11) were placed between the bumper and the gas tank, the Pinto would be comparable to other cars of its class with respect to the danger of the fire from rear-end impact. A company cost-benefit analysis that weighted the cost of adding the baffle against the estimated cost of suits resulting from "excess" accidental deaths and injuries indicated that it would cost the company less not to insert the baffle than to insert it. For whatever reason, the company did not change the design from 1971 to 1978. Nor did the company offer its customers the option of purchasing the baffle.

Between 1976 and 1977 alone, Pintos suffered thirteen fiery rear-end collisions, which was more than double the number for comparable-size cars. As it turned out, suits brought against Ford and the amount it had to pay (estimated at more than USD 50 million) far exceeded what it saved (20.9 million) by not correcting the defect-not to mention the cost of bad publicity.

Nonetheless, despite reports of fires in the Pinto, the car sold well through 1978, when it was finally recalled to have the baffle inserted. When the State of the Oregon, because of safety concerns, sold its fleet of Pintos at public auction, the cars went for as much as USD 1800 each. Obviously, buyers discounted the danger, weighting it against the cost of what was considered adequate transportation at a good price.

Ford's actions with respect to the Pinto have been widely criticized. Harley Copp, a former Ford executive and engineer, was critical of the Pinto from the start. He left the company and voiced his criticism, which was taken up by Ralph Nader and others.

Of course, the Ford engineers were not instructed to make any unsafe car, nor did Ford management set out to do so. That the Pinto was arguably below the state of the art may have been a result of the accelerated production schedule. That the defect was not corrected after the initial production year was the result of a business decision.

Was anyone at Ford at fault? Did anyone at Ford have an obligation to make known to the public the facts that Ford knew but did not make public? If so, who? Why?