September 6, 2010
Current Ethical Issues in Business: The Ford Pinto Fires
In early 1968, the Ford Motor Company decided to take on the foreign car competition by introducing a compact, affordable vehicle they named the Pinto. What began as the decision to enter the race for the top small car ultimately led to an unprecedented court case wherein the Ford Motor Company found itself charged with reckless homicide and was the first corporation charged with criminal conduct. In this paper, the authors delve into the tragedy of the Ford Pinto fires and the ethical standards and boundaries of the Ford Motor Company at that time. History
For two years, then-president Semon "Bunky" Knudson and Lee Iacocca engaged in a battle of power regarding the Pinto (Gioia, n.d.). Knudson was of the opinion that Ford should stay out of the small car market and focus instead on the more profitable areas of medium and large model vehicles. Iacocca, on the other hand, held firm in his belief that Ford should try to outdo the competition and join the race in the small car arena. Ultimately, Iacocca was authorized to move forward with production of the Pinto (Gioia, n.d.).
Because Iacocca wanted the Pinto released with the 1971 vehicle models, the production planning period was dramatically reduced from three and one-half years to approximately two years. Additionally, he implemented a specific goal known as "the limits of 2,000" (Gioia, n.d.). This goal meant that the Pinto could not cost more than $2,000 and could not weigh more than 2,000 pounds. Consequently, the rush for completion led to the Pinto's inadequate gas tank design resulting in the tank exploding upon contact in rear-end collisions. Despite crash test results that made Ford fully aware of the faulty tank design, Ford opted to stick with its original gas tank design rather than spend the extra $11 per vehicle. To correct the faults in design as identified in Ford's cost benefits analysis believing that the $11 to improve the tank design was an unjustifiable expense, despite the knowledge gleaned from Ford's own crash tests indicating that deaths and burn injuries were imminent, (Schwartz, 1990).
By 1973, field reports were surfacing indicating that Pintos were susceptible to exploding and catching fire when in rear-end collisions at speeds under 25 miles per hour. Despite this fact and the increase in such reports in future years, no recall was issued until 1978 when Ford finally recalled 1.5 million Pintos built between 1970 and 1976. Unfortunately, this was too little too late as many people had already suffered horrific deaths and burn injuries, their lives forever changed as a result of Ford's unwillingness to bypass their cost benefits analysis and invest $11 per vehicle to prevent unnecessary death and injury (Schwartz, 1990). Issue
In the 1960s and 1970s, consumers were not overly concerned with vehicle safety (Gioia, n.d.). Iococca was noted for repeatedly remarking "Safety doesn't sell." This was a lesson he had learned in the 1950s after his attempt to add costly safety features to Ford vehicles failed. Ford experimented with relocating the gas tank, but eliminated those options when it became clear that the usable trunk space was affected.
Had Ford responded to the field reports in a proper, ethical manner by taking the time to recall and repair the gas tanks already on the road and those about to be released, multiple deaths, and injuries could have been avoided. Instead, Ford chose greed over safety. There were some ground rules that manifested the ethical dilemmas that the Ford Pinto was then faced with. To begin, Lee Iacocca was not concerned for safety; the main ground rule was that “the Pinto was not to weigh an ounce over 2,000 pounds and not cost a cent over $2,000” (Peabody, 2009). Certain product objectives that were then manifested in order to stay within the ground rule. The objectives were, “true subcompact...
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