Formal Letter

Topics: Ford Motor Company, Ford Pinto, Ford Mustang Pages: 2 (380 words) Published: March 18, 2005
Mr.
WMW Engineering Consultants
54 Park Avenue South
New York, NY 10004

14 February 2005

Mr. Lee Iacocca
CEO
The Ford Motor Company
555 Dearborn Avenue
Detroit, MI 54423

Dear Mr. Iacocca,

As a consultant engineer with WMW, the company you engaged to evaluate the Ford Pinto gas tank placement problem, I hereby submit my results.

Your engineers have come up with four solutions to the problem: to relocate the gas tank from its present position between the differential and the rear bumper, to above the differential; to install a part that will prevent the gas tank being ruptured by the exposed bolts of the differential in the event of a rear-end crash; to insert a rubber bladder into the gas tank to prevent fuel spillage; or to stay with the original design and absorb the legal costs.

The first two solutions do not look practicable since the first one reduces the trunk space and the cost of the second one is much higher than your estimation of the cost of lawsuits, compensation and repairs.

Then, a comparison must be made between the remaining two solutions. The total cost of the third solution is $63,3 million and your estimation for the cost of the other one is $49,5 million. The third solution is much safer than the other as your catastrophe assumptions for the calculation of the estimation show; which are 2100 burned vehicles, 180 serious burn injuries, and 180 burn deaths.

But the consistency of your estimation must be well thought-out since the injuries and deaths might be much more, or the legal costs might be increased and therefore the estimated cost might be much more than $49,5 million. So, in such a situation the $63,3 million case might be more profitable. Even if it is not more profitable, since the third case does not lead that much deaths, it is better for your long-term reliability which is the most important quality for a company.

So, I strongly recommend inserting the rubber bladder into...
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