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Pinto%20case%20copy - The Ford Pinto There was a time when...

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Unformatted text preview: The Ford Pinto There was a time when the “made in Japan” label brought a predictable smirk of superiority to the face of most Americans. The quality of most Japa- nese products usually was as low as their price. In fact, few imports could match their domestic coun- terparts, the proud products of Yankee know-how. But by the late 19605, an invasion of foreign-made goods chiseled _a few worry lines into the counte- nance of U.S. industry. In Detroit, worrywas fast fading to panic as the Japanese, not to mention the Germans, began to gobble up more and more of the subcompact auto market. Never one to take a back Seat to the competi- tion, Ford Motor Company decided to meet the threat from abroad head-on. In 1968, Ford execu- tives decided to produce the Pinto. Known inside the company as “Lee's car,” after Ford president Lee Iacooca, the Pinto was to weigh no more than 2,000 pounds and cost no more than $2,000.21 Eager to have its subccmpact ready for the 1971 model year, Ford decided to compress the normal dmfiing-board—to—showroom time of about three-and—a-half years into two. The compressed schedule meant that any design changes typically made beforeproduction-line tooling would have to be made during it. _ Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met ' a safety standard proposed by the National Highway Traffic Safety Adminish'aticn (NHTSA) to reduce fires from trafi'ic collisions. This standard would have required that by 1972 all new autos be able to with— stand a rear+end impact of 20 mph without filel loss, and that by 1973 they be able to withstand an im- pact of30 mph. The prototypes all failed the 20-mph test. In 1970 Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dan- gerous leaks. The only Pintos to pass the test had been modified in some way—for example, with a rubber bladder in the gas tank or a piece of steel be- tween the tank and the rear bumper. Thus, Ford knew that the Pinto represented a se- rious fire hazard when struck from the rear, even in low-speed collisions. Ford officials faced a decision. Should they go ahead with the existing design, thereby meeting the production timetable but pos- sibly jeopardizing consumer safety? Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? Ford not only pushed ahead with the original de- sign but also stuck to it for the next six years. What explains Ford's decision? The evidence sug- gests that Ford relied, at least in part, on cost-bene- fit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing some- thing. There were various ways of making the Pinto’s gas tank safer. Although the estimated price of these safety improvements ranged from only $5 to $8 per vehicle, Ford evidently reasoned that the increased cost outweighed the benefits of a new tank design. How exactly did Ford reach that conclusion? We don’t know for sure, but an internal report, “Fatali- ties Associated with Crash-Induced Fuel Leakage and Fires,” reveals the cost-benefit reasoning that the companyusedincaseslilsethis.Thisreportwas not written with the Pinto in mind; rather, it con- cerns fuel leakage in rollover accidents (not rear- end collisions), and its computations applied to all Ford vehicles, not just the Pinto. Nevertheless, it illustrates the type of reasoning that was probably used in the Pinto case. In the “Fatalities” report, Ford engineers esti- mated the ccst of technical improvements that WOuId prevent gas tanks from leaking in rollover accidents to be $1}. per vehicle. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the rela- tively low figure of 180 deaths per year. But given that number, how can the value of those individuals‘ lives be gauged? Can a dollars-and-cents figure be as- signed to a human being? NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, today’s figure would, of course, be con- siderably higher). It broke down the costs as follows: . Future productivity losses _ Direct $132,000 Indirect 41,300 Medical costs Hospital 700 Other 425 Pmperty damge 1500 Insurance administration 4,700 Legaland court expenses 3,000 Employer losses _ 1,000 Victim’s pain and suffering 10,000 Funeral 900 Assets (lost consumption) 5,000 Miscellaneous accident costs 200 Total per fatality $200,725 Putting the NH'I’SA figures together with other statistical studies, the Ford report arrives at the fol- lowing overall assessment of costs and benefits: 3MB Savings: 180 hum deaths, 180 serious burn injuries, 2,100 burned vehicles Unit cost: $200,000 per death, $67,000 per injury, $700 per vehicle Total benefit: (180 x $200,000) + (130 x $67,000) + (2,100 X $700) z $49.5 million Costs . Sales: 11- million cars, 1.5million light I trucks _ Unit cost: $11 per car, $11 per truck Total cost: 12.5 million x $11 = $137 .5 _ million : Thus, the costs of the suggested safety improve- ments outweigh their benefits, and the “Fatali- ties” report accordingly recommends against any improvements—a recommendation that Ford followed. likewise in the Pinto case, F ord’s management, whatever its exact reasoning, decided to stick with the original design and not upgrade the Pinto’s fuel tank, despite the test results reported by its engi- neers. Here is the aftermath of Ford’s decision: - ' Between 1971 and 1978,- the Pinto was respon- sible for a number of fire-related deaths. Ferd puts the figure at 23; its critics say the figure is closer to 500. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles). 0 NHTSA finally adopted a 30-mph collision stan- dard in 1976. The Pinto then acquired a rupture proof fuel tank. In 1978 Ford was obliged to recall all 1971—1976 Pintos for fuel-tank modifications. ' Between 1971 and 1978, approximately fifty lawsuits were brought against Ford in connec- tion with rear-end accidents in the Pinto. In the Richard Crimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. The judge reduced punitive dam~ ages to $3.5 million. ' On August 10, 1978, eighteen-yeanold Indy Ulrich, her sixteen-yearnldsister Lynn, and their eighteen-year—old cousin Donna, in their 1973 Ford Pinto, were struck from the rear by a van near Elkhart, Indiana. The gas tank of the Pinto exploded on impact In the fire that re- sulted, the threeteenagers were burned to death. Ford was charged with criminal homi- cide. The judge in the case advised jurors that Ford should be cOnvicted if it had clearly dis- regarded the harm that might result from its actions, and that disregard represented a sub- stantial deviation from acceptable standards of conduct. On March 13, 1980, the jury found Ford not guilty of criminal homicide. For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. The company also points out that in every model year the Pinto met or surpassed the govern- ment’s own standards. But what the company doesn’t say is that successful lobbying by it and its industry associates was responsible for delaying for seven years the adoption of any N HTSA crash standard. Furthermore, Ford’s critics claim that there were more than forty European and japanese models in the Pinto price and Weight range with safer gas~tank position. “Ford made an extremely irresponsible de- cision,” concludes auto safety expert Byron Bloch, “when they placed such a weak tank in such a ridicu- lous location in such a soft rear end.” Has the automobile industry learned a lesson from Ford’s experience with the Pinto? Some ob- servers thought not when twenty years later an Atlanta jury held the General Motors Corporation responsible for the death of a Georgia teenager in the fiery crash of one of its pickup trucks. Finding that the company had known that its "sidesaddle" gas tanks, which are mounted outside the rails of the trucks frame, are dangerously prone to rupture, the jury awarded $4.2 million in actual damages and $101 million in punitive damages to the parents of the seventeen-year-old victim, Shannon Moseley. After the verdict, General Motors said that it still stood behind the safety of its trucks and con- tended “that a full examination by the National _ Highway Traffic Safety Administration of the tech- nical issues in this matter will bear out our con- tention that the . . . pickup trucks do not have a safety related defect.“ Subsequently, however, the Department of Transportation determined that GM pickups of the style Shannon Moseley drove do pose a fire hazard and that they are more prone than competitors’ pickups to catch fire when struck from the side. Still, GM rejected requests to recall the pickups and repair them, and later the Georgia Court of Appeals threw out the jury’s verdict on a legal technicaliHspite ruling that the evidence submitted in the case showed that GM was aware that the gas tanks were hazardous but, to save the expense involved, did not try to make them safer. Expense seems to be the issue, too, when it comes to SUV mllovers. After nearly three hundred rollover deaths in Ford Explorers equipped with Firestone tires in the late 1990s, Congress mandated NHTSA to conduct rollcver road tests on all SUVs. (Previ- ously, the agency had relied on mathematical formu- las based on accident statistics to evaluate rollover resistance, rather than doing real-world tests.) In Au- gust 2004 NHTSA released its results, and they weren't pretty—at least not for several of Detroit’s most popular models. The Chevrolet Tahoe and the Ford Explorer, in particular, have between a 26 and a 29 percent chance of rolling over in a single-vehicle crash, almost twice that of models from Honda, Nissan, and Chrysler. The Saturn Vue couldn’t even finish the test because its left-rear suspension broke, leading General Motors to recall all 250,000 Vues. Ford and General Motors have the anti-rollover technology necessary to make their SUVs safer. The problem is that rollover sensors and electronic stabil- ity systems add about $800 to the price of a vehicle, so the companies have offered them only as options. The same is true of side-curtain airbags to protect oc- cupants when a vehicle rolls over. They cost about $500. Improved design—wider wheel tracks, lower center of gravity, and reinforced roofs to protect pas- sengers in a rollover—would also help. Embarrassed by the test results, the companies promised to make more safety features standard equipment on new SUVs. Lawsuits by rollover victims are also prodding the companies to enhance their commitment to safety. We months before NHTSA released its re- sults, Ford had to pay $369 million in damages—one of the largest personal-injury awards ever against an automaker—to a San Diego couple whose Ex- plorer flipped over four-and—a—half times when they swerved to avoid a metal object on the highway ...
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