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FORD PINTO CASE
Name ____________________________
“
GRADE” FORD’S MANAGEMENT
(e.g., 0 - 100%) IN TERMS OF THEIR:
“OVERALL PERFORMANCE” _____
“CSR” PERFORMANCE _____
EXPLAIN
:
_____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
WHAT WERE
KEY MACROENVIRONMENTAL FACTORS
AT THE TIME OF THE CASE?
ECONOMIC
_______________________________
_____________________________
_______________________________
_____________________________
SOCIAL
_______________________________
_____________________________
_______________________________
_____________________________
TECHNICAL
_______________________________
_____________________________
_______________________________
_____________________________
POLITICAL/
_______________________________
_____________________________
LEGAL
_______________________________
_____________________________
HOW DID/MIGHT THESE FACTORS HAVE
INFLUENCED FORD’S DECISION
?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
DESCRIBE THE NATURE OF THE
COMPETITIVE MARKET
AS BEST YOU CAN:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
IN YOUR OPINION, WHAT
PRIMARY FACTORS INFLUENCED FORD’S DECISIONS AND
BEHAVIOR
?
1. __________________________________________________________________
2. __________________________________________________________________
3. __________________________________________________________________
4. __________________________________________________________________
5. __________________________________________________________________
6. __________________________________________________________________
HOW
IMPORTANT
WAS
THE
PINTO
TO FORD? WHY?
_______________________________
______________________________________________________________________________
EVALUATE
THE ACTIONS OF THE MANAGEMENT
PRIOR
TO THE "CRISIS
.”
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
EVALUATE
THE ACTIONS OF THE MANAGEMENT
AFTER
THE "CRISIS
.”
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
THINK ABOUT THE
DECISION MAKING OF THE RECALL
COORDINATOR
.
IT’S 1973
AND FIELD REPORTS HAVE BEEN COMING IN
ABOUT REAR-END COLLISIONS, FIRES, AND FATALITIES.
YOU ARE THE
RECALL COORDINATOR AND YOU MUST DECIDE WHETHER TO
RECALL!!!
WHAT WOULD YOU DO, AND WHY?
RECALL?
___ YES
___NO
WHY
/
WHY
NOT
? _______________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
CASE
Pinto Fires
by Dennis A. Gioia
On August 10, 1978, three teenage girls died horribly in an automobile accident.
Driving a 1973 Ford Pinto to their church volleyball practice in Goshen, Indiana, they were
struck from behind by a Chevrolet van. The Pinto’s fuel tank ruptured and the car exploded
in flames. Two passengers, Lynn Marie Ulrich, 16, and her cousin, Donna Ulrich, 18, were
trapped inside the inferno and burned to death. After three attempts, Lynn Marie’s sister,
18-year-old Judy Ann, was dragged out alive from the driver’s seat, but died in agony hours
later in the hospital.
They were merely the latest in a long list of people to burn to death in accidents
involving the Pinto, which Ford had begun selling in 1970. By the time of the accident, the
car had been the subject of a great deal of public outcry and debate about its safety,
especially its susceptibility to fire in low-speed rear-end collisions. This particular accident,
however, resulted in more media attention than any other auto accident in U.S. history.
Why? Because it led to an unprecedented court case in which the prosecution brought
charges of reckless homicide against the Ford Motor Co.—the first time that a corporation
had been charged with criminal conduct, and the charge was not negligence but murder. At
stake was much more than the maximum penalty of $30,000 in fines. Of immediate
concern, a guilty verdict could have affected 40 pending civil cases nationwide and resulted
in hundreds of millions of dollars in punitive damage awards. Of perhaps greater concern,
however, were larger issues involving corporate social responsibility, ethical decision
making by individuals within corporations, and ultimately, the proper conduct of business
in the modern era.
How did Ford get into this situation? The chronology begins in early 1968 when the
decision was made to battle the foreign competition in the small car market, specifically the
Germans, but also the growing threat from the Japanese. This decision came after a hard-
fought, two-year internal struggle between then-president Semon “Bunky” Knudsen and
Lee Iacocca, who had risen quickly within the company because of his success with the
Mustang. Iacocca strongly supported fighting the competition at their own game, while
Knudsen argued instead for letting them have the small car market so Ford could
concentrate on the more profitable medium and large models. The final decision ultimately
was in the hands of then-CEO Henry Ford II, who not only agreed with Iacocca but also
promoted him to president after Knudsen’s subsequent forced resignation.
Iacocca wanted the Pinto in the showrooms by the 1971 model introductions, which
would require the shortest production planning period in automotive history to that time.
The typical time span from conception to production of a new car was more than three and
a half years; Iacocca, however, wanted to launch the Pinto in just over 2 years. Under
normal conditions, chassis design, styling, product planning, advance engineering,
component testing, and so on were all either completed or nearly completed prior to tooling
of the production factories. Yet, because tooling had a fixed time frame of about 18 months,
some of these other processes were done more or less concurrently. As a consequence,
when it was discovered through crash testing that the Pinto’s fuel tank often ruptured
during rear-end impact, it was too late (in other words, too costly) to do much about it in
terms of redesign.
A closer look at the crash-test reports reveals that Ford was aware of faulty fuel tank
design. Eleven Pintos were subjected to rear-end collisions with a barrier at average speeds
of 31 miles per hour to determine if any fuel would be lost after impact. All eight of the
Pintos equipped with the standard fuel tank failed. The three remaining cars, however,
survived the test because special measures had been taken to prevent tank rupture or fuel
leakage. These measures included a plastic baffle placed between the axle housing and the
gas tank, a steel plate between the tank and the rear bumper, and a rubber lining in the gas
tank.
It should be noted that these tests were done under guidelines established by Federal
Motor Vehicle Safety Standard 301, which was proposed in 1968 by the National Highway
Traffic Safety Administration (NHTSA), but not officially adopted until the 1977 model
year. Therefore, at the time of the tests, the Pinto met the required standards. Standard 301
had been strenuously opposed by the auto industry, and specifically Ford Motor Co. In fact,
the lobbying efforts were so strong that negotiations continued until 1976, despite studies
showing that hundreds of thousands of cars burned every year, taking 3,000 lives annually;
the adoption of the standard was projected to reduce the death rate by 40 percent. Upon
approval of Standard 301 in 1977, all Pintos were provided with a rupture-proof fuel tank
design.
But for the Pinto’s 1971 debut, Ford decided to go with its original gas tank design
despite the crash-test results. Because the typical Pinto buyer was assumed to be extremely
price conscious, Iacocca set an important goal known as “the limits of 2,000”: the Pinto
could not cost more than $2,000 and could not weigh more than 2,000 pounds. Thus, to be
competitive with foreign manufacturers, Ford felt it could not spend any money on
improving the gas tank. Besides, during the late 1960s and early 1970s, American
consumers demonstrated little concern for safety, so it was not considered good business
sense to promote it. Iacocca echoed these sentiments when he said time and time again
“Safety doesn’t sell,” a lesson he had learned after a failed attempt to add costly safety
features to 1950s Fords.
Ford had experimented with placing the gas tank in different locations, but all
alternatives reduced usable trunk space. A design similar to that of the Ford Capri was
successful in many crash tests at speeds over 50 miles per hour, but Ford felt that lost trunk
space would hurt sales too much. One Ford engineer, when asked about the dangerous gas
