Instructions:
Ford Motor Company – Pinto car defect
The total cost to install and fix the issue with the Pinto would ultimately cost Ford more than the cost of any potential lives lost due to the product flaw (estimated 200).
Consequentialism is the theory that asks if the ends justify the means. It determines what is right by weighing the potential outcomes of the decision and picking the one that makes the most sense; which may not be the most ethical option. (Consequentialism, 2018)
Starting on the next page under the heading, References, list in an APA7 formatted citations list, at least seven (7) credible sources you will use in support of your Week 7 Research Paper. Use APA7th ed. Guidelines. This is the same as the Reference list at the end of an APA paper.
Your References must include the following. (These can overlap. For example, a Required Reading source might also be your ethical theory source; a Library source might cover a legal topic. And so forth.)
Ford Pinto Car Defect Case Study
Introduction
Ford Motor Company has a rich history of being among the largest automobile firms worldwide based on units sold. The company is known for manufacturing a wide range of automobiles such as trucks, sport utility vehicles (SUV). Despite its formidable portfolio and success that the company has attained, it has experienced its share of legal and ethical issues in the past. Ford has had problems attributed to low safety ratings of some of its models leading to significant damages to its brand reputation. An example of such an issue is the greatly criticized manufacture of the Ford Pinto model. The car had been built for its budget-friendly price and subcompact size to gain a sizeable market share of the increased demand for passenger cars. However, the model was defective, leading to the model being described as the most dangerous car ever built.
Pinto Car Defect Case Study
During the 1960s, Toyota and Volkswagen had made a fortune vending their subcompact cars in Europe and the Japanese auto market. The growing demand for small cars increased in the U.S., prodding local automobile producers to respond to market demand. Ford Motor Company (Ford) was under pressure to release a similar subcompact car to compete with foreign products saturating the U.S. market. Ford’s vice president, Lee Iacocca, was eager to introduce a car with similar dimensions as Japanese automakers. In May of 1968, the company decided to introduce a subcompact car assembled domestically.
The leadership aimed at manufacturing a vehicle that would be compact, cheap, and within the shortest time possible, ignoring significant safety issues in the process. The product development team was required to accelerate the design to the production time frame, affecting the tooling process, design, styling, product development, and testing. The standard design development cycle was 42 months; however, Ford Pinto took 25 months, a significant drop in the time limit; thus, the car model was not effectively tested limited by the set deadline.
The crash tests revealed issues with the model’s fuel tank placement, which upon impact from the rear even in low-speed collisions, caused a severe fire hazard (Lee, 1998). The gas tank was positioned in the back to afford ample area in the tank. Ford conducted 11 tests at average speeds of 31 miles per hour to determine whether the fuel tank would remain intact after impact. Eight tests failed, while specific modifications were made to prevent the rupture of the fuel tank. The company was aware of the fatal flaw with the design but ignored the defects to prevent the market delay. The management decided not to alter the original design based on the time frame designated for the model to compete with the Japanese automaker’s models effectively.
Statement of Ethical Dilemma
The ethical dilemma was in the development and release of the Ford Pinto. Was it morally acceptable for Ford to release a car model with known potentially fatal flaws? Ford’s target to compete in the compact car field with its competitors limited the time frame required for developing a safe model of the car. According to Ford’s cost-benefit analysis, releasing Ford Pinto into the showrooms with all its flaws was practically beneficial than fixing all the defects before releasing the vehicle (The Pinto Memo, 2009). Ford had the design to reduce the susceptibility of Ford Pinto from exploding after a rear-end collision at the cost of $11 per car. The company decided to compensate all lawsuits originating from injuries and deaths due to the product flaw. The company estimated that each death would cost $200,000, major burns would cost $67,000 per person and $700 per car for repair damages. The report estimated 2,100 burned vehicles, 180 critical burn injuries, and 180 deaths figures that would save the company over $88 million from not recalling and repairing the fuel tanks.
However, before the official recall of the cars in 1978, the ultimate cost of settlements had exceeded the initial redesign expense due to the increase in the number of casualties. Though Ford’s decision was legal, the company lacked social responsibility and ethical considerations to the consumers. The primary ethical issue was that Ford Company management prioritized the firm’s economic responsibilities over ethical considerations. Though the business analysis procedure was legal, the case brought up business ethics and human rights abuse.
Ford had the responsibility of making morally sound business decisions; to manufacture a car that did not compromise consumer safety and to put consumer safety over cost, which they failed. The company had violated the consumer’s human rights by intentionally selling a vehicle with a high probability of ending their life. Ford’s brand reputation of high customer loyalty and goodwill was tarnished due to the negative publicity the lawsuits caused. The management of the Ford Company was responsible for informing the customers about the car’s shortcomings and investing in research and development to produce a risk-tolerant car.
Ethical Framework
The company employed the philosophy of economist Milton Freidman’s free-market or shareholder ethics. Ford was faced with two decisions concerning the Ford Pinto; recall the product and fix the gas tank defect or continue distribution of the faulty model, which would raise more capital; thus, the management stuck with the latter option (Matteson and Metivier, 2020). Friedman’s theory emphasizes the question of economic valuation instead of morality, as no human life was of infinite value. According to Friedman’s monetarism theory, an organization’s primary purpose is to maximize its shareholders’ profits. The company executives work only for the owners, that is, shareholders. Since the owners employ the executives, they run the company according to the owners’ desires, making substantial profits by obeying society’s basic rules.
The company also applied the utilitarian theory of consequentialism in the decision-making process. Consequentialism is the theory that implies the end justifies the means. It determines what is right by weighing the potential outcomes of the decision and picking the one that makes the most sense, which may not be the most ethical option. (Consequentialism, 2018). Consequentialist ideology advocates actions that foster happiness and increase the amount of good for many people. Since the number of those affected was minimal, society’s impact on the vast majority was negligible. The data showed that the accidents caused by other vehicles were no more than that of Ford Pinto; thus, the least harm was releasing the car into the market.
The company would have used the deontological ethical framework to distinguish right from wrong based on set rules. Immanuel Kant developed the theory in the 18th century and focused on ethical duty instead of its consequences. The theory states that regardless of the decision’s results, universal moral duties such as do not lie or do not cheat should be upheld. The approach doesn’t require a cost-benefit analysis; rather, people follow the rules. This avoids subjectivity and uncertainty in the ethical dilemma as one only follows set rules. Ford’s choice of sacrificing safety to reduce costs and time goes against Kant’s views on humanity’s treatment. If management had applied the deontological theory, the production process would have been halted, and the sold units recalled. The management would have based their decision on moral values where the car would not be produced unless the company assured its safety. The decision is ethically right though it would mean the reduction of profits but would have proven its responsibility to protect its consumers.
Non-Disclosure Agreements Versus Whistleblower Protection
Ford Motor Company employees were subject to lawsuits for violating their non-disclosure agreements (NDA). NDA is a legal contract between two parties that prohibit someone from sharing classified information. Employee NDA is a contract between employer and employee that clarifies to the staff that they may not share trade secrets without management approval. The employees had signed the NDA together with their employment contracts, thus disclosing confidential information regarding the company’s activities, such as the failure to redesign the Ford Pinto’s fuel tank location on the released models, would warrant legal action against the specific staff (Dowie, 1977). Eligible employees for protection under the Occupational Safety and Health Administration, Whistler blower’s protection program are federal employees since restrictive NDAs are prohibited in government contracts. The Whistleblower Protection Act protects federal staff and applicants who lawfully discharge information regarding; violation of the law, mismanagement and wastage of funds, abuse of authority, and public safety violations. Under the Act, employees are protected from legal retaliation by employers.
Criminal Liability
A criminal liability or tort is misconduct done by one party against another, which leads to injury. The plaintiff, that is, the injured person, may take civil action against the perpetrators or defendants. Torts are classified under three categories; intentional, negligence, and strict liability (The Ford Pinto, 2020). Intentional torts describe civil liability where the Act committed against another party intentionally causes harm or attempts to cause harm. The courts, that is, jury have the final say on whether or not the defendant’s conduct was intentional. Strict liability torts define a legal doctrine that holds manufacturers responsible for their products without the plaintiff proving fault. Negligence tort applies where one party fails to take proper care to avoid foreseeable risks. There are five elements of negligence tort. The first element is reasonable care, proving the defendant owed the plaintiff a duty of care not to cause harm. The second element is the breach of care, which deals with defendants demonstrating care in fulfilling an obligation. The third element is causation, which proves the correlation between the injury suffered and the negligent actions. The fourth element is the proximate cause, which deals with the ability to prove an injury was a direct result of the violation of standard care. The fifth element refers to the plaintiff’s harm in the form of personal injury or property damage due to the negligence in care.
In Grimshaw vs. Ford Motors Company, the company was charged with reckless homicide in the deaths of three Indiana teenagers; Judy Ann Ulrich, aged 18, her sister Lynn Marie aged 16, and their cousin Donna, 18, who were killed in 1978 when their Ford Pinto was hit from the rear side rupturing the gas tank causing an explosion. The case presented precedent for court trials of U.S. corporations on criminal charges. The prosecution argued the impact’s speed would not have been sufficient to cause an explosion if the car’s design was safe. The defendants argued the car was at a standstill; thus, the impact would have caused similar damage to any vehicle (Danley, 2005). Ford was acquitted of the criminal charges after the prosecution failed to prove criminal liability. However, the company was guilty of civil wrongdoing, negligence tort, strict liability, and intentional tort for failing to inform the public of the Ford Pinto defect, thus fined for the damages. The court awarded $ 2.5 million to the Grimshaw family and $559,680 to Gray’s family (The Ford Pinto, 2020). Initially, the court had fined Ford $125 million for exemplary damages, which was later lowered to $3.5 million after a petition.
Impact of National Highway Traffic Safety Administration Requirements
Ford violated federal law with its design of the Ford Pinto fuel tank, which increased its chances of blowing up. Ford did not comply with motor vehicle safety requirements, where a crash involving impacts of 20 mph would not lead to fuel leakage and ultimately fires. The law was enacted in 1967 when the National Highway Traffic Safety Administration (NHTSA) passed the Federal Motor Vehicle Safety Standards. The law aimed at protecting the driver and passengers after a crash, particularly fire hazards; thus, all auto manufacturers were to design car models where a speed of 20 miles per hour would hold out against a fixed barrier impact without the fuel tank leaking.
The law only covered the front-rear; thus, in 1968, NHTSA proposed stretching the law to cover the rear ends and increase the barrier speed test limit to 30mph (Ford Pinto Fuel-Fed Fires, 2009). Ford Pinto crash simulations illustrated the car complied with the law covering the front-rear; however, the car’s rear end could not withstand the impact; thus, the product development team would have to redesign the car, ultimately leading to losses. Ford Pinto was to be ready by 1971; thus, Ford lobbied against the standard protocols that would come into effect during the Ford Pinto production, leading to the delay of their implementation. In 1974, the Center for Auto Safety petitioned the NHTSA to call back the Ford Pinto’s and redesign the fuel tanks. The proposed standard measure for the rear end was adopted in 1977. In 1978, NHTSA informed Ford of the defective fuel tank, thus placing Ford Motors Company in violation of the law, thus forcing Ford Motors Company recalled 1.5 million Ford Pinto’s, the most extensive product recall in the automotive industry.
Conclusion
Ford Pinto case is used in business regarding ethics due to the controversy it caused. Ford Pinto design was faulty due to the fuel tank’s placement, which exploded after a mild collision. However, the management continued production and eventual release into the market armed with recommendations from a cost-benefit analysis. There were no ethical considerations from Ford’s management team since they were aware of the default before release. After seven years in operations, Ford Pinto was recalled having over 180 fatalities directly related to the product flaw. The Department of Transportation improved safety laws wilting to public pressure, which enhanced personnel safety during a crash.
References
Consequentialism. Ethics Unwrapped. (2018, December 12). https://ethicsunwrapped.utexas.edu/glossary/consequentialism.
Danley, J. R. (2005). Polishing up the Pinto: Legal Liability, Moral Blame, and Risk. Business Ethics Quarterly, 15(2), 205–236. https://doi.org/10.5840/beq200515211
Dowie, M. (1977, September 1). Pinto Madness. Mother Jones. https://www.motherjones.com/politics/1977/09/pinto-madness/.
Ford Pinto Fuel-Fed Fires. The Center for Auto Safety. (2009, February 11). https://www.autosafety.org/ford-pinto-fuel-fed-fires/.
Lee, M. (1998). The Ford Pinto Case and the Development of Auto Safety Regulations, 1893—1978. Business and Economic History, 27(2), 390-401. Retrieved November 7, 2020, from http://www.jstor.org/stable/23703151
Matteson, M., & Metivier, C. (2020). Case: The Ford Pinto. Business Ethics. https://philosophia.uncg.edu/phi361-matteson/module-1-why-does-business-need-ethics/case-the-ford-pinto/.
The Ford Pinto. The American Museum of Tort Law. (2020, April 24). https://www.tortmuseum.org/ford-pinto/.
The Pinto Memo: ‘It’s Cheaper to let them Burn!’. Spokesman.com. (2012, September 27). http://www.spokesman.com/blogs/autos/2008/oct/17/pinto-memo-its-cheaper-let-them burn/.
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