PRESENTED BY:

INTRODUCTON
The Ford Pinto a small car to compete with
foreign(Japanese) car company competitors.
The pinto would weight weigh less than 2000
pounds, cost less than $2000.
A rush project lead by Lee Laccoca, president of ford
at that time.
Pinto was rush project because it brought to the
market in 2 years instead of normal 4 years.

[Source: business ethics book by Manuel Velasquez]

Cont
Pinto project was the shortest production
planning schedule in automotive history up to
that time.
It was launched in 1971.
Design problems
Testing found several safety defects
@ 25mph+ the gas tank would rupture in an
accident
It was observed that collision from back @30mph+
rear endings would cause the gas tank to leak and
the rear of the car to be folded up into the back seats
@ 40mph+ the car doors would jam
 The controversy surrounding the Ford Pinto concerned the
placement of the automobiles fuel tank. It was located behind
the rear axle, instead of above it.
The problem with this design was that it made Pinto more
vulnerable to rear-end collisions.
The gas tank and the rear axle were separated by only nine
inches.
There were bolts that were positioned in a manner that
threatened the gas tank.
Finally, the fuel filler pipe design would disconnect from the
tank in the event of an accident, causing gas spillage that could
lead to dangerous fires.

[Source: https://philosophia.uncg.edu/phi361-matteson/module-
1-why-does-business-need-ethics/case-the-ford-pinto/]
 Ford was fully aware of the faulty fuel tank that
often ruptured during rear-end impact.
But, Laccoca decided to go with same design.
THE ACCIDENTS

In May 1972, Lily Gray was traveling with thirteen year old Richard
Grimshaw in a 1972 Pinto car.
Their car was struck by another car traveling approximately thirty
miles per hour.
The impact ignited a fire in the Pinto
Killed Lily Gray and left Richard Grimshaw with devastating
injuries.
Jury awarded $56Q,000 to the Gray family and $2.5 million to
Grimshaw in compensatory damages.

Source: https://philosophia.uncg.edu/phi361-matteson/module-1-
why-does-business-need-ethics/returning-to-the-pinto-case/
Cont
Ford was involved in yet another controversial case
involving the Pinto.
The automobile's fuel system design contributed to the
death of three women on August 10, 1918
Their car was hit by another vehicle traveling at a
relatively low speed by a car driven by a drunk man.
The fact that Ford had chosen earlier not to upgrade the
fuel system design became an issue of public debate.
Cont
On August 10, 1978, on U.S Highway 33, a van
weighing over 400 pounds traveling at fifty five
miles an hour stuck the stopped Pinto, resulting
in the death of two teenage girls, one severely
injured, when the car burst into flames.
 This measure was taken by the management for
2 reasons:
Cost conscious buyers
Cost on safety reflects the buying behavior.
Colleagues and other ford engineers agreed
with Laccoca about the faulty gas tank and
launched PINTO into the market.
HOW FORD DEFENDED ITSELF?
After these accidents, the Ford motor company decided
to do a cost/benefit analysis based on the improvement
of the fuel tank.
Ford stated that its reason for doing a risk/benefit
analysis was the the National Highway Traffic Safety
Administration (NATSA) required them to do so..
The cost/benefit approach excuses a defendant if the
monetary costs of making a production change are
greater then the societal benefit of that change.
Cost/benefit analysis
The main controversy surrounding the Ford Pinto case was
The Ford Motor Company's choices made during development
to compromise safety for efficiency and profit maximization.
Ford engineers estimated the cost of technical improvements
that would prevent gas tanks from leaking in rollover
accidents to be $11 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 relatively 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 assigned 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, todays figure would, of
course, be considerably higher). It broke down
the costs as follows:
Source:
https://philosophia.unc
g.edu/phi361-
matteson/module-1-
why-does-business-
need-ethics/case-the-
ford-pinto/
Putting the NHTSA figures together with other statistical studies, the Ford report
arrives at the following overall assessment of costs and benefits:
The Negligence-Efficiency
Ford Motor case has spurned the arguments for and against the use of
risk/benefit analysis because of its foundation of economic efficiency.
The Ford Motor Company case has spurred this argument.
Judge Learned Hand's famous formulation of the negligence
standard.... In a negligence case, Hand said, the judge (or jury) should
attempt to measure three things: the magnitude of the loss if an
accident occurs; the probability of the accident's occurring; and the
burden of taking precautions that would avert it. If the product of the
first two terms exceeds the burden of precautions, the failure to take
those precautions is negligence.

[Source:
https://users.wfu.edu/palmitar/Law&Valuation/Papers/1999/Leggett-
pinto.html]
Arguments Against Negligence-Efficiency
1.Ethics
Taking an ethical approach to the Ford Pinto case
makes accepting the risk/benefit analysis
performed by the Ford Motor Company difficult.
In making what seems to be the correct decision
based on numbers, Ford is essence adopted a
policy of allowing a certain number of people to
die or be injured even though they could have
prevented it.
2. Act Utilitarianism
A second problem with strictly applying the
risk/benefit framework is that it does not seem to take
into account all of the consequences of Ford's decision.
This position is considered the "act utilitarian' point of
view. The act utilitarian approach evaluates each action
separately and the consequences that arise from it.
This analysis would include any "harms" or "benefits"
incurred by any people involved in the case. In utilizing
this approach, it seems there are many factors that the
Ford Motor Company did not account for in its
risk/benefit analysis.
 3. Health and Safety Regulation
Exception
should be condemned for relying on a
risk/benefit analysis to make decisions based on
consumer safety. In the areas of safety and health
regulation, there are instances where it may not
be wise to undertake a certain decision even
though the benefits do not outweigh the costs.
That is, the issue of whether the benefits outweigh
the costs should not govern our moral judgment.
There are some cases where a company must "do
the right thing."
 4. No Wealth Maximization
The foundation of the risk/benefit analysis is the theory
of economic efficiency and an underlying principle for
efficiency is wealth maximization. If legal decisions are
based on efficiency, then nothing will be wasted and the
wealth of the country will be at its maximum.

5. Externalities
Another potential problem with the risk,/benefit approach
is the fact that it does not take externalities into effect.
This is a topic with which the law of torts often has
trouble. However, it cannot be ignored just because it is
hard to compute. Victims are permitted to recover for
pain and suffering and the cost/benefit analysis seems to
ignore this point.
6. Activity Frequency
If a company or a court were to accurately analyze the costs
and benefits of an activity, it must calculate the number of
times the potential victim engages in the activity.
This calculation is often unobtainable, especially in Ford's
case in terms of automobile use. Professor Polinsky, in his
book, An Introduction to Law and Economics explains, "In
practice it is usually not feasible to include the level of
participation in the activity has an aspect of the standard of
care.
For example, it would be virtually impossible for a court to
determine how many miles a particular person drives each.
 7. Negligence is Predictable: Victims
Often Lose
Finally, the cost/benefit analysis and economic efficiency
reasoning is argued to be a skewed framework because it
does not take into account the fact that injured parties are at
a disadvantage. While the law attempts to place the plaintiff
and defendant on equal ground, it is impossible to
accomplish. The plaintiff must prove the negligence, a
difficult task. The negligence-efficiency theory does not
account for plaintiffs who cannot afford to bring a lawsuit to
trial or those who cannot establish negligence although it
exists. With the adoption of the negligence-efficiency theory,
it is predictable that victims are going to lose more than.
They are going to win.
8. Conclusion
Obviously there are a number of arguments against the
use of cost/benefit analysis and the negligence-
efficiency theory. Most of these arguments are separate
but related and revolve around the fact that there are
no markets or prices for human life. It will be forever
debated whether it is possible to set a price or value on
a life to use in these calculations and whether this
leads to an economically efficient outcome In the case
of Grimshaw, the jury was obviously appalled with
Ford's attempt to apply the NHTSA's calculation to
risk/benefit standard. Was this a sign of this standard's
inefficiency or was it just a sign of an ineffective jury?
Ethical Issues
Ford employees

Lee Iacocca

Henry Ford II
Ford Employees
Were they morally responsible to refuse to
produce a car they knew would hurt the customer?

Should they have put more effort into convincing

Iacocca that this car was unsafe?

Should they follow Iacoccas commands regardless

of their opinions since he is their superior in the
company
Lee Iacocca
Is Iacocca responsible for the safety of his customers?

Should he maximize profits for the company at any

costs?

If safety defects are found after production, does he

have a moral obligation to inform all his customers

Should Iacocca have established a working

environment where his employees did not feel that
they would lose their jobs for disagreeing with him?
Henry Ford II
Should Ford have trained his managers and presidents in
safety?

Does Ford have a responsibility to design a culture that

encourages employees to bring up safety defects?

Does Ford need to have a new policy that puts the has safety
of their products more important than maximizing profits?

Does Ford have a moral responsibility to do what is best for

his shareholders
Add $11 Safety Addition
pros cons
Repairs the safety defect

Saves Ford from potential

lawsuits

Protects Fords reputation

High cost

Slight delay before launch

Explore Other Safety Measures
pros cons
A cheaper alternative could be
found

Profit margin could be higher

than first alternative
Pinto release would be delayed
Repairs the safety defect
indefinitely
before launch
Still decreases total profit
Return to the Planning Stage
pros cons
Design can be more focused on
safety

Improve Fords reputation

Significant delay of launch

Most costly alternative

Continue with Production
pros cons
Releases the Pinto to the
customers immediately
Selling unsafe products to
The largest profit margin is customers could lead to
serious injuries and deaths
obtained from each Pinto sale

High chance of lawsuits

against the company

If/When injuries occur, loss of

reputation
What Happened
Ford workers were afraid to talk to Iacocca about the safety defects

In Feb. 1978, Ford was sued for $128 million more then 3 times
the amount they had predicted

May 1978 Department of Transportation announces defects with

the Ford Pinto Ford recalls 1.5 million Pintos

Mar. 1980 Ford was charged with reckless homicide acquitted

of charges, however they stopped all Pinto production

In 2008, Time magazine included the Pinto in The Fifty Worst

Cars of All Time,