Corporate Ethics Case Analysis: Ford Pinto Explosion

This report will examine the case of the suspected defects of the Ford Pinto. It will inquire as to why the car is suspected to have been built without taking the account of safety issues into consideration. It will also discuss the laws which were involved in the case-related corporate decisions.

The Ford Pinto was manufactured by Ford Motor Company in 1971. The Pinto was considered to be one of the lightest and smallest vehicles on the market that was manufactured by any American company. It was also one of the most popular vehicles available, with over three million vehicles being produced between 1971 and 1980. Part of this popularity was due to the low price set forth of about two thousand dollars. Then there were doubts that the car was dangerous that had been raised in 1977. To be more precise, it was thought that the Pinto's fuel system was excessively susceptible to damage from relatively minor collisions. From 1972 onwards, records of explosions in low-speed collisions involving Pintos struck from the rear began to appear. In many of the cases, crash reports found that patients had few, if any, serious injuries as a result of the collisions, but had been burned to death when the vehicles erupted for flames. Some were stuck inside the cars due to the crumbling of the body and busting of the doors. After many accidents and injuries were reported, the National Highway Traffic Safety Administration actually demanded a recall of the Pinto. Ford Motor Company faced a variety of very expensive litigations as well.

Records revealed that, in December 1970, Ford Motor had performed first rear-end crash testing on the Pinto, months after it was already in manufacturing. Initially, there were 11 carefully orchestrated collisions, and gas tanks ruptured in all but three of them, and almost always burst into flames. The vehicles had prototype safety features which engineers had built while working alongside suppliers in the three tests which did not result in fires. The most successful was the use of a rubber bladder and liner developed by the Goodyear Tire and Rubber Company. No fuel was leaked, despite rupturing the tank's lining, and no fire resulted. It was calculated that the unit cost of the bladders would have been $5.08 per vehicle. The second approach which was used, was an extra steel plate that was attached to the rear end of the car behind the bumper, isolating the tank during impact from direct contact. It warded off the 30-mph impact successfully, helping to keep the tank stable.

There was no study of the company's costs at the time, but analysts thought this component could have cost up to $11 per car to build. Engineers found that two factors had caused the bulk of the ruptures. The first factor is the filler neck-breaking off and allowing fuel to spill out, where it may be exposed to a source of ignition. The second factor is that the tank is penetrated by contact with the differential mounting bolts and proper shock absorbers. This is where a third promising repair was invented. A rather simple plastic insulator mounted on the differential which would prevent the bolts from ever coming into contact with the fuel tank. Each element would have cost less than $1. During the civil trials, several company memos that were presented as evidence showed that these solutions had been discussed, with the result that shutting down production and reengineering would be too expensive. Memos found and published by author and researcher Mark Dowie in the tabloid-style magazine Mother Jones were the most damaging evidence against Ford Motor Company and extensive cost analysis of corporate liability in case of having to compensate victims of the crashes.

So, what exactly happened when Ford Motor Company chose not to boost the Pinto's safety standards? It is estimated that there were about five hundred people that had been killed from the collisions with the Ford Pinto between 1971 and 1978. Some of the engineers from Ford Motor Company actually testified stating that about ninety five percent of the deaths that were involved with the Pinto would have been avoided if the fuel tank had been shifted to a different position on the vehicle, like they had previously done with other models. The 30 miles per hour impact requirement was finally adopted in 1976, which forced Ford Motor Company to put out a recall for all the Pintos that were manufactured and sold between the years of 1971 and 1976. Ford Motor Company also faced about 50 lawsuits related to the Pinto during that same rough time span. Nearly one hundred forty million dollars in damages were paid to these lawsuits by Ford Motor Company.

The ethical dilemma that was presented in the case was that Ford Motor Company was selling vehicles that were deemed unsafe to the public and would rather pay off the deaths of the victims rather than paying to recall the vehicles. An additional general legal topic that was discussed in this case is a cause of action leading to personal injury. Another topic, dangerous or defective product resulting in injury was also discussed.

The behavior presented by Ford Motor Company shows that the philosophy of Milton Friedman was indeed upheld in this case. The philosophy that Milton Friedman has set forth is that the only moral obligation that a large company executive has to abide by is to increase profits for the shareholders of the company. This type of behavior that was displayed by Ford Motor Company was considered to be acceptable morally since they were under the impression that the best interests for the company’s economics were in play.

In the present day, Milton Friedman’s views are now widely rejected in the market community. It seems clear that in trying to increase stock value, a corporation can be guilty of moral misconduct. 'Indeed, since few companies ever do anything that is not in their best economic interests, Friedman’s view has the absurd result that few if any companies every do anything morally wrong.' 

It may be believed that an alternative ethical framework such as hedonistic utilitarianism would produce the same results. 'Ford could have reasoned — and probably did reason — that human lives have a certain dollar value, and they made calculations that maximized happiness (or pleasure) for everyone, where the value of a human life is monetized.' 

In conclusion, Ford Motor Company should have taken the lives of American consumers more considerately. Yes, the company did have an interesting idea to save money by paying the legal fees rather than the recalls, but it was not an ethical decision in regard to the reputation of the company and to the customers. During the testing phase, the fuel tanks should have been relocated to ensure impacts at more than 30-mph would not result in leakage of the fuel and evidentially the deaths that would follow.