Ford Pinto- Ethics Essay
Current Ethical Issues in Business: The Ford Pinto Fires In early 1968, the Ford Motor Company decided to take on the foreign car competition by introducing a compact, affordable vehicle they named the Pinto. What began as the decision to enter the race for the top small car ultimately led to an unprecedented court case wherein the Ford Motor Company found itself charged with reckless homicide and was the first corporation charged with criminal conduct. In this paper, the authors delve into the tragedy of the Ford Pinto fires and the ethical standards and boundaries of the Ford Motor Company at that time.
History For two years, then-president Semon “Bunky” Knudson and Lee Iacocca engaged in a battle of power regarding the Pinto (Gioia, n. d. ). Knudson was of the opinion that Ford should stay out of the small car market and focus instead on the more profitable areas of medium and large model vehicles. Iacocca, on the other hand, held firm in his belief that Ford should try to outdo the competition and join the race in the small car arena. Ultimately, Iacocca was authorized to move forward with production of the Pinto (Gioia, n. d. ).
Because Iacocca wanted the Pinto released with the 1971 vehicle models, the production planning period was dramatically reduced from three and one-half years to approximately two years. Additionally, he implemented a specific goal known as “the limits of 2,000” (Gioia, n. d. ). This goal meant that the Pinto could not cost more than $2,000 and could not weigh more than 2,000 pounds. Consequently, the rush for completion led to the Pinto’s inadequate gas tank design resulting in the tank exploding upon contact in rear-end collisions.
Despite crash test results that made Ford fully aware of the faulty tank design, Ford opted to stick with its original gas tank design rather than spend the extra $11 per vehicle. To correct the faults in design as identified in Ford’s cost benefits analysis believing that the $11 to improve the tank design was an unjustifiable expense, despite the knowledge gleaned from Ford’s own crash tests indicating that deaths and burn injuries were imminent, (Schwartz, 1990). By 1973, field reports were surfacing indicating that Pintos were susceptible to exploding and catching fire when in rear-end collisions at speeds under 25 miles per hour.
Despite this fact and the increase in such reports in future years, no recall was issued until 1978 when Ford finally recalled 1. 5 million Pintos built between 1970 and 1976. Unfortunately, this was too little too late as many people had already suffered horrific deaths and burn injuries, their lives forever changed as a result of Ford’s unwillingness to bypass their cost benefits analysis and invest $11 per vehicle to prevent unnecessary death and injury (Schwartz, 1990). Issue In the 1960s and 1970s, consumers were not overly concerned with vehicle safety (Gioia, n. d. ).
Iococca was noted for repeatedly remarking “Safety doesn’t sell. ” This was a lesson he had learned in the 1950s after his attempt to add costly safety features to Ford vehicles failed. Ford experimented with relocating the gas tank, but eliminated those options when it became clear that the usable trunk space was affected. Had Ford responded to the field reports in a proper, ethical manner by taking the time to recall and repair the gas tanks already on the road and those about to be released, multiple deaths, and injuries could have been avoided. Instead, Ford chose greed over safety.
There were some ground rules that manifested the ethical dilemmas that the Ford Pinto was then faced with. To begin, Lee Iacocca was not concerned for safety; the main ground rule was that “the Pinto was not to weigh an ounce over 2,000 pounds and not cost a cent over $2,000” (Peabody, 2009). Certain product objectives that were then manifested in order to stay within the ground rule. The objectives were, “true subcompact (size and weight), low cost of ownership, such as the initial cost and reliability, and clear product superiority (appearance) (Casotti, Lafler, & Lindaman, 2004, slide 9).
Engineers who worked on the Pinto would not advise Iococca on safety issues because Iococca refused to listen and directed the engineers to follow the product’s objectives. Another ground rule was the mission statement which basically served as guidelines for Ford: “We are a global, diverse family with a proud heritage, passionately committed to providing outstanding products and services that improve people’s lives” (Casotti, Lafler, & Lindaman, 2004, slide 3).
Although the mission statement indicates the improvement of people’s lives, it does not indicate the safety of the product. After the Pintos were released to the public and then involved in rear-end collisions, and some people died because of the fires, Ford then placed another ground rule, which was to analyze how much a life was worth in 1971. By placing the benefits side-by-side as to, which one is more cost effective, Ford was then able to make the determination to either spend a few extra dollars to add a plastic part or pay for the lost life.
The choice was then made and the additional part was not added because “safety doesn’t sell” (Gioia, 2010). Ethical Change and Ethical Systems The ethical deficiency was that Ford did not focus on the overall safety for the consumer because it was not in the best interest of the company to do so. The ethical conflict was between the personal versus the business ethics. The right decision for the company, in Ford’s view, was to make a product that made money. The personal was that the engineers knew the Ford Pinto was not a safe car.
No one foresaw the financial deficit that it would bring for the company in the long run or the outcome of their mistake, such as the recalls of the Pinto that were built until 1971-1976, (Hagerty Insurance asked its customers, mostly car collectors, to name the “Most questionable cars” of all time. These are the top vote-getters. , para. 3). Organizational Behavior Ford Motor Company leadership ventured into multiple high risk situations during the Pinto design phase. The first was the power struggle between Knudson and Iacocca regarding the decision to enter the market.
When Iacocca was named President of Ford after Knudson resigned, the project was on a course that employees knew could not be stopped. From the unprecedented project schedule to the limits of 2000, these edicts created serious business risks that could not be overcome. While Iacocca was leading the project to completion, engineers were aware of the gas tank issue. The conflict between management and employees is common when leadership goes through turmoil as Ford did. An engineer who worked on the Pinto design (as cited in Craig, 2001, para. ) was asked why no one discussed the gas tank issue with Iacocca commented that the person who engaged in this dialogue would have been terminated. The conflict in ethical behavior between Ford management and employees was derived from a top down management style used to meet the aggressive project targets. 12 Manage (2010) defines top down management as “[a]n autocratic and hierarchical method of decision making…in which strategies or plans are first conceived by one or few senior managers and disseminated further down the organizational chart of the firm.
The lower levels of hierarchy are…bound by the decisions of the top management” (para. 1). Iacocca was obsessed with producing Pintos having requirements that were difficult to achieve. The employees were not going to risk admonishment or termination because of personal ethics. Conclusion A failure to use ethical behavior and decision making during the Ford Pinto design created a disastrous result for Ford Motor Company and its leaders. When faced with competition in an unstable, changing market, the company leaders chose profits over safety.
Leaders used top down management which intimidated employees and stopped those with personal ethical issues from bringing attention to this behavior. These circumstances cost human lives and severely damaged the company’s reputation as a leader in the automotive industry. The lesson that stringent ethical business practices is clear but continues to be a significant challenge for business leaders today.
References Casotti, L. , Lafler, N. & Lindaman, J. (2004, October). Ford Pinto Case [PowerPoint slides]. Retrieved from http://mecholsky. mse. ufl. edu. Gioia, D. A. (n. d. ). Pinto Fires Case Study. Retrieved from Gioia, D. A. PHL323 website Nelson, K. & Trevino, L. (2007). Managing Business Ethics: Straight Talk About How to do it Right (4th ed. ). Hoboken, NJ: Wiley Peabody, M. (2009). Once there was a way to get back home. Mugsy Peabody Online. Retrieved from http://mugsypeabody. blogspot. com/search? q=ford+pinto Schwartz, G. T. (1990). The Myth of the Ford Pinto Case. Point of Law. Retrieved from http://www. pointoflaw. com/articles/archives/000023. php Valdes-Dapena, P. (2010). Tagged: 10 cars with bad reputations. CNNmoney. com. Retrieved from http://money. cnn. com/galleries/2007/autos/0708/gallery. questionable_cars/3. html