A Ford Pinto Controversial Project - Essay Example

THE FORD PINTO- WHAT CAN ENGINEERS AND MANAGERS LEARN FROM THIS?     By         Location THE FORD PINTO- WHAT CAN ENGINEER AND MANAGERS LEARN FROM THIS? Executive summary Ford Pinto is a model of a car produced by Ford Motors Company, whose model years are between 1971 and 1980. The firm produced the controversial car in which more than three million cars were sold and also sparked legal suits against the firm for allegedly putting the lives of the buyers at risk. The controversy came about after several Ford Pinto models went down in flames when being hit from the rear by an oncoming car, which attracted media interest and involvement. Such burns to consumers could have been avoided if the fuel tank of the Pinto was placed in a better position and structured to withstand crash at 20mph. The Pinto memo, which was written and printed in 1977 by the Mother Jones magazine claimed Ford intentionally released unsafe cars into the market to save on the cost of restructuring the model (Hoffman 1982, p. 222). Allegations made claim ford engineers were aware of the danger in the design, but the top managers decided to go ahead with the production anyway. The question of Ford’s social responsibility is sharply brought out in this case. The ethical standing of the firm is put to test by the incidence and the proceedings, Though the firm met all the production requirements by the law at that time, the fact that it was aware of the possible danger of the car to consumers puts the firm on the limelight. However, how could ford set the standards and follow them with knowledge of the additional cost of correcting the defect? At the end of it all, ford is absolved of any homicide, but the cars are recalled proving that a defect truly existed in the Pinto. Discussion The American market had an increasing demand for small cars in the 1970 thus Fords Motors saw it as an opportunity to introduce a small car into the market that will compete effectively with cheaper imports. That is how the whole idea of Pinto production came to be. The car was designed and tested within a very short time only adhering to the set federal regulations of that time. A tight budget on the development of the vehicle was in place and any major adjustment in the design meant increasing the costs significantly against the set budget. Thus, despite ford’s engineers, realizing the defect in the model during the testing stage, the company still went ahead to roll the model into the market. Little was known to consumers about the danger associated with the positioning of the tank, thus they went ahead to purchase the new model. The management of the firm had the option of correcting the defect immediately, but opted for cost benefit analysis. A cost benefit analysis showed that the cost of compensating victims was lower than the cost of remodeling the car. The firm’s management decision to have the model in the market and compensate consumers was very unethical. The cost benefit analysis was as good as placing monetary value on human life so that it was easier for a firm to let the customers die while it is making profit. The major goal of Ford motors when producing the pinto was profit maximization. Profit maximization should however not come at the expense of consumers. Businesses should always have consumers’ interest first to be able to maximize profits through consumer satisfaction. Ford, however, had a different approach. They had their mathematics done well in advance and knew how long it would take for the firm to break even before correcting the defect in the model. Maximizing on the size of the truck saw the engineers place the fuel tank behind the rear axle instead of above it. Consumers were obviously going to like a small size of the Pinto model coupled with a huge truck space. Only the interest of the manufacturer was put into consideration to make more sales due to the model feature. Consumer safety was widely compromised, especially with no specific laws as to the position of the fuel tank. Using current regulations as a defence for their car was not good enough. Though the regulations were not clear enough on the safety requirements of the model produced by fords, it was obvious that the firm was aware of the effect of the defect. After causing burns and deaths for eight years, the model was finally recalled for correction of the defect. Failure to provide consumers with alternative to having a safer tank was also unethical on the part of Ford. The alternatives available were both short term and long term. The long term alternative was for the model to undergo a total change to correct the defect to enable the car model withstand rear end collision without igniting; the long term alternative was too costly for the firm at that time. The firm, however had a shorter alternative it could provide to consumers, which was to fix a rubber bladder inside the tank to prevent crash fire. The cost of installing a rubber bladder was as low as $5.08 compared with the cost of correcting the defect at $11. Despite having all this information, Ford kept silent on the defect of the Pinto and instead concentrated on bailing the firm out of the multiple lawsuits arising from Pinto related accidents. Ford further defended itself, claiming that the numbers of deaths caused by Pinto crash fires were far less than what most reports indicated. The deaths on the roads were nothing more than normal accidents and they were ready and willing to compensate the victims with $10000. Additional cost to consumers for additional safety could have been better than compensating burns for victims. Concealing vital information about the product features and possible defects was unethical in the part of Ford management. Confidential records that leaked to the public showed that Pinto could only withstand collision from the front end at 20mph but not from the rear end. The inability of the model to withstand collision was the main cause of most burns of the rear end collision. Further records revealed that the firm had conducted a cost benefit analysis of the car, thus had put a value on consumers’ lives. Assuming a figure of 180 burn deaths, 180 injuries and 2100 burned vehicles, the compensation will be as follows; $200000 per death,$67000 per injury and $700 per burnt car. The total benefits to be paid out, thus amounted to $49.5. On the other hand, with sales of 11 million cars and 1.5 million light trucks and a cost of $11 per truck and car for correcting defects, the total cost will be 137 million. The cost benefit analysis was later used for setting industry regulations for burn deaths. The use of the cost benefit was neither ethical as no proper criteria could determine the amount that victims should be compensated especially for pain and suffering. Ford was risking its reputation in the market by engaging in the malpractices. As much as consumers are interested in new brands and models in the market, they are more concerned about their safety. Any information leaking to consumers about a defect in a product that can cause harm will see them restrain from purchasing the product. The risk is not only to the specific model, but to all models of the same brand. Consumers can unite against a given brand to protest the deaths and injuries to other consumers and losses to the society due to accidents attributed to the given brand. Regaining consumer confidence is one of the most difficult tasks a firm can undertake, especially after multiple deaths caused by their products. Therefore, in a bid to increase profits, Ford was risking their entire business. Winning the law suits served a lot to save ford from a looming downfall. Though the judgment was made in favour of Ford, the victims were not fairly treated by the ruling. Disregard of human life was evident in the ruling which may lead stakeholders to losing confidence in the judicial system. The order to recall all Pinto was proof enough that the model was defective. Guidelines for hypothetical company Consumer safety will be the top priority for the firm. Goods produced should be fit for the purpose produced for. Product safety is a major ethical concern that needs to be addressed by all firms in the manufacturing industry. Producing goods that are unsafe for consumers is unethical practice that has serious consequences both to the consumer and manufacturer. The manufacturer faces the possibility of lawsuits that will cost them a lot while consumers stand high chances of harm. Providing sufficient information to consumers on the product, its component, use and possible danger are an ethical practice to be observed. Provision of information to consumers ensures the consumer is enlightened on what they are purchasing and possible consequences. As a result, the firm can take precautionary measures to protect themselves against any potential harm. Selling at fair prices in the market is also part of ethical practice to be observed. Product dumping occurs when a firm exports a large quantity of a product to another country and sells at a price lower than the current market price. Cheap imports are one of the reasons Ford opted to continue with the production of Pinto despite detecting defects early in advance. The additional cost of remodeling the design could not allow the firm to compete with the imports effectively. The end result was a defective product being sold to consumers resulting in many deaths due to associated accidents. Setting flexible time for product development will aid in correcting defects. Allowing flexible time will allow the experts developing the product extra time correct defects in the product before releasing it to the market. A well designed product free of defects may be costly to produce, but the outcome is worth the trouble. The cost of correcting the defect later may be higher than the cost of correcting the defect plus the resultant costs associated with the defects. Further, powers to make decisions on when the product is ready for the market should include the expert leading the development process. In so doing, the experts are liable for any defect in the product that is sold out to the consumers. The liability burden will ensure products are well designed and redesigned to meet safety and other specifications. When top management is allowed to make production decisions independently, some serious details may be taken lightly yet having serious consequences. Taking responsibility is another policy to be adopted by the firm. Instead of exchanging accusations on the cause of the accident with the victim and other concerned parties, the firm should take responsibility for incidents involving their products. Taking responsibility does not necessarily mean the product was defective; but rather it can be done as a social responsibility to the consumer and the society. Proper guidelines should be put in place to ensure consumers do not misuse the product because the firm is taking responsibility. Conclusion From the case study of Ford motor, it is evident that the firm acted unethically by selling Pinto in the market with knowledge of its defects. Calculating the cost benefit of the product is as good as putting monetary value on human life which is quite unethical. Withholding vital information on Pinto led to crush burns which could have been avoided if the firm was to adhere to ethical practice. Among the major ethical practices to be observed by firms include ensuring safety of products for consumer use and providing consumers with product details. If all firms were to be ethical in production and selling, many consumer accidents related to products could be avoided. Bibliography Cotte J, & Trudel R, May 12, 2008, does being ethical pay? The Wall street journal. Accessed from: http://www.wsj.com/articles/SB121018735490274425 [26 Feb. 2015] Hoffman W, 1982, corporate obligation and responsibility: everything old is new again. Ford Pinto case study. Accessed from: http://ridgepoinths.com/wp-content/uploads/2012/08/Pinto-Case1.pdf [26 Feb. 2015 ] McDonald G, 2014, Business ethics: a contemporary approach. Cambridge University Press. Schlegelmilch B, & Oberseder M,2007, Ethical Issues in Global Supply Chains. Symphonya. Accessed from: http://www.unimib.it/upload/gestioneFiles/Symphonya/lasteng/f20072/schlegelmilchobersedereng22007.pdf Read More