Business Ethics Positive Social Change and the Ford Pinto

Business Ethics and Positive Social Change: The Ford Pinto Fiasco
How much is a human life worth? Most people would likely agree that human lives are priceless, but the executives at Ford Motor Company made this type of grisly calculation when they were confronted with the alarming facts about the dangers posed by flaws in the gas tanks of their Pinto automobiles in 1970. Although Ford Motor Company would ultimately recall 1.5 million Pintos to repair the gas tank flaw in 1978, the decision to continue production of this car represented one of the most high-profile examples of how unethical business decisions can have a profoundly adverse effect on society. The purpose of this paper is to provide a review of the relevant literature concerning this business ethics crisis and the scandal that ensued within the context of positive social change.
1) What are the essential details of the event, and the causes of the crisis and/or negative impact to society?
The origins of the unethical business decision made by Ford Motor (hereinafter alternatively “Ford” or “the company”) can be traced to early 1970 when the decision to develop an inexpensive vehicle was originally made by the company’s leadership. Introduced to the market in 1971, the Ford Pinto was the brainchild of Lee Iacocca, whose original design specifications were straightforward and called for a one-ton automobile that could be developed and manufactured quickly and which would retail for around just $2,000 (Bumbeck, 2018). In response, in 1969, the company’s design engineers quickly set to work at an accelerated pace in order to satisfy these specifications.
In their haste to deliver the goods, the design engineers at Ford succeeded in developing a car for budget-minded Americans that largely satisfied the original specifications. The company’s faith in Iacocca’s decision to manufacture the Pinto was certainly justifiable. After all, Iacocca was considered a veritable automotive genius by his employees because he had just saved Ford Motor from near-certain bankruptcy by developing and introducing the wildly popular Mustang in the early 1960s which remains one of the company’s best selling cars today (Goodman, 2018). Moreover, the company was struggling to compete in an increasingly globalized marketplace where cheap foreign imports were destroying the American automotive industry and time was of the essence.
Nevertheless, as the casualties and fatalities that mounted over the next decade would prove beyond a doubt, the design engineers overlooked an important detail with respect to the car’s solid rear axle and its rear-mounted fuel tank. During collisions, the rear axle could penetrate the fuel tank, resulting in spillages, fires and even explosions (Bumbeck, 2018). Indeed, the car’s reputation for injuring and killing people became so pronounced that by the mid-1970s, late-night comedians were suggesting the United States could easily win the war in Vietnam by sending a fleet of Pintos into North Vietnam in reverse.
Although the company would go on to survive this public relations disaster, the damage that was done to Ford’s corporate reputation and brand was enormous. In addition, this incident underscored the increasing willingness of major corporations in the minds of tens of millions of American consumers to ignore and even conceal potentially hazardous products. In fact, in the aftermath of the Pinto fiasco, one industry analyst concluded that, “The U.S. economy has been hurt most by incompetence and bad ethics at the top levels of management and administration. These tendencies have encouraged inefficient, uneconomic and demoralizing practices in practically every walk of economic life” (Aggarwal, 1992, p. 25). Of course, there have been countless instances of products that ultimately prove dangerous to consumers due to flawed designs over the years, but design failures are completely different from the types of unethical business decisions employed by the company that further exacerbate these harms and these issues are discussed below.
2) Where do you see failures in corporate governance?
While the company would eventually be found not guilty of any criminal wrongdoings in the injuries and deaths caused by the flawed Pinto design by a court of competent jurisdiction, it is clear that there was a breakdown in the Ford corporate culture that placed a higher priority on profitability than it did on the welfare of the people who purchased their Pinto automobiles (Hayk & Hersey, 2008). As the court records would eventually show, though, there was a profound failure in corporate governance at Ford Motor that made it possible for the company’s leadership to make this type of cost-benefit analysis concerning the costs of lawsuits against the company and the costs of a recall to repair the problem using real live human beings as the guinea pigs in this equation.
The precise dates when the company’s executives first became aware of the problem remain unknown, most industry analysts believe that Ford’s leadership knew about the gas tank problem early on and chose to proceed with production and marketing anyway. In this regard, Bumbeck (2018) advises that, “The Pinto’s ‘Unsafe at Any Speed’ moment came in the fall of 1977, when Mother Jones magazine reported Ford was aware of the Pinto’s lethal shortcomings, yet failed to act—even though, it claimed, a plastic part costing as little as $1 per car might have prevented the issues” (para. 5). Other authorities place the costs of repairing the gas tank problem at around $11 per vehicle, or a total of less than $50 million for all of the defective Pintos then on the road (Wojdyla, 2011).,
3) What caused the failures in the ethical culture and climate of the company?
It would be a simple matter to posit that the Pinto problems were caused by a few Ford executive or a cabal of middle managers who were desperate to save their enterprise in the face of increasing foreign competition, but this type of conclusion does not fully take into account the type of corporate culture that existed in the company during this period in its history. For example, Winfield (2017) reports that, “No-one at the time dared report it to the company’s formidable CEO. ‘Hell, no,’ claimed one Ford engineer. ‘That person would have been fired.’ As the cigar chomping boss Lee Iacocca was fond of declaring: ‘Safety doesn’t sell’” (para. 4). As it turned out, the failures in the company’s ethical culture and climate were primarily attributable to a lack of concern over the danger posed by the Pinto to the millions of consumers who placed their good faith in Ford Motor’s products. As Hayk and Hersey (2008) point out, “In 1978, a person severely injured from a Pinto explosion sued the Ford Motor company and was awarded $125 million. The judge of the case declared, ‘Ford’s institutional mentality was shown to be one of callous indifference to public safety’” (emphasis added) (p. 25).
This is a remarkable – and disturbing – conclusion on the part of the trial judge, of course, but there is a general consensus among industry analysts that this was in fact the environment at the company during the debates over how best to proceed in handling the Pinto problem by Ford executives. One of the overarching causes for this failure in the ethical culture and climate at the company cited by analysts is the fact that the people who purchased Pintos were regarded by Ford executives as essentially numbers rather than humans, and this type of perception made it easier for them to place a dollar value on their lives. As Hayk and Hersey (2008) conclude, “When victims of corruption are faceless, it is easier to do them harm. If family members of lee Iacocca, the president of Ford at the time, had died in a Pinto explosion, the ‘callous indifference’ might have melted and the ‘units’ might have been called Jane or Cynthia” (p. 25). Indeed, there were no reports of any Ford executive, most especially the company’s CEO, of owning and driving a Pinto during this period in the company’s history.
4) What ethical policy might prevent this scenario from occurring in the future?
Given that any corporation has a responsibility to its shareholders to remain solvent and earn a profit, implementing and sustaining ethical policies that prevent unethical practices represents a challenging endeavor, but it is clear that corporations that fail to do so are placing their organizations in jeopardy. While it is reasonable to suggest that Ford’s executives did not formally plan on producing a flawed vehicle from the outset, it is also reasonable to posit that there were inadequate ethical policies in place to prevent such an eventuality. Therefore, an ethical policy that ensured decisions concerning defective products received sufficient review from disinterested third-party analysts would go a long way in preventing future incidents on the level of the Pinto fiasco.
5) If you were a leader within this company, what choices would you have made differently to effect positive social change?
With the future of Ford and tens of thousands of jobs at stake, it is clear that Iacocca was faced with some difficult decisions with respect to how to proceed with the Pinto, but it is also clear that this “cigar-chomping boss” chose Ford’s welfare over that of the American public based solely on the amount of money involved. Effecting positive social change, however, would require decisions that placed an absolute priority on the safety of the products manufactured by Ford regardless of the costs involved in fixing their own mistakes.
Conclusion
The research showed that bad business decisions are made all the time, and companies suffer and even fail as a result. Bad business decisions, though, are not on the same level as unethical ones, and the research was also consistent in showing that the executives at Ford Motor failed to take the steps there were needed to prevent dozens of deaths and hundreds of injuries due to their defective Pinto automobile based on a comparison of the amounts of money that were involved. Although the company managed to survive this public relations disaster, its corporate image and brand were irrevocably damaged as a result and it may be several more generations before the legacy of the Pinto is entirely forgotten by American consumers.



References
Aggarwal, S. C. (1992, March/April). Our damaged economy: Blame incompetence and bad ethics. Industrial Management, 34(2), 24-28.
Bumbeck, M. (2018). Ford Pinto. AutoWeek. Retrieved from https://autoweek.com/article/car-life/ford-pinto-its-all-relative.
Goodman, D. (2018, August 14). Who invented the Mustang? PonyParts. Retrieved from https://www.cjponyparts.com/resources/who-invented-the-mustang.
Hayk, R. & Hersey, P. (2008). The ethical executive: Becoming aware of the root causes of unethical behavior: Stanford, CA: Stanford University Press.
Winfield, R. (2017, September 14). The Ford Pinto and corporate culture. LinkedIn. Retrieved from https://www.linkedin.com/pulse/ford-pinto-corporate-culture-richard-winfield.
Wojdyla, B. (2011, May 20). The Ford Pinto fuel tanks. Popular Mechanics. Retrieved from http://www.popularmechanics.