1. The Ford Pinto Chase Cheviron and Aliya Sultaninkarim

2. How much is a human life worth? BENEFITS Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles. Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle. Total Benefit: 180 X ($200,000) + 180 X ($67,000) + $2,100 X ($700) = $49.5 million. FORD’S ESTIMATED COSTS Sales: 11 million cars, 1.5 million light trucks. Unit Cost: $11 per car, $11 per truck. Total Cost: 11,000,000 X ($11) + 1,500,000 X ($11) = $147 million. Costs outweigh the benefits. It’s cheaper just to pay the lawsuits than to fix the problem. Easy answer, right? $200,000

3. History In 1968, Volkswagon began producing small, efficient cars. Ford was eager to enter this market and intended to compete based on: –Size –Weight (no more than 2000 pounds) –Low cost of ownership ($2000 selling price) –Fuel consumption –Appearance –Comfort –Performance Because of the competition from Volkswagon, and their desire to enter the market quickly, Ford rushed the production schedule of the Pinto. –Typically, most cars take 43 months from conception to production. The Pinto was under 25 months.

4. Key People Lee Iacocca –Became president of Ford in 1970 –Driving force behind Pinto development –“Safety doesn’t sell.” –Fired in 1978 Dennis Gioia –Field Recall Coordinator in 1973 –Reviewed initial reports and dismissed them because they were similar to other fires in other models –Voted against recall twice based on similarities to other subcompact cars –Left Ford in 1975; currently teaches at Penn State

5. The Problem If the car was hit in a rear-end collision, the gas tank (located 6 inches from a flimsy bumper) would explode and catch fire. This happened at speeds as low as 21 MPH. Worse, the body of the car crumbled and trapped passengers inside. Ford was aware of these reports but because of the massive amounts of capital already invested (approximately $200 million), Ford continued with production.

6. Alternatives Ford could have used another gas tank it used in other models that was safer, but it would have to be relocated and would have reduced trunk space, so the idea was dismissed. Goodyear developed a bladder that cost only $5.08 and would prevent gas from leaking from the tank, but Ford did not implement it. Ford’s own engineers engineered a bolt that would not rupture the gas tank in a collision. It cost $1 and added 1 pound of weight to the car. It ended up being dismissed as an extra cost/weight that was unnecessary.

7. Ford’s Defenses During the production of the Pinto, Ford lobbied against increased federal safety requirements for automobiles. Ford’s progression of defenses: –“Accidents are not caused by cars, but by people and highway conditions.”

8. Ford’s Defenses “Automotive fires are not a concern.” A Washington research firm conducted a study and found that: –400,000 cars (not just Pintos) were burning up every year, killing 3,000 people. –Automotive fires were increasing at a rate five times faster than other fires. –35% of all fire deaths occurred in automobiles. –A total public cost of $350 million per year that was never included in cost/benefit analyses.

9. Ford’s Defenses “Fire accidents do happen, but rear end collisions are relatively rare.” “The problem is not burns, but impact. Most of the people would have died whether the car burned or not; they were killed by the kinetic force of the impact.” “The testing and evaluation process was unfair…changes would take 43 months to implement.”

10. The Lawsuits Over 100 lawsuits were filed. Ford initially had these cases heard by juries, confident that “solid American registered voters” would buy the industry doctrine that drivers, not cars, cause accidents. In February 1978, a jury awarded a sixteen year old boy who was badly burned in a rear-end collision… $ 1 2 8 m i l l i o n the largest single personal injury judgment in history.

11. History From 1971 – 1977, Ford manufactured 3 million defective Pintos. Ford ended up paying more lobbying against Congress and in lawsuit judgments than they would if they fixed the problem. In 1977, the government passed Standard 301. The 1977 Pinto used the $1, one pound bolt and was considered safe. This was the only noticeable change from earlier models. May 8, 1978: Ford was forced to recall all 1971 – 1976 Pintos. 1980: Due to a bad public image, Ford discontinues the Ford Pinto.

12. Other Examples Merck Pharmaceuticals - Vioxx –Has been blamed for 27,785 heart attacks and sudden cardiac deaths between 1999 and 2003 –Approximately 92.8 million prescriptions were written for Vioxx in the US –Big money maker for Merck, generating $2.5 billion of revenue per year –Study conducted found that high doses of Vioxx tripled risks of heart attacks and sudden cardiac death –Did Merck know the effects of Vioxx before releasing it? Source: http://www.consumeraffairs.com/news04/vioxx_estimates.html

13. Anything worse? Peel Trident (1964 – 1966)