Business Readings

Name: Lei Yingjie   ID:23959959
Reading Summary of Ford Pinto

  * From 1971 to 1977, the Ford Pinto was manufactured with a deadly flaw. Rear end impact over 30 mph would cause the gas tank to explode, resulting in deadly fires.

  * This article arises two parties debate in the court. One is general manager of Mother Jones called Mark Dowie who accusing Ford of knowingly putting on the road unsafe cars, and the other party Ford knows that the Pinto is a firetrap, yet it has paid out millions to settle damage suits out of court, and it is prepared to spend millions more lobbying against safety standards.

  * In the article, it explains the reason that why did ford knowingly manufacture a faulty product for so long but takes 8 years to adjust that situation. It also shows two forms to describe the Ford pinto’s costs and benefits are broken down as follows.

Benefit:
Savings 180 burn deaths, 180 serious burn injuries, and 2100 burned vehicles.
Unit Cost: $200,000 per death, $67,000 per injury, $700 per vehicle.
180*($200,000) + 180*($67,000) + 21,000*($700) = $49.5 million

Cost:
Sales: 11 million cars, 1.5 million light trucks.
Unit Cost: $ 11 per car, $11 per truck
Total cost: 11,000,000*($11) +1,500,000*($11) = $137 millions

  * Ford’s cost benefit analysis determined that it was cheaper to pay lawsuit than to install a lifesaving plastic shield in the gas tanks. In the end these numbers turned out to be far from reality. In one wrongful death case alone the Judge awarded $3.5 million in compensatory and $ 2.5 million in punitive damages.

  * Even Ford is not guilty for criminal homicide in Ulrich case, however, it raises many questions of ethical importance regards to how industry, government and society in general ought to interrelate to form a framework within such decisions can properly be made in the future.