”Safety doesn’t sell” – Lee Iacocca
The year is 1970 and the American auto industry is reeling. Faced with stiff competition from Volkswagen and a slew of Japanese imports that are cheaper, better engineered and have better gas mileage, Ford introduced the Pinto. The intent was to stem the competition and regain some of the market share they lost to their foreign counterparts. It was designed to sell for under $2,000 and not weigh an ounce over 2000 pounds. Lee Iacocca is put in charge of development.
What went wrong?
Well, the normal time it took Ford to design, test, and produce a car was 43 months. The Pinto took a mere 25. That should have been a warning signal. Ford’s engineering team also discovered that when the car was involved in a rear end collision over 20 MPH, the chances were the gas tank would rupture and subsequently explode. You’d think that would do it. Any responsible corporation certainly would not market this bomb to the public. You’d be wrong.
It seems that the assembly line machinery was already in place before the engineers made this discovery. Rather than re-tool the assembly line, company officials decided to go on with production anyway.
Whoa, what was the basis for their decision?
Well, the bean counters at Ford conducted an internal cost benefit calculation that determined it would take the whopping sum of $11.00 per car to fix each vehicle. They estimated that it would potentially cost the company about 137 million dollars to get to all of ‘em. They then compared this number to the number that they estimated they might have to pay out in benefits for accidents in which the car blew up. That number came in at 49.5 million. Folks, you don’t need a calculator
to determine that represented a potential savings of 87.5 million dollars. In other words, it was cheaper to pay the potential claims than it would be to fix the freakin’ car. A simple actuarial calculation.
So what happened?
Well, as the cases began to mount and the fact that Ford knew about the design flaw came to light, the American public became outraged. In 1978 a jury in California awarded a then record amount of 128 million to a plaintiff involved in the Pinto fiasco. Also in 1978, the Department of Transportation decided that Pinto had a “safety related defect” and Ford agreed to re-call the 1.5 million (appx) Pintos that were still on the road.
A pretty good movie on the subject, (while not directly mentioning Ford or the Pinto) called Class Action which starred Gene Hackman as the underdog lawyer was made in 1991. I’d recommend it.