According to media reports the 1971 Ford Pinto was a subcompact automobile which was poorly designed. Not only was it poorly designed, it was dangerously designed according to the reports. Rear end collisions caused the car to burst into flame. The way Ford Company handled the matter became infamous when an in-house memo became public. The memo seemed to note that the cost of fixing the rear end of all the Ford Pintos so the car would be safe cost too much. The estimated cost would be $121 million. On the other hand the estimated the cost of making payments to victims of crashes would cost $50 million. Given the larger overall cost to repairing the cars the Mother Jones article indicates that the company had decided to continue making payouts to people who have been injured or the families of victims that had died rather than make the repairs.
Werther and Chandler (2011) would not agree that saving money in a case like the Ford Pinto case was a sound economic decision. They teach that Corporate Social Responsibility (CSR) makes good sense for achieving good economics. “We believe it (economics) is the clearest of the three (moral, rational, and economic) arguments supporting CSR and emphasizes the importance of CSR for businesses today” (Werther & Chandler 19). They report that there is a problem in the way science and regulations work; and maybe that goes for engineering and regulations, too. The two are supposed to work hand in hand but “even after evidence begins to mount that an existing product might not be safe, regulators are still reluctant to issue a recall” (Werther & Chandler 264). An example given was about chemicals and food but the point seems to apply to anything else that needs to be regulated. The problem may be a food product or a car but sometimes recalls seem very slow to take place. Regulators are what Werther and Chandler (35) call ‘societal stakeholders’ but sometimes they are slow to act when scientists have proof or, like with the Ford Pinto, car accidents are proof that something needs to be regulated right away.
Ford had strong competition in the sub compact car division. Germany’s Volkswagen was the leader with small cars and Ford wanted to make some progress in the subcompact market. Dowie, the Mother Jones, investigative reporter, explained that Ford wanted so badly put the Pinto into auto salesrooms they pushed the production schedule forward so the cars would come out earlier than the original plan. Dowie also reported that the problem of rear end collisions causing terrible damage to the fuel system was known before the cars went on the market. Sadly an anonymous engineer who was working at Ford during that time said “You see safety isn’t the issue, trunk space is. You have no idea how stiff the competition is over trunk space” (Dowie).
There was even more pressure to cut corners on safety due to the boss of Ford, Iacocca. Iacocca had given strict goals to the Pinto automotive engineers that the car should be designed to weigh no more than 2,000 pounds and the cost should be no more than $2,000. A safety expert interviewed by Dowie, Byron Bloch stated that the design of the fuel tank system was not good. The fuel tank was “weak” and placing it in such a dangerous position made it seem that “it’s almost designed to blow-up” (Block cited by Dowie).
I would suggest a CSR plan for Ford Motor Company giving equal priority to economics, ethics and good common sense. Ford needs a CSR plan in order to meet its obligations of producing a good and a safe product while at the same time meeting its economic goals. All the stakeholders in the company would benefit from a CSR plan. The organizational stakeholders, the unions, stockholders, managers, employees and especially Iacocca need to learn the lessons of how ‘haste makes waste’ and in this case lives were wasted. Not only will the company’s reputation be damaged but so the CEO, Iaccoca’s for pushing to get a dangerous car onto the market as quickly as possible. At first it may seem like a good idea to try to take the lead over a strong competitor by getting to the market fast but over the long term the economic costs are not worth rushed planning. Careful planning leads to better economics and a better product. The organizational stakeholders also have friends and family that buy Ford products, maybe even the Pinto – that makes the stake very personal and the goal of safety very important.
Other stakeholders are the economic stakeholders who include, the customers the suppliers, the car dealerships the competitors and the distributors (Werther and Chandler 35). Without a balance between economics, ethics and good common sense the stakeholders will suffer. In the case of the Ford Pinto some customers and their families suffered with death and burns. When money has to be spent in the legal system in order to give money to customers to make up for engineering mistakes the organizational and the economic stakeholders suffer. For example the employees will not be paid as much and the stockholders will not have as much profit. The auto dealerships will also suffer. They are often family businesses so the damage to the reputation of a Ford dealer could hurt the whole family. Communities are societal stakeholders that are hurt when they lose residents in car accidents.
Government regulators are important societal stakeholders who need to be courageous and stop dangerous products from being sold. This is very difficult to do. Today many times people called ‘whistleblowers’ try to tell about dangerous problems in products but they are fired and treated badly. This needs to change. Car manufacturers as well as other corporations need to have a cooperative relationship with regulators. When a ‘Whistleblower’ has something to say to management then they should be allowed to share the information and when necessary action should be taken. Ford should not have allowed the cars to leave the factory in the first place. But the cars were put on the market and people were killed. The Ford Company should have immediately initiated a recall of all Ford Pintos. They should have gone public with the announcement of the recalls. For example the CEO, Iacocca could have gone on the business/financial shows to make the announcement.
Carroll’s Corporate Social Responsibility Hierarchy is a good tool for Ford to use to understand firstly that making money (economics) is not the only obligation of a car manufacturer. The Hierarchy is made of four principle factors (a) “discretionary responsibilities, (b) ethical responsibilities, (c) legal responsibilities and (d) economic responsibilities” (Werther & Chandler 6). Ford needs to incorporate all of these responsibilities into its mission statement and make sure all the stakeholders understand.
The stakeholders in the company need to agree that moral responsibility is equally important to economic profit. In the long term, using the Ford Pinto case as an example, this is clearly the case. For example the company could have set as its goal making the world’s safest sub-compact car. The profits would have added up over time. The car may have even become popular in other parts of the world. Using the triple bottom line as a measure for success would be a great idea for Ford. The three factors of the triple bottom line are thoroughly assessing (a) environmental performance (pollution and recycling) (b) social performance (responsibility to society), and (c) economic performance. Ford needs to think of all three of these as points on a triangle that are equally important.
A strategy could be designed to make good measurements to use to measure the “triple bottom line” so a judgment could be made about whether progress is being made or changes are needed (Werther & Chandler xiii). Combine the elements of Carroll’s CSR and the triple bottom line into the mission statement and making them an integral part of corporate strategy from the bottom to the top – would bring success for Ford. There can be nothing worse for a car company then selling c cars that cause people to die. CSR is a way to avoid that kind of mistake in the future.
References
Dowie, Mark. “Pinto Madness.” Mother Jones September/October 1977. Web. 1 December 2012. <>
“The 50 Worst Cars of All Time: 1971 Pinto.” Time n.d. Web. 2 December 2012. <>
Werther Jr., William B. and David Chandler. Strategic corporate social responsibility: Stakeholders in a global environment. Thousand Oaks, CA: Sage Publications, Inc. 2011. Print.
