Killers at Work

“A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.”

– Edward Norton, Fight Club

In 1972, the car being by Lily Gray stalled. It was in the centre lane of a California freeway, and seconds later it was rear-ended by a car travelling somewhere between 30 and 50 miles per hour. The rear of Lilly’s car crumpled, rupturing the fuel tank and setting the vehicle ablaze. Lily died on impact, her passenger in the car, 13-year-old Richard Grimshaw survived, but suffered from hideous burns. The car Lily was driving was a Ford Pinto.

In 1968, seeing increasing competition in the USA from the Volkswagen Beetle, executive vice-president Lee Iacocca decreed that Ford should launch a new, subcompact, fuel efficient car. The vehicle, the Ford Pinto, was, Iacocca instructed, was not to weigh an ounce over 2,000 pounds or cost (to the customer) a cent more than $2,000. The Pinto, which became known as “Lee’s car”, was produced in an incredibly short time – Iacocca wanted models in the showrooms for the 1971 season, which meant that from conception to production there was a little less than 25 months, a normal figure at the time was 43 months. This limited time frame meant that tooling – creating the machine tools required to carry out production, a process  which takes around 18 months – had to start whilst product development was still going on. Usually this process doesn’t start until a car has been fully designed and tested, providing the opportunity for problems to be resolved before the production lines are built. In the case of the Ford Pinto, this wasn’t an option – which was a tragedy, because the car had a very significant design flaw indeed.

The design of the Ford Pinto placed the gas-tank of the car behind the rear-axle – a mere nine inches (23 cm) behind hit. The more usual location for the gas tank was above the rear axle – but taking this approach in the Ford Pinto would have reduced the size of the car’s trunk (boot) and this was deemed unacceptable. This design decision was a problem for a very simple reason – if the car was struck from behind, rear-ended, the axle would be rammed into the gas tank. Other cars with similar gas-tank-behind-the-axle-design had reinforcement structures known as “hat sections” to provide some measure of protection. The Pinto did not. The situation was made even worse by the fact that the differential housing had bolts sticking out of it that could punch straight into the gas tank in the event of an impact. It also had a rear bumper that was designed much more as an ornament than as a means of protection. Finally, when rear-ended the Pinto’s doors would often end up wedged shut. If someone drove into the back of you with sufficient force, you could end up in a burning car with no means of escape.

All of these factors combined with tragic effect – in the mid 1970s Ford Pintos made up 1.9% of the cars on US roads, yet they accounted for 4.1% of all rear-end fire fatalities. To be fair, other sub-compact cars had a poor performance record for these type of deaths, but the Pinto was bad even by those standards. Trying to work out exactly who knew what at Ford about the Pinto’s failings and how decisions were made is challenging, and there are a number of myths that surround the case. It is clear, however, that the fuel-tank problem was known about from crash testing, but this only took place once the tooling had been done – making it costly and time consuming to make changes. It has been claimed that one crash test showed that a $1 piece of plastic weighing one pound could stop the bolts punching through the tank, but this was not included in the car due to the additional cost and weight it would contribute. This plastic baffle was, finally, added to the Pinto in the 1977 model.

When asked whether anyone told Ianocco, a senior engineer is reported as saying:

Hell no. That person would have been fired. Safety wasn’t a popular subject around Ford in those days. With Lee it was taboo. Whenever a problem was raised that meant a delay on the Pinto, Lee would chomp on his cigar, look out the window and say ‘Read the product objectives and get back to work.'”

It emerged in the damages suit brought against Ford by Richard Grimshaw that Ford could have made a number of improvements to the Pinto for a relatively trivial cost. Changing the bumper for one that was stronger, removing the bolts from the differential and making it smooth, and adding in hat sections to guard the gas tank against being rear ended would have cost a princely $9.85 per car. Nonetheless, Ford decided not to do this – and it seems certain that this decision was based upon a cost benefit analysis. Ford’s thinking on this issue is shown in a seven-page memo entitled “Fatalities Associated with Crash-Induced Fuel Leakage and Fires”, which was prepared by the company for the National Highway Traffic Safety Administration (NHTSA) to demonstrate how proposed enhanced safety legislation would have a negative cost-benefit, when factoring the social costs of the deaths versus the costs of recalling cars and fixing them. This memo has, erroneously, been treated as a “smoking gun” with regard to the Ford Pinto safety decisions, even though it does not directly relate to the model. That aside, it is nonetheless hugely indicative of how a major car manufacturer considered the lives of its customers to be simply an element in a cost benefit analysis.

The memo works through the following scenario:

Option 1) – Fix the Vehicles

  • 5 million vehicles, each requiring an $11.00 recall repair, total cost: $137,500,000

Option 2) – Don’t fix the vehicles

  • 80 incremental burn deaths, each costing $200,000 in compensation, total cost: $36,000,000
  • 180 incremental serious burn injuries, each costing $67,000 in compensation, total cost: $12,060,000
  • 2,100 car repairs, each costing $700, total cost: $1,470,000
  • Grand total: $49,530,000

In making these calculations Ford was using NHTSA figures for the “cost” of a life – it turns out that these costs were much lower than the sums that a court would deem an appropriate valuation. In the case of Richard Grimshaw, damages of almost $7,000,000 were awarded for his injuries and for the death of Lily Gray.

Ford was not the only motor manufacturer to make these kind of cost benefit analyses. In 1973 a young engineer called Edward Ivey carried out a cost-benefit analysis of fuel-fed fires for the cars produced by General Motors in a memo snappily entitled “Value Analysis of Auto Fuel-Fed Fire Related Fatalities”. Ivey concluded that 5,000,000 automobiles that GM built each year would lead to 55 deaths from fuel-fed fires. The cost of compensating those deaths would (again using the $200,000 cost per life measure) come to $11,000,000 a year. On that basis, if the improvement to a single car to prevent fuel-fed fires cost more than $2.20, then it wasn’t worth doing. Ivey did have the decency to end his memo with these words:

“This analysis must be tempered with two thoughts. First, it is really impossible to put a value on human life. This analysis tried to do so in an objective manner but a human fatality is really beyond value, subjectively. Secondly, it is impossible to design an automobile where fuel fed fires can be prevented in all accidents unless the automobile has a non-flammable fuel.”

This memo would come back to haunt GM – despite claiming that it had no operational bearing, and attempting to block its release in court for years, finally, in 1999 it was allowed into evidence in a series of compensation claims likely to have cost the company more than $1billion – again due to fire deaths and injuries caused by poorly located and designed fuel systems. Such cases are not relics of a poorly regulated industry in the 1960s and 70s. On February 6th 2014, GM issued a recalled 800,000 cars in the USA as part of process that ultimately lead to almost 30 million cars being recalled worldwide. The fault this time related to ignition switches – the “switch detent plunger” didn’t supply enough torque to carry out its primary function, which was to prevent the car ignition being accidentally switched off during driving. This could result in the engine cutting off, the airbags failing to deploy and a number of other issues. If you were driving at speed when, because of a slight jolt or the weight of your key chain the ignition cut out, the results were sometimes fatal.

It transpired that GM had known about the issue for almost a decade before it issued the recall in 2014. As early as 2004 engineers has suggested a fix for the problem but this was rejected by senior managers because of “consideration of the lead time required, cost and effectiveness.”. In 2005 a service bulletin was issued to GM dealers suggesting that advised owners of the affected vehicles to remove “unessential items from their keychains” to reduce their weight and hence the risk of an ignition switch off. In the same year a fix for the problem was developed – a change to the spring in the unit that would have cost $0.57 – but GM decided not to go ahead with this resolution on cost grounds. GM ended up paying out compensation for 124 deaths as a result of the fault (having claimed as late as April 2014 that only 13 people had been killed as a result of their failings) – though the true number of deaths is likely to be much higher, as more than 90% of claims were rejected by GM, and some litigation continues.

These are just two companies, two different cases, but there are dozens more that are publicly known about, and probably hundreds that remain hidden in company archives – the Ford/Firestone tyre problem that caused 240 deaths and 3,000 injuries in the late 90s and early 00s is yet another example.

Organisations are not living entities – capable of thought or feeling or desire. They are collections of individual human beings, following rules and seeking goals that have been defined by themselves or by other human beings. Some of these people will have questionable moral values, some even will be psychopaths. The vast majority, however, are people would who generally describe themselves as decent, honest, moral – not perfect, by any means, but on the whole much more of a good person than a bad one. And yet, it is just these “good” people who make or facilitate or help to conceal the kind of decisions that we have just read about.

What could have caused them to do this? I believe that there are three factors at play:

  1. They believe that they have no choice other than to act as they do. Remember the engineer who commented on the fuel risks of the Ford Pinto saying that anyone who raised the issue would be sacked, and even then nothing would change? He felt that he had no choice – to challenge the authority would have had significant negative consequences for him personally, with no improvement in safety.
  2. The organisation has normalised unacceptable behaviour. The people carrying it out don’t realise that they are doing anything wrong, because everyone else is doing the same or worse – much as was the case when I look back on some of my management experiences. Some organisations make aspects of this normalisation part of their ethos – how many times have you come across a company that describes itself as having a “work hard, play hard” philosophy? I was once approached by a headhunter to apply for a role that would have meant a significant rise in both salary and seniority. I decided against going for it because the job description explicitly stated “emotional resilience required” – I knew that the culture would be aggressive, stressful and, likely as not, bullying.
  3. The person taking the action is removed from the effects that it has. I would like to believe that, if that Ford engineer had be told that they had to push a button that would burn someone to death right in front of their eyes or lose their job, then they would have been happily fired – if even they had been told that should they not push the button, someone else almost certainly would.

All of these factors – powerlessness, indoctrination, isolation – are conditions that hostages experience.