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Rond Motor Corporation.pdf

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SOC 111
Margaret Buckby

The Rond Corporation Note: this problem case is fictional—drawing on different data, it has been composed to contain various situations only for the purposes of an analytic exercise. stablished in 1907, Rond Motor Company is a multinational automaker based in Detroit, US. It takes its values and its social responsibility very seriously. On its website, Rond promises to E pursue the highest standards in all areas of business, be transparent, and focus on creating better products, for a better tomorrow. In 1968, Rond began designing a subcompact automobile that ultimately became the Binto. Rond’s objective was to build a car weighing 2,000 pounds or less to sell for no more than $2,000. At the time, prices for gasoline were increasing and the American auto-industry was losing ground to small vehicles from Japanese and German manufacturers. Normally, manufacturers conduct surveys and preliminary engineering before styling a new line, but with Binto styling dictated engineering design because it was a rushed project. Thus, styling dictated the placement of the fuel tank behind the rear axle, rather than above or in front of it as in European or Japanese cars. The Japanese and European manufacturers placed the tank in front or behind rear axle because small cars have less “crush space” between the rear axle and the bumper than the larger cars. Binto had only nine or ten inches of “crush space,” much less than other American or oversees subcompacts. Furthermore, Binto lacked reinforcing longitudinal side members and horizontal cross members that were found on all Rond cars produced overseas, which made it much less crush-resistant. Binto’s bumper was little more than a chrome strip, less substantial than bumpers on any other America cars produced then or later. Finally, Binto’s differential housing had an exposed flange and bolt heads that were sufficient to puncture a gas tank driven forward against the differential by a rear impact. The feasibility study for the Binto had been conducted under the supervision of A. D. Rodford, the vice president of car engineeriThe Rond’s Product Planning Committee approved the concept and made the decision to go forward with the project without modifications. n your first day at Rond, you met Linda Wright, the head of legal department at Rond. She explains that right now the department is extremely busy. They have assembled a legal team to O deal with lawsuits related to accidents involving Bintos. One case is particularly troubling: In November 1971, Mrs. L. Ray purchased a new 1972 Binto hatchback manufactured by Rond in October 1971. On May 28, 1972, Mrs. Ray, accompanied by 13-year-old Richard, set out in the Binto from Anaheim for Barstow to meet Mr. Ray. After stopping for gasoline, Mrs. Ray proceeded toward her destination at 60-65 miles per hour. As she approached the Route 30 off-ramp where traffic was congested, she moved from the outer fast lane to the middle lane of the freeway. Shortly after this lane change, the Binto suddenly stalled and coasted to a halt in the middle lane. It was later established that the carburetor float had become so saturated with gasoline that it suddenly sank, opening the float chamber and causing the engine to flood and stall. A car traveling immediately behind the Binto was able to swerve and pass it, but the driver of a 1962 Ford Galaxie was unable to avoid colliding with the Binto. The Galaxie had been traveling from 50 to 55 miles per hour, but before the impact it slowed to a speed of 28-37 miles per hour. At the moment of impact, the Binto caught fire and its interior was engulfed in flames. According to plaintiffs' expert, the impact of the Galaxie had driven the Binto's gas tank forward and caused it to be punctured by the flange or one of the bolts on the differential housing so that fuel sprayed from the punctured tank and entered the passenger compartment through gaps resulting from the separation of the rear wheel well sections from the floor pan. By the time the Binto came to rest after the collision, both occupants had sustained serious burns. When they emerged from the vehicle, their clothing was almost completely burned off. Mrs. Gray died a few days later of congestive heart failure as a result of the burns. Richard managed to survive—he has undergone numerous and extensive surgeries and skin grafts. He lost portions of several fingers on his left hand and portions of his left ear, while his face required many skin grafts from various portions of his body. Now, the challenges for the legal team are to exonerate the senior management and the company from responsibility and stall liability claims. uesday, Harley Strop, the engineer in charge of the crush testing, told you this story. “I have been involved in testing the prototypes to see if they can pass the proposed fuel system integrity safety T regulations in rear-end collisions, but we ran into problems. We found that Binto could not meet a proposed federal regulation requiring all automobiles manufactured in 1972 to be able to withstand a 20/mph fixed barrier impact and those manufactured in 1973 to withstand a 30/mph fixed- barrier impact without significant fuel spillage. When prototypes were struck from behind at 20/mph, the fuel tanks were driven forward and punctured, causing fuel leakage in excess of the standard prescribed by the proposed regulation. When a production Binto crushed into a fixed-barrier at 20/mph, the fuel neck got torn off from the fuel tank and the tank got punctured by a bolt on the differential housing. In one test, the spilled fuel filled the driver’s compartment through gaps resulting from separation of the seams due to lack of reinforcements. We tested other vehicles, including modified and reinforced Bintos, which proved safe at speeds at which the Binto had failed. Installing rubber bladders in the tank would prevent leakage in fixed-barrier crushes at 21/mph. Vehicles with fuel tanks installed above rather than behind the rear axle passed the impact fixed-barrier test at 31/mph. A Binto with two longitudinal hat sections added to firm up the rear structure passed a 20/mph rear impact fixed- barrier test with no fuel leakage. All of this was submitted in our report and forwarded up the chain-of-command, but the Product Planning Committee approved the project without any modifications anyway. I raised my concerns with A. D. Rodford, the vice president of car engineering, explaining that the gas tank is vulnerable to puncture at low rear- impact speeds, which creates a significant risk of death. I also pointed out that making the necessary modifications to make the vehicles safer would be inexpensive. Modifications could include rubber bladders installed in tanks or moving the tank above rather than behind the rear axle, installing side and cross reinforcements at $2.40 and $1.80 per car; shock absorbing flack suite for the tank at $4.00, protective shield between tank and the housing at $2.35, reinforcing bumper at $2.60, and addition of ‘crush space’ at a cost of $6.40 per car. In the end, equipping the car with a reinforced rear structure, smooth axle, improved bumper and additional crush space at a total cost of $15.30 would have made the fuel tank safe in a 34 to 38/mph rear-end collision. If, in addition to the foregoing, a bladder or tank within a tank were used or if the tank were protected with a shield, it would have been safe in a 40 to 45/mph rear impact. If the tank had been located over the rear axle, it would have been safe in a rear impact at 50/mph or more. D. Rodford responded by saying that I should not worry—after all, safety does not sell. ‘We are up against very efficient, light, and inexpensive European and Japanese car, and so we must save money everywhere we can. Modifications at this point would not be cost-effective.’ Every time I raised these issues with the management I get blocked. Last time I spoke to Rodford, he said that if one person keeps rocking th
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