Plant Services - September 2007 - (Page 37) Safe returns If safety was free and easy, everyone would be safe. But building and maintaining a culture in which safety truly comes first takes time, effort and money, and while few North Americans would say so, not everyone is convinced it’s worth it. “We invented the safety gate, and we see companies that take the attitude, ‘Do I have to install this, or is a chain OK?’ e bean-counter mentality,” says David LaCook, CEO, FabEnCo (www.fabenco.com). “I ask them, ‘Is safety in your core values?’ ey say it is, and I say that means you have to do it.” Some people who push back don’t understand the situation. “A small company may go a long time without a loss and not realize the risk,” says Lanny Floyd, principal consultant, electrical safety and technology, DuPont, Wilmington, Del. “Beyond the personal, tragic consequences of a serious injury or death, the cost of an accident can ruin a small company, and so can the loss of knowledge and expertise.” e cost of the injury itself might be dwarfed by lost production. “A fall might kill someone, but the machines still run,” says Joe Weigel, product manager, Square D/Sch neider Electric Co. (www.squared-services.com). “An arc flash may or may not kill, but equipment is damaged and shuts down, and product may be damaged or lost.” Weigel has seen cases where an arc flash with injury cost $8 million to $10 million. “One case cost the insurance company $29 million,” he says. “ e workers’ comp rate went through the roof: from $250,000 to $5 million for five years.” In the United States, the National Safety Council estimates for every $1 spent on safety there is a $3 return. “Productivity improves. Companies find that they can make more parts per day,” says Dan Hornbeck, manager, safety business development, Rockwell Automation (www. ra.rockwell.com). “Alcoa saw profitability increase several percent,” says John Peabody, vice president, safety integration, Omron STI (www.sti.com). “Employees could focus on the task instead of on safety. Quality goes up, too.” Accidents also affect insurance rates. As a result of improved safety, Schneider Electric’s North American Operating Division saw its medical incident rate drop 40% in 2006 at its 30 North American manufacturing facilities. is translated to a savings of approximately $2 million, split between workers’ compensation and indirect costs. “ e bean counter looks at the general ledger and sees ‘safety and security expense’ as reducing profits, but you’re saving money,” LaCook says. “We’ve always been very proud of our workman’s comp experience modifier – in the 0.7 to 0.8 range, very good for a small company in metals manufacturing. When you see that discount, compared to others, you have a competitive advantage.” at edge can extend to costs most people don’t see as safety-related, such as turnover. “Employees leave comS THE PRICE OF AN EYE How can manufacturers dem onstrate a quanti able nan turn for safety and healthcial rerelated investments? It can be di cult to calculate the direct and indirect cost of injuries and illnesses. However, tracking such me trics is critical to proving the success of a workplace safety progra m or initiative. In a survey of 231 senior nancial executives at larg e and midsize companies, insurance company Liberty Mutual found that more than 40% of respond ents cited productivit y as the top bene t of an e ective workpla ce safety program. The sec ond most frequently mentioned top bene t was reduced costs, as identi ed by just more than 28%. Workplaces that establish health and safety systems can reduce their injury and illness rate by 20% to 40% and see a retu rn of $4 on every $1 invested, according to the AIHA and OSHA. So, is the investment wor th it? This often is the questio n facing nance personnel when eva luating a workplace safety purchase such as personal protect ive equipment (PPE). Con sider a hypothetical case of an eye inju ry that could have been pre vented by a $5 pair of safety glasses or $10 pair of goggles. Is a $5 to $10 investment wor th a potential sho rtfall of more than three-q uar ters of a million dollars? Direct cost of eye injury: Indirect cost of eye injury (industr y-standard 3x factor): Total nominal cost of eye injury (direct + indirect costs): Pro t margin on job where injury occurred 5% (÷ 0.05) = added revenue company must generate to recover injury cost: $10,000 $30,000 $40,000 $800,000 (International Safety Equ ipment Association exam ple cited by KimberlyClark Professional Educati on publication, “Safety Doe sn’t Cost – It Pays”) panies they see as unsafe places to work,” says Travis Rhoden, editor, workforce safety, J.J. Keller (www. jjkeller.com). He suggests you take the same approach to safety that you use to keep a machine running. “Consider the cost of a down employee, and avoid that cost.” It’s impossible to guarantee investing in safety will prevent all incidents, says Greg Anderson, CEO, Results in Learning (www.resultsinlearning.com), “But I can guarantee that not investing in safety will result in incidents occurring, either on or off the job, because people who work in a culture of safety have that mindset wherever they are.” Avoiding the cost of a single incident that would have injured or killed can pay for a program. “Financially responsible people are willing to spend the money because they understand the consequences,” Weigel says. “Even if they think it costs too much or they can’t afford it, they have to do it. If someone gets hurt, they have to do it anyway, and they pay both ways.” It’s a culture thing e specific regulations, staffing, equipment and training you need to maintain a safe working environment depend 37 .PLANTSERVICES. http://www.fabenco.com http://www.squared-services.com http://www.ra.rockwell.com http://www.jjkeller.com http://www.ra.rockwell.com http://www.jjkeller.com http://www.sti.com http://www.resultsinlearning.com http://www.PLANTSERVICES.com
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