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Metal fabrication, efficiency, and safety

The case for Safe Inc.

I had the pleasure of presenting recently at a breakfast conference sponsored by CNA, an insurance partner of the Fabricators & Manufacturers Association International®. In addition to my talk, and one by the inimitable Chris Kuehl, FMA’s economic analyst, a CNA staff consultant gave an excellent presentation on workplace safety as it relates to overall operational efficiency and improvement.

It got me thinking, and reflecting. In the more than 25 columns on improvement I have written in the past two or so years, not one had a topic of safety. It’s time to remedy that. Not only is safety a component of operational effectiveness, it is arguably a primary component. Let’s examine why.

Morality

I reported to someone early in my career who, in addition to having been blessed with an incredible ability to reduce complex issues to their underlying core, had a strong moral compass that grounded his toughest decisions in a sensibility that is in stark contrast to what we see too often today.

One of his many common-sense but profound statements that was drilled into rookie general managers (and wayward experienced ones) was this: Every person should expect to go home from work in the same condition in which he or she arrived. That basically was the corporation’s policy on safety, and I’ve yet to find one better or more succinct.

Over time people deconstructed the meaning and intent of the word condition, and found ways to write the statement in a more grammatically elegant way, but I and everyone else got the meaning perfectly. The fact that I remember it years later is proof of how it affected me. I adopted the policy immediately and have never changed it.

Embedded in the statement is a strong moral undertone: Doing your job, or even just being in your workplace, should not cause significant inherent risk to your overall well-being. This is what is behind the creation of OSHA and EPA, which handle safety in the workplace and the environment, respectively. Regardless of how well or poorly these government agencies do their jobs, it is difficult to argue with their purpose.

Fear

If morality was the foundation of the modern safety movement, it quickly gave way in importance to another, far less noble component: fear—fear of lawsuits; fear of fines; fear of mandatory, government-directed investments in safety improvements; fear of sky-high workers’ compensation expenses.

While hardly elegant, fear does have one overriding trait: It often works. Companies often approach safety in a preventive mode: “We have to do [whatever it is] or we risk being sued/fined/supervised.” Few say this (I hope), but the sense is there.

Efficiency

But are fear/prevention and morality the only reasons for investing in safety? Also, is fear/prevention even the most important reason? In my view, no and no. Here’s why.

We all have been inside operations where we hope that we can find a way out with all of our body parts still attached. You know the drill: fork trucks playing demolition derby; unidentified stuff stacked in piles of questionable mechanical stability; moving tables on machines suddenly traversing at lightning speed, ready to hit the unaware like an NFL linebacker; steel coils swinging around on hoists of dubious quality just waiting to knock someone into next week; cranes with the most recent certification label from 1992; machines with some creative electrical workarounds made with homemade solder joints and whatever tape was lying around (all unlabeled, of course); and, one of my all-time favorites, roof leaks causing water to stream down walls or posts where 480-V electrical boxes are mounted. It’s all truly scary.

Then we have been inside operations that are just the opposite: highly organized; great visual labeling; passageways that are guaranteed to be safe; equipment that is certified as to its ratings and maintenance; lockout/tagout protocols; highly managed safety statistics, to name a few. These are places where you have the feeling that the only way to get hurt is to try really hard … and even then it would be difficult.

Assuming equal sales levels, which company would be more profitable? In the short term, the dangerous company could be more profitable simply because it spends less than the safe company. But that takes a lot of luck: folks moving or ducking in the nick of time—many times—and no one complaining to OSHA. Given the nature of luck, a highly profitable Dangerous Inc. is highly unlikely, even in the short term.

In the long term, there is no way that Dangerous Inc. beats Safe Inc. Dangerous Inc.’s costs of non-safety-related issues would easily surpass Safe Inc.’s costs related to safety. This is especially true in the metalworking industries where there are a lot of ways to get hurt.

Ignoring the fines and lawsuit costs that usually accrue, Dangerous Inc. would most certainly incur high turnover and suffer the costs of operating with untalented and seriously unmotivated, even careless, workers. The company just can’t attract anyone better, and even these workers would escape at the first opportunity. All this creates significant costs. Further, it would be extraordinarily difficult to design and implement anything resembling a managed continuous-improvement process in such an operation. The environment isn’t right.

Why Safe Inc. Wins

Safety and efficiency are not mutually exclusive; they are complementary, and five solid reasons support this view:

  1. Safe Inc. is disciplined. This is a necessary condition for controlled, predictable operations and sustained improvement.
  2. Safe Inc. has less turnover. This means that it accrues the full benefits of a trained and experienced workforce. It avoids the continual costs associated with a poorly trained and motivated workforce, and it also doesn’t have the costs that come with constant recruitment.
  3. Safe Inc. has better employees. The safe company has a much better chance of recruiting and retaining higher-quality people, those who have choices when it comes to employment. They’re not working for you because they can’t find a job anywhere else. The reason is obvious. Folks want to leave work in the same condition that they arrived. The safe company cares.
  4. Safe Inc. is ergonomically aware and active. Beyond the injury risks that arise from repeated motions that moderately stress the body and any motions that cause heavy stress, poor ergonomics cause early fatigue. This is itself a cause of declining efficiency and quality as the workday progresses.
  5. CNA has a great deal of data on motions such as bending, stooping, lifting, and reaching. Highly ergonomic organizations are usually more efficient than those that generally ignore ergonomics. (Editor’s note: For more on this, see “How to prepare for the aging workforce,” an article based on a presentation by CNA’s Brian Roberts, available at www.thefabricator.com.)

  6. Safe Inc. has a highly organized, clean, and visual workplace. Beyond enhancing safety, this type of workplace reduces waste associated with searching, ambiguity, and confusion.

Costs of Safety

Can safety be overdone? In theory, yes. The cost of safety is similar to the cost of quality. Investments beyond those needed to achieve a given “lowest achievable” failure (incident or accident) rate gain fewer and fewer improvements. Total safety costs rise, but results don’t improve. It can happen, but I’ve seen it only once, and that involved the esoteric world of handling radioactive material.

It’s so rare because of how safety costs add up. They include the costs of detecting potentially unsafe conditions; preventing accidents; and paying for the failures themselves, including the accidents and fines. But there’s another element to add to the equation: the reasonably possible costs of failure. You may be lucky; your actual costs for accidents may be low, but an unsafe workplace opens the door to all sorts of potential accidents, each of which can be extraordinarily expensive.

If the costs of detection and prevention are larger than the actual as well as the reasonably possible costs of failure, you may have overdone it. In my experience, that condition is much rarer than underdoing it.

A Powerful Component of Improvement

I propose that you supplement the moral and fear/prevention components of safety with another one: efficiency and productivity. When you look at safety from the added dimension of efficiency, it becomes a powerful component of improvement. I can’t say that all safe companies are great companies, but I can say that all great companies are safe.

About the Author

Dick Kallage

Dick Kallage was a management consultant to the metal fabricating industry. Kallage was the author of The FABRICATOR's "Improvement Insights" column from May 2012 to March 2016.