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Managing Safety In A Recession


April 1, 2009
By Pulp & Paper Canada

Recently, American Society of Safety Engineers president Warren K. Brown cautioned employers against cutting back on workplace safety in times of economic difficulty.

Recently, American Society of Safety Engineers president Warren K. Brown cautioned employers against cutting back on workplace safety in times of economic difficulty.

“We realize these are tough times, but during economic downturns, employers seeking to cut expenses may target variable operating costs such as travel, training and safety,” Brown said. “Money cut from safety processes now could have an enormous cost later; this can be from injury and health care costs, fines, lost production time, employee morale, or worst of all, employee injury or even death. There are better and smarter ways to protect the bottom line.”

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Amen!

The issues

While economic hard times may be a more recent concern for many North American manufacturers, the pulp and paper industry has been living with this problem for the last 10 years or more. But in 2008-09 it reached critical proportions. At some point the situation will level off and the surviving mills will see better times. Until then, mills still face difficult challenges. All employees fear mill closures. Corporate liquidity is severely affected; cash is short. Anxiety and stress are rampant, employees are overworked in some cases, and work routines are disrupted. Jobs are at risk and employee morale is extremely low.

Can mills deal with these issues? What problems do they create for employee safety?

The problems: weak sales, liquidity, and safety

Many mills desperately need cash. Cash shortages lead to more cost cutting and the mill safety budget is not immune. Accidents and illness rates often escalate. Stress and/or fatigue stem from overtime, downsizing, new tasks, fear of job and income loss, etc. Reduced or ineffective spending on accident prevention and plant maintenance generate new or additional hazards in the workplace. In some instances, employees who fear imminent job loss may resort to fraudulent work-related injury/illness claims to receive workers’ compensation benefits to replace their expected lost income.

But there may well be a silver lining. Simple, targeted, cost-effective initiatives that address employee insecurity and safety during recessions can even contribute to corporate liquidity in both the short and long term.

Cost-effective solutions

Most mills have fairly comprehensive safety efforts in place. During good times, they are well funded but are rarely subject to intensive scrutiny. They accumulate fat. Rather than blindly defending existing safety spending, now is the time to take a quick, hard look at identifying and reinforcing those safety activities that actually add value, deleting those that don’t, and maybe adding one or two that are missing. Now is the time to cut out the fat in the safety process. Above all, keep it simple.

But first, addressing the low morale and financial anxieties of employees is a prerequisite to any other initiatives. If not already done, management should be open with employees about the true status of the enterprise, all possible outcomes, and the seriousness of the situation. Layoffs, severance, and relocation procedures should be clearly established to reassure employees that the employer cares about their welfare, whatever the outcome. All this is vital to reduce employee stress and anxiety to a manageable level. This establishes management credibility, improves employee receptiveness, and sets the stage for exceptional recession-based safety initiatives.

The secret to world class safety is essentially that it is process-focused and employee-managed. Management and employees work together to identify those safety activities that truly add value and those that don’t. During the good years, a lot of fat can accumulate on the safety process because nobody is really scrutinizing it. But where mills have fairly comprehensive safety management systems, the additional improvements in safety performance usually come from activities that involve a high level of employee participation and ownership. These are characterised by the ability of the employees to perform risk management individually and/or as teams. They continuously perform some form of pre-task planning and risk assessment procedure, mental or written, before performing a task.

They also provide management with continuous feedback on hazards and incidents in order to improve the upstream hazard filtering activities of the safety management systems. This reduces the hazard burden at the workface where the employee is exposed to risk. The key feature of this type of activity is that it focuses on forward looking, pre-emptive practices that emphasize seeing the risks and exposures that lie ahead as opposed to those that lay behind. To quote Ron Dembo on risk management, “Risk lies where we’re going, not where we’ve been!”

Employees need sound, pressure-proof work performance methods and skills in order to work safely in a dynamic, uncertain, changing environment. The beauty of this approach is that it can be implemented at little or no extra cost to the enterprise during a recession when cash is tight. Cutting the fat may well reduce overall safety process costs and budgets.

Two excellent examples of this thinking come to mind.

First, the AbitibiBowater Beaupr, Que., mill, which has a good safety record, implemented in 2008 a risk assessment procedure for 100 maintenance workers. The procedure uses a simple checklist on a single, double-sided card to help employees identify hazards and adequately prepare for the safe, productive perfor mance of every maintenance task. This procedure can take seconds, minutes, or hours, depending on task complexity. Yet the training time required was only one hour per employee.

Incidents dropped 30% in 2008, the first full year of its application. In addition, the process was developed, not by management, but by an employee task force composed of two electricians and five mechanics with support from a unionized foreman! The mill now plans to expand the approach to all 200 remaining mill employees.

The second example comes from a U. S. company. This money-saving safety initiative is one that focused on a shift from measuring safety by OSHA incident rates to valuing safety in hard dollars. A former risk manager for the Hagen-Dazs Co. found his most immediate challenge was to reduce high workers’ comp costs generated by the California facility.

Larry Hansen recounted this tale on ehstoday.com:“Corporate-imposed incident rate measurements had frustrated supervisors because they were held accountable for something over which they had little control, had created employee cynicism because workers knew that numbers were suspect, and had driven real problems and near-miss events underground until they ultimately surfaced as costly injuries. His solution was to implement what he calls the ultimate safety metric — an average loss cost calculated by the following formula:

Average loss cost = total cost of all incidents/total number of all incidents.

By “incidents,” he meant incidents of all types: near-misses, first aid, medical only, restricted duty, and disabling. His goal was to build trust and remove cynicism by removing the negative consequences associated with reporting, which in turn would expose real problems and foster real safety progress.

The genius of this metric is that the only two ways it can be improved is by increasing the number of incidents reported (exposing hidden problems), or by reducing total costs (forcing better management of employee claims).

By the end of the first year, the plant reported 33% more claims, but produced a 30% reduction in claim costs. The risk manager went on to a Dole Foods division where he applied the same approach and reduced loss costs from $385,000 to $30,000 in the first year.”

In conclusion, by emphasizing employee management of safety and concentrating on those activities that focus on the safety processes that reduce exposure to risk, mills can still succeed in maintaining safe opera
tions while cutting prevention costs and contributing to corporate liquidity.

John E. Little is a risk management consultant and can be reached atjelittle@videotron.caor418-826-0541.


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