Seat belts, airbags, crumple zones and collapsible steering columns . . . these are just a few of the safety measures designed into most cars these days. These devices neither make our cars faster nor do they increase fuel efficiency, yet it is nearly impossible to find a new car without them, why? I guess you could say that the cost of not having them far outweighs the cost of designing these safety measures into our automobiles.
Couldn’t we make the same argument for our fabrication equipment?
Machines that are not safeguarded correctly will cost you in a number of ways. Unguarded or machines that are not safeguarded correctly have a negative impact on productivity, employee morale and the bottom line. The result of an incident on an unguarded machine will most likely result in machine down-time (loss of production), increased insurance costs, OSHA citations and fines, employee injury, reduced employee morale, and litigation costs.
Costs of an accident
Estimating the financial costs in advance of an injury is difficult. Fortunately, OSHA’s interactive $afety Pays website offers assistance. Using insurance company claims data, the tool calculates the estimated direct and indirect costs of an injury. Also, if you enter your profit margin information, $afety Pays will project the additional sales required to recover the costs of the injury.
Consider a simple example: Assume that a company has annual sales of $10 million with an 8% pre-tax profit margin. For a single accident resulting in an amputation, $afety Pays estimates the costs of the injury as follows:
Average Direct Cost: $21,718
Average Indirect Cost: $23,890
Estimated Total Cost: $45,608
The additional sales revenue necessary to cover these costs is:
Total Cost: $570,100
In other words, the next 5.7 percent of sales growth will go solely to pay for the total cost of the accident. If your pre-tax margins are less, the sales impact is even greater. Indirect costs account for the majority of accident expenses but are not typically covered by insurance. One final note – the answers returned by $afety Pays may be conservative with regard to the ratio of indirect-to-direct costs which is almost 1:1. A poll by Liberty Mutual Group estimates the actual figure may be 5:1 while an American Society of Safety Engineers study suggests a ratio of 8:1.
61 percent of executives claim that for every dollar spent on investments in workplace safety $3 is saved (according to a poll by the Liberty Mutual Group). 95 percent of the executives in the poll indicate workplace safety has a positive impact on a company’s financial performance. OSHA’s Office of Regulatory Affairs reports an even more dramatic result; suggesting $4 to $6 is saved for every $1 invested.
An October 2009 study by the ASSE Foundation Research on Employee Morale shows a direct correlation between work place safety and employee morale. These costs savings and benefits are realized when safety is done right. How do you ensure that machine safety it is done right?
Successful machine safety integration starts with a thorough and documented assessment of the machines to be guarded. An assessment provides the right information which allows the customer and vendor to clearly understand whether their machines are compliant to OSHA and ANSI requirements, the current level of risk and scope of work necessary to bring equipment into compliance. The assessment will also give a clear written description and drawing of the guarding concept. This allows your production personnel to review and understand the guarding concept prior to the installation of the guards and devices, allowing for most changes to be made prior to the integration team even arriving on-site. Armed with this information, you are assured of maintaining or increasing production rates after the guards and devices are installed.
The direct costs of having your critical machines out of production for longer periods of time than expected, or your operator’s inability to produce as much product due to a poor guarding scheme, can have a significant impact on the plant’s bottom line. These are the hidden costs of a safeguarding installation which can easily be prevented if you know how to do it properly. If you want to be assured of a successful machine safeguarding project with no hidden costs, request the following:
- Documented Assessment Report – at a minimum includes: risk assessment methodology and process used, risk level score before guarding, required safety related control level based on the assessed risk level, risk level after the guards and devices are installed, drawing of the guarding concept showing materials, type, size, and approximate location of the proposed safeguards and devices. This assures that production personnel will have a clear understanding of the guarding concept and impact on production.
- List of References – shows the credibility of the machine safety integrator.
- Completion Guarantee – ensures machines will be guarded to the standards and released to production on schedule.
Machine Safeguarding: an Investment and Cost Cutting Measure was originally published in the April 2010 issue of Fabricating & Metalworking magazine.